By Business Reporter- The government has conceded that the new gold-backed currency, the Zimbabwe Gold (ZiG), is encountering resistance in the market, raising concerns about its viability.

Since its introduction in April 2024, the ZiG has only captured a modest 30% share of domestic transactions, with the US dollar still dominating at 70%.

Finance Permanent Secretary George Guvamatanga acknowledged this on Wednesday during the Zimbabwe Economic Society and Friedrich-Ebert Stiftung (ZES/FES) mid-term budget breakfast meeting in Harare.

Guvamatanga defended the currency, stating, “To say that the ZiG is not circulating is not correct; the ZiG has been accepted in the market but is only circulating in electronic form. When we introduced the ZiG, the portion of transactions was 80-20, and now we are at 61-39 percent, so there has been a very marked increase in the use and acceptance of ZiG. We are seeing more transactions in ZiG.”

Despite Guvamatanga’s reassurances, the numbers tell a different story.

The initial phase saw an 80-20 split between the ZiG and other currencies, which has since shifted to 61-39, indicating that the ZiG is struggling to gain a foothold.

The government acknowledges that the currency’s physical form—small notes and coins—has yet to circulate widely, which could be contributing to its limited acceptance.

At the start of the year and for much of 2023, the US dollar dominated local transactions, accounting for approximately 80% due to the rapid depreciation of the Zimbabwean dollar.

While the introduction of the ZiG was intended to stabilize the economy, the ongoing shortage of foreign currency remains a significant hurdle.

The situation raises questions about the long-term sustainability of the ZiG, as it struggles to compete with the more trusted US dollar, leaving the government with the challenge of convincing a skeptical market to embrace its new currency.