By Dr. Masimba Mavaza | Zimbabwe launched a new currency in Harare on April 5, 2024, becoming the only African country without its own currency prior to this move. However, five months after its launch, the Zimbabwe Gold (ZiG) currency is facing significant challenges, putting the government’s plans to make it the sole legal tender by 2026 in jeopardy.

Zimbabwe, a third-world country, is trying to adopt first-world monetary practices. This approach is akin to trying to support an elephant on matchstick legs. To ensure economic stability, the country needs to seriously control imports of goods and services. Limiting the amount of money one can take out each time is a start, but it would be more effective if the number of trips abroad per year were also restricted. The notion that people can freely use their money, without consideration for national interests, is simply unsustainable.

Some suggest adopting a floating exchange rate. However, this strategy works only in countries with an adequate stock of foreign currency reserves, not in Zimbabwe, where demand for forex far exceeds supply all year round. Moreover, the persistent existence of the black market is a critical issue. The black market is a crime and should not be used to fund business. It also makes stopping money laundering difficult when street banks fund economic activities.

When the U.S. dollar comes under pressure, the U.S. government stimulates demand for it, sometimes even through war efforts. Yet, in Zimbabwe, many believe in a floating exchange rate with no import restrictions, which is not a feasible solution in our context. Zimbabwe needs to face reality to stabilize the local currency.

The ZiG, a gold-backed currency, is Zimbabwe’s sixth attempt at stabilizing its currency in the past 15 years. Since its introduction, it has lost nearly 80% of its value on the black market. This sharp devaluation points to a lack of confidence in the currency, as locals remain reluctant to fully embrace it. Although the uptake of ZiG has been slow and devaluation occurred, it is too early to declare the currency a failure.

The real issue behind the ZiG’s struggles is man-made. The government’s failure to prioritize the use of ZiG, such as by demanding more taxes in the local currency, has eroded any initial confidence. The lack of preference shown by the government itself for its currency has planted doubts about ZiG’s long-term viability. To restore confidence, the government must urgently intervene by injecting more foreign currency into the market. This would help restore confidence among traders, the general market, and the public.

The Ministry of Finance has also failed to modernize Zimbabwe’s monetary system to match the global digital age. As countries increasingly shift towards digital payments, the ministry has not introduced digital money options to complement ZiG. In a world where digital currencies are gaining prominence, the Reserve Bank of Zimbabwe could have issued a retail-focused digital currency to strengthen the ZiG’s role. Careful design and implementation could have safeguarded monetary sovereignty and ensured the stability of the new currency.

To succeed, the ZiG must add value for users, support competition, and avoid crowding out private innovation. People should not be forced to accept a currency, but rather be eager to use it. Confidence in private money comes from the ability to convert it into safe public money—like banknotes backed by the state. However, confidence in the ZiG has been undermined by the black market, leaving citizens skeptical about its future.

The truth is, the government has not addressed the fundamental issue: a lack of transparency and accountability, particularly among parliamentarians and cabinet ministers. Many in leadership positions are businesspeople, promoting policies that protect their own interests rather than the country’s. The ZiG’s struggles are compounded by the fact that parliament and cabinet are not run by patriots committed to national welfare. Instead, they are dominated by individuals who prioritize their businesses over national prosperity.

The struggle Zimbabwe faces is not just economic, but political. For the ZiG to succeed, Zimbabwe’s leadership needs to align its interests with the nation’s well-being. Unfortunately, many of the country’s policymakers are involved in corrupt activities, preventing them from making decisions that benefit the public.

A capable policymaker must have the following traits:

1. The ability to absorb, evaluate, and distill vast amounts of information into key concepts.
2. A deep respect for and knowledge of Zimbabwe’s laws and regulations.
3. The impartiality to make decisions based on principles and values rather than self-interest.
4. A commitment to the people of Zimbabwe, putting their interests first.
5. The moral and ethical strength to resist corruption and personal vendettas.
6. The intellectual discipline to keep personal opinions out of decision-making.

Unfortunately, many current leaders lack these qualities. Instead of leading Zimbabwe toward prosperity, they serve themselves, undermining the president’s efforts and citizens’ trust. Their actions have stripped the new currency of its credibility and viability.

The introduction of the ZiG reflects the government’s latest effort to tackle Zimbabwe’s economic challenges, but without the commitment of patriotic leaders, the currency’s chances of success remain slim. Zimbabwe needs transparent governance, free from corruption, to restore trust in its financial system. Without this, both the ZiG and Zimbabwe’s economy are doomed to fail.

The fight to stabilize Zimbabwe’s economy continues with little relief in sight for ordinary citizens. The ZiG, once a symbol of hope, is now struggling under the weight of poor leadership and self-serving officials. Unless drastic action is taken—such as high-profile arrests of those sabotaging the economy—the ZiG’s potential will remain unfulfilled, and Zimbabwe will continue to struggle without its own viable currency.

Together, Zimbabweans can save their sovereignty and stabilize the ZiG, but only if the nation’s leaders choose to put the people first.