By Business Reporter-The black market has resurfaced following the refusal of the ZiG by many retailers owing to its continued devaluation.
Introduced in April last year, ZiG was meant to stabilise the economy and curb inflation.
However, it rapidly lost value within two weeks of its launch, raising concerns about the government’s failure to implement sound monetary policies.
Despite this, authorities mandated businesses to accept ZiG, even as the government itself continued to require foreign currency for essential services such as fuel and passport fees.
Zimbabwe’s economic troubles are deeply rooted in years of policy mismanagement, corruption, and lack of investor confidence.
The country’s history of monetary instability dates back to the early 2000s, culminating in the infamous hyperinflation crisis of 2008, when inflation reached an estimated 89.7 sextillion percent (Hanke, 2008).
During this period, the Zimbabwean dollar became worthless, forcing the government to abandon it in favour of a multi-currency system dominated by the US dollar.
However, in recent years, authorities have attempted to reintroduce a local currency, first with the RTGS dollar in 2019 and now with ZiG.
These efforts have largely failed due to weak economic fundamentals, a lack of public confidence, and an absence of credible policies to support the currency.
The government’s insistence on using ZiG while continuing to demand foreign currency for critical services has further eroded trust in the financial system.
The rejection of ZiG by businesses has had severe consequences, with many shops shutting down as they struggle to restock goods.
Retailers rely on foreign currency to import products, but with customers hesitant to use ZiG and black-market exchange rates soaring, businesses face insurmountable losses.
In response to the growing crisis, RBZ Governor John Mushayavanhu released a statement on Wednesday, 12 March, clarifying that only banks participating in the interbank market are authorised to set exchange rates.
He warned that no other businesses or entities should establish their own rates, stating:
“The Reserve Bank of Zimbabwe has taken note of the confusion regarding the exchange rate determination for pricing of goods and services following the pronouncement of the Monetary Policy Statement (MPS) on 6 February 2025. It is important to highlight that the country is operating under a Floating Exchange Rate system where the exchange rate is determined in the interbank market for foreign exchange under the Willing-Buyer Willing-Seller (WBWS) arrangement.”
Mushayavanhu also reiterated that banks are free to sell foreign currency acquired from the RBZ at rates that align with international standards.
However, the reality on the ground suggests that the formal banking sector is struggling to meet the foreign currency demands of businesses, forcing many to turn to the parallel market for survival.
The re-emergence of the black market and shop closures highlight the ongoing failure of the government to implement sustainable economic policies.
Instead of addressing the root causes of currency instability—such as low production, excessive money printing, and lack of investor confidence—the authorities continue to rely on short-term measures that only deepen the crisis.
For Zimbabwe’s economy to recover, there is an urgent need for comprehensive economic reforms, including:
- Restoring confidence in the financial system – The government must demonstrate fiscal discipline and ensure that any local currency introduced is backed by strong economic fundamentals.
- Liberalising the foreign exchange market – Businesses should have unrestricted access to foreign currency at competitive rates rather than being forced to rely on an inefficient and manipulated interbank system.
- Encouraging investment and production – A shift towards export-led growth and industrial revival is essential to stabilise the currency and reduce reliance on imports.
Until these structural issues are addressed, Zimbabwe is likely to remain trapped in a cycle of economic instability, with businesses and ordinary citizens bearing the brunt of policy failures.