Why Aren’t Zimbabweans Feeling the Benefits of ZiG Stability?

By Newton Mambande

HARARE – THE fiscal and monetary authorities have asserted that the Zimbabwe Gold (ZiG) currency has strengthened and remained stable. Even the visiting International Monetary Fund (IMF) delegation, present at the time of writing, commended the administration of President Emmerson Mnangagwa for its efforts in maintaining ZiG stability. The IMF has reportedly recommended transitioning to a sole legal tender and mono-currency regime.

While adopting a mono-currency regime is a theoretically sound idea—since economic growth and development often depend on a stable local currency—Zimbabwe may not yet be ready for such a shift. Implementing it prematurely could risk financial and economic instability, similar to the challenges faced after the reintroduction of the Zimbabwean dollar (ZWL) in July 2019. At that time, the economy experienced a surge in black-market activity, hyperinflation, and foreign currency shortages, prompting a return to a multi-currency system in April 2020.

Observations suggest that the parallel market is currently struggling, as fewer people exchange U.S. dollars through informal channels.

But has ZiG stability benefited everyone?

The answer is a resounding “no”. The currency has not yet reached a level where it can function as the sole legal tender due to social, economic, and political factors.

Since its introduction in April 2024, ZiG has depreciated by approximately 40% against the U.S. dollar, and prices continue to rise. This raises questions about the currency’s true stability.

Key Challenges Undermining ZiG Stability

Debt Overhang: Zimbabwe’s total external debt stands at approximately US$21 billion, owed to the Paris Club, Bretton Woods Institutions (IMF, World Bank), and other creditors. This debt burden has restricted access to credit lines, discouraging investment in critical sectors.

Liquidity Crunch: There is a noticeable shortage of ZiG in financial markets. Most transactions are conducted in U.S. dollars, and many employees receive salaries exclusively in foreign currency. Additionally, public trust in ZiG remains low, with individuals preferring to hold U.S. dollars as a store of value.

Government Distrust in Its Own Currency: Ironically, the government itself appears hesitant to fully embrace ZiG. For example, passports and vehicle import duties must be paid in foreign currency, not ZiG.

Environmental and Economic Shocks: The El Niño-induced drought of 2024 disrupted raw material supplies and reduced agricultural and mining output, likely weakening ZiG stability. While 2025 has seen some recovery, the lingering effects persist.

Policy Inconsistencies: The government has a history of abrupt policy shifts. Initially, the multi-currency system was promised until December 2030, but recent signals suggest an earlier shift to a sole legal tender. Additionally, the African Development Bank (AfDB) was reportedly consulted on debt resolution strategies, but no visible progress has been made. Such unpredictability deters investor confidence.

Global Economic Pressures: Volatile commodity prices, energy crises, and power shortages have increased production costs and reduced productivity. Potential reciprocal tariffs under a future U.S. administration could further strain the economy if not proactively managed. In 2023, Zimbabwe’s economy reportedly contracted by US$12 billion, shrinking to around US$35 billion.

Conclusion

ZiG’s stability remains fragile due to structural weaknesses in the economy. Persistent distrust in the local currency, coupled with goods shortages, has limited its benefits for ordinary Zimbabweans.

Newton Mambande is an entrepreneur and researcher. He has published scholarly work in internationally recognized journals. Reach him via email at newtonmunod@gmail.com or WhatsApp at +263773411103.