In Zimbabwe, with a new “golden currency”, they are trying to restore the trust of the population in the local currency / Article

“Zimbabwe Gold” or, translated from English, “Zimbabwe gold” – zig (ZiG) – this is the name given to the new currency of the southern African country. Since 2009, this is another attempt to restore the national currency, replacing the one introduced five years ago at the beginning of April this year, which bore the name of the Zimbabwean dollar.

This dollar is not related to the Zimbabwean dollar withdrawn from circulation in 2009. At the time, hyperinflation reached such levels that the Zimbabwean dollar had gained global attention with trillions of dollars worth of very high denomination notes.

Many use US dollars as a means of payment

Until April this year, when the new means of payment was introduced, the Reserve Bank of Zimbabwe, the country’s central bank, tried to fight inflation by issuing both a digital means of payment and gold coins.

However, this did not restore public confidence in the local currency. The Zimbabwean dollar has lost 70 percent of its value since the beginning of this year.

In many places, especially on the black market, the US dollar remained the main means of payment. It is estimated that the US dollar is used in 80 percent of all transactions in Zimbabwe.

With the help of a new local currency, the responsible authorities hope to reduce the use of American dollars in circulation. Zimbabwe’s new gold currency was launched as an electronic means of payment in early April, with notes and coins also introduced at the end of April.

To facilitate the circulation of the new currency, the government has launched a crackdown on illegal currency traders. On Tuesday, it said it would soon come up with rules binding traders to follow the official exchange rate.

The agency “Reuters” indicates that the Zimbabwean currency maintains a stable position on the official market, but on the black market it is sold for 65 percent of its value in exchange for the US dollar. Not all merchants and government institutions accept the new currency – in some cases, transactions can only be made in US dollars.

Safety concerns

The three-week deadline, during which residents had to exchange their current means of payment for the new state currency, has caused anxiety in the society. In general, there are different opinions about the usefulness of the new currency in society.

“I am sure that now that there is “Zimbabwe gold”, all transactions will be easier, we will be able to shop more easily. It was difficult, especially in the passenger bus, where people were waiting and shouting about the balance,” says bank customer Tafadzwa Zinhumwe.

Another customer of the bank, Suzanne Chikumeni, is concerned about the security of the new currency.

“I’m afraid that people will cheat me because I don’t understand its value. We need someone to teach me. I asked the bank, they said they don’t know.”

Hoping for public support

In the second half of last week, South Africa hosted the Zimbabwe Investment Summit, which was organized with the aim of attracting investors to invest in the country.

Zimbabwe’s Finance Minister Mthuli Nkube said the country has one of the fastest-growing economies in the region after the pandemic and stressed the bank would be open in sharing information about its reserves.

The Deputy Governor of the Central Bank, Innocent Matše, also expressed hope for public acceptance of the new currency, although he was reluctant to admit that there were problems with gaining trust.

“The feeling on the ground is that the community is finally [redz] currency that can be used. By the numbers, we have found that the viability of its use has increased. I know there are separate ones [sabiedrības] elements that want to think that its acceptance rates are poor. Yes, indeed, more needs to be done so that the public is fully informed about the new currency. I can say, this is a new experience – finally people understand that it is completely provided by assets.”

The government is committed to learning from past mistakes

Economist Hepines Zengeni explained in a conversation with “Associated Press” what the government should do to regain public trust in the national currency.

“It depends on the government to be able to sustain itself and be disciplined, that they keep a piece of money printing. Then people will start to slowly and gradually accept the local currency. And then there will be no need for an alternative market.”

The fact that the government of Zimbabwe might have learned from its mistakes this time is evidenced by the statement of the governor of the country’s central bank, John Mushaiyanwanhu, to media representatives that, unlike his predecessors, “irresponsible” money printing will not be allowed under his leadership.