Story by Stanley James, Business Editor
THE Reserve Bank of Zimbabwe (RBZ) has expressed satisfaction with the performance of the Zimbabwe Gold (ZiG) currency, which marks one year since its introduction.
Launched on April 5, 2024, ZiG was introduced as a structured currency to address challenges affecting domestic currency stability. As the currency reaches its first anniversary, RBZ Governor Dr John Mushayavanhu reflects on its impact.
The Road to ZiG: A Monetary Solution
“The Zimbabwe Gold (ZiG) was introduced at a time when the economy was facing significant inflationary and exchange rate pressures from December 2023 to March 2024. The pressures resulted in the domestic currency losing its value, its desired properties of predictability, convertibility, transactional convenience, and reliability as a store of value.
“The significant growth in inflationary pressures in the economy led to the depreciation of the local currency both on the interbank and parallel markets, such that banknotes became too small and inconvenient for the transacting public given the price levels in the economy. Such challenges, among others, necessitated the recalibration of the bank’s monetary policy framework, together with the reintroduction of a structured currency, the Zimbabwean Gold to restore price and exchange rate stability and expectations necessary to boost confidence in the local currency.
“The economy also experienced challenges with small change for foreign currency transactions, compelling retailers to either use shop coupons or force customers to buy small items. The situation also saw some retailers, wholesalers, and banks refusing soiled or torn US dollar notes, further inconveniencing the transacting public.
“The transition from the Zimbabwe Dollar to ZiG was smooth, as all the Zimbabwe Dollar balances in bank accounts were successfully converted to ZiG using a factor of 2,498.7242. To ensure a seamless process, the Reserve Bank also mandated banks to continue accepting deposits of Zimbabwe Dollar banknotes for a period of 21 days after 5 April 2024,” said Dr Mushayavanhu.
ZiG Acceptance and Performance
The RBZ Governor highlighted how businesses and the public have embraced the new currency.
“The ZiG currency has been fully embraced by businesses and accepted by the transacting public for both transactional and saving purposes. The countrywide outreach programmes to create awareness of the new currency also demonstrated that the general populace embraced the ZiG.
“Basically, the acceptance of the local currency by the public has improved since 5 April. Before the introduction of ZiG, the economy was moving towards full dollarisation, with the US dollar increasingly dominating the weaker Zimbabwe Dollar. However, the ZiG’s domestic share in total transactions has increased to above 35% from less than 15% in 2023 and continues to grow as confidence improves.
“Therefore, the economy has experienced relative stability since April 2024 on both the exchange rate and inflation fronts, notwithstanding the shock on the exchange rate experienced around August and September 2024. The parallel exchange rate premium, which was above 100% before the introduction of ZiG, has since narrowed to below 20% by March 2025,” he said.
Building Reserves and Future Plans
In light of these developments, promoting the wider use of ZiG remains a key objective for the RBZ.
“The Reserve Bank continues to accumulate reserves to provide adequate backing for ZiG stability. Currently, total reserve coverage for the ZiG amounts to over US$500 million, of which more than US$230 million are gold reserves. The current level of reserve coverage for the ZiG is equivalent to more than three times the total amount of the ZiG currency in circulation, which is quite a healthy situation to durably support the stability of the local currency.
“Complementary measures put in place by the government have also entrenched stability in the local currency. Going forward, the Reserve Bank is working on enhancing the quality and design of ZiG banknotes in line with international standards.
“As per international best practice, producing notes takes about six months to two years, hence the Reserve Bank urges the public to exercise patience as the manufacture of higher quality and more durable ZiG notes takes place. Moreover, the higher quality banknotes will be strategically distributed to the most remote areas of the country, where there are scarce brick-and-mortar financial services,” Dr Mushayavanhu explained.
As the RBZ maintains its tight monetary policy stance, expectations are high that these measures will further consolidate ZiG’s stability gains.
