By Business Reporter- The much-vaunted Zimbabwe Gold (ZiG) currency has officially collapsed, a senior member of the Reserve Bank of Zimbabwe (RBZ) has revealed.
Persistence Gwanyanya, a member of the RBZ’s Monetary Policy Committee, confirmed the currency’s downfall at the Insurance Institute of Zimbabwe’s annual conference in Victoria Falls, attributing the collapse to a lack of public confidence in the currency.
Launched in April this year and initially pegged at ZiG13.50 to one US dollar, the ZiG currency was championed by Zanu PF, whose spokesperson Christopher Mutsvangwa once compared its anticipated strength to President Emmerson Mnangagwa’s authority, dubbing him “Mr. Strong ZiG.”
However, the currency’s value has plummeted and is now trading at ZiG25.48 per US dollar on the interbank market.
The rate has spiralled even higher on the parallel market, reaching ZiG43 per US dollar.
Gwanyanya commented on the situation, stating:
“In our case, where confidence has hit a historic low due to previous hyperinflation experiences, expecting stability to be driven by confidence alone is preposterous.”
As trust in the ZiG currency dwindles, many businesses and service providers have shifted to demanding payment exclusively in US dollars.
Those still accepting ZiG have resorted to using parallel market rates to protect themselves from losses due to currency volatility.
Despite the growing reliance on the US dollar, the government insists there will be “no going back” on its de-dollarisation policy.
To rebuild confidence in the ZiG, Gwanyanya proposed that the government should make it mandatory for taxes, duties, and statutory fees to be paid exclusively in the local currency.
He stated:
“To address the rejection of the ZiG, there is a need to create strong demand by ensuring that the currency is widely utilized. The government is best positioned to drive this demand by requiring payments for taxes, duties, and fees to be made in ZiG.”
He added that the government should plan for increased usage of ZiG in the 2025 budget, a move he believes could help restore confidence.
However, this reliance on ZiG could also mean an increasing dependence on the interbank market for foreign currency to meet government needs.
The dramatic collapse of ZiG reflects Zanu PF’s ongoing struggles with economic policy, highlighting the challenge of achieving currency stability amid enduring scepticism from Zimbabweans wary of repeating past economic failures.