Skepticism Runs Deep: Can ZiG Win Back Zim’s Trust?

By Newton Mambande

HARARE – RESERVE Bank of Zimbabwe (RBZ) Governor John Mushayavanhu’s analysis of ZiG stability and supply highlights key concerns, including public skepticism, gold backing, currency stability, and supply-side challenges. This article examines Mushayavanhu’s fiscal and monetary policy assessment while analyzing Zimbabwe’s current financial environment and proposing corrective measures.

Skepticism and Mistrust

Public confidence in the new ZiG, introduced in April 2024, remains low due to past economic instability and currency failures. In southern regions like Masvingo, Matabeleland, and Midlands, the South African Rand (ZAR) and US Dollar (USD) dominate trade transactions.

In rural areas such as Chimanimani and Chipinge, many remain unfamiliar with the ZiG, and its perceived value is weak. Consequently, adoption remains limited due to lingering distrust.

Moreover, Zimbabwe’s formal economy still operates predominantly in USD. Elite private schools, government-linked businesses, and fuel stations transact exclusively in foreign currency. The ZiG is not accepted for critical imports like oil and gas, while customs duties and passport fees must be paid in USD.

Governor Mushayavanhu claims local currency usage rose from ZIG 7.9 billion (26%) in April 2024 to ZIG 56.8 billion (43%) by May 2025. However, these figures are questionable, as ZiG usage remains negligible across most economic sectors.

Gold Backing

The RBZ maintains that ZiG’s stability is backed by gold reserves and foreign currency holdings (US$701 million, equivalent to ZIG 18.9 billion). Yet, this has not resolved underlying governance failures—corruption, fiscal indiscipline, and policy inconsistencies—or spurred infrastructure development.

Currency Stability

The RBZ acknowledges that global commodity price fluctuations, trade wars, reduced foreign aid, and regional conflicts impact Zimbabwe’s economy. The ZiG has depreciated by 50%, indicating the central bank’s failure to control inflation effectively.

Supply-Side Manipulation

The RBZ has restricted ZiG circulation, refusing to print sufficient notes despite liquidity shortages. This artificial scarcity exacerbates economic instability, erodes business confidence, and deters investment. Authorities seem aware that premature currency reforms risk hyperinflation, yet their current approach stifles growth.

Policy Recommendations

Financial Literacy Campaigns: Public awareness programs should promote ZiG usage and explain its benefits over foreign currency.

Governance Reforms: Authorities must lead by example—adopting ZiG in official transactions while tackling corruption and policy inconsistencies.

Convertibility Confidence: Gold backing alone won’t ensure trust. Like the USD, credibility depends on sound governance and economic productivity.

Historical Lessons: Zimbabwe should learn from Rhodesia’s import-substitution strategies during crises, which stabilized its homegrown currency.

Sustainable ZiG stability requires addressing governance failures, boosting productivity, and restoring public trust. Without systemic reforms, skepticism will persist, undermining economic recovery.

Newton Mambande is an entrepreneur and researcher with published works in international journals. Reach him via newtonmunod@gmail.com or WhatsApp +263773411103.