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Three months on, ZWG firms against major currencies

Story by Bruce Chahwanda, Business Editor

INDUSTRY and business concur the introduction of the Zimbabwe Gold (ZWG) currency was the right call by monetary authorities as it has stabilised the economy, with prices remaining relatively stable.

On the 5th of April this year, government through the Reserve Bank of Zimbabwe introduced a new currency backed by gold and other precious minerals.

The ZWG is at the moment backed by gold worth over US$370 million and the market has realised drip feeding as a way of ensuring accessibility of the legal tender.

CEO Africa Roundtable chairperson Mr Oswel Binha is alive to the benefits saying the local currency has brought envisaged stability to spur economic growth.

”I think the ZIG has been tested. And as a platform, we believe that the ZiG has come with some stability. And that stability is a welcome development. Secondly, the platform recognises all the efforts the government is making to ensure that it then deals with the legacy issues, the legacy issues pertaining to value preservation, the legacy issues pertaining to a dependable transaction medium, and legacy issues pertaining to, obviously, the historical losses that companies and individuals alike have experienced. However, there are a number of hygienic issues that government needs to recognize and take into consideration, take them into consideration seriously,” he said.

Industrialist Mr Davison Norupiri is convinced the ZiG is slowly taking over as the currency of transacting in the market.

“What they may need to make sure is to just make sure that the supply of the US dollar itself is actually adequate in the banks and in the market as well, to make sure that those people who import, for example, those who are into agro-processing, they import a lot of grains, especially maize. It’s now almost all imported, and they need a lot of forex.

“So once those industries and other importers are supplied or can easily get forex from the banks, then we will have a very steady growth in terms of demand of the ZiG. As it is now, business used to have 80% US dollars and 20% local currency, but now it has turned the other way around. Business is now getting 80% ZIG as their sales and 20% US dollars. So what is important is to make sure that the US dollar is now available in the banks for the manufacturers to be able to pay their foreign invoices. Once that is done, then we are assured of a very stable current in future and now,” he said.

Business, however, feels monetary authorities should release smaller denominations and the other notes as articulated in the bank’s roadmap.

“The issue is of availability of the unit. If the government communicated a roadmap to be followed around introduction of the currency, that roadmap must be met, and that increases the confidence in the information given by government to the transacting public. As we speak, the denominations that were spoken to are not sufficient in the market. We’re still getting our chocolates in the supermarkets. We’re still getting key rings in the hardwares, because synergy has not reached the breadth and length of the country. We still have withdrawal limits in the banks that are constraining access to this currency,” noted Mr Binha.

The central bank introduced the ZWG currency as part of a raft of policy measures to address exchange rate volatility and restore the much needed stability in the economy.

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