Official LÈAD statement on the devaluation of the ZiG currency

27 September 2024

By Linda Tsungirirai Masarira

The recent 100% devaluation of the ZiG currency, from 1:14 to 1:25, is a direct reflection of deeper systemic economic challenges facing Zimbabwe. This decision has far-reaching consequences that will affect every Zimbabwean, particularly the most vulnerable in society. As Labour Economists and Afrikan Democrats (LEAD), we believe that immediate and decisive action must be taken to mitigate the impacts of this devaluation and set our nation on a path toward sustainable recovery.

We need immediate social protection for vulnerable citizens.
The devaluation will inevitably lead to rising inflation, increasing the cost of basic goods and services. Zimbabweans, especially low-income families, are already struggling to afford necessities, and this devaluation threatens to plunge even more of our citizens into poverty.

We urgently call on the government to implement robust social protection measures like
increaseing social safety nets. Immediate scaling up of food aid, subsidies for essential goods like fuel, and cash transfers to help citizens navigate the rising cost of living.

Teachers and other civil salaries which were supposed to be paid earlier this week haven’t been paid and today we understand why? The insensitivity to the plight of already struggling ivil servants is appalling and a cause of concern to every progressive citizen of this country. We demand salary adjustments to ensure decent salaries for civil servants and pensions for senior citizens. Public and private sector wages must be reviewed and adjusted in line with inflation to prevent the erosion of purchasing power. Workers should not be left to suffer under the weight of devaluation without compensation.

We need transparency in the Gold-Backing mechanism. What is the current state of the purported gold-backing of the ZiG currency? Gold prices are increasing globally, yet the ZiG has devalued by 43%. This raises serious concerns about the effectiveness of the gold-backing mechanism.

Reserve Bank of Zimbabwe must provide:

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The public deserves to know the true state of the gold reserves, how they are managed, and whether they are sufficient to support the currency.

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If the currency is genuinely backed by gold, why is it not reflecting global gold price trends? A clearer, more stringent framework linking the currency to gold must be put in place to restore market confidence.

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This currency devaluation is a wake-up call for broader economic reform. Monetary policy must focus on stabilizing the currency and addressing the underlying factors driving inflation. This should include:

• ????????? ??? ???????? ??????: The Reserve Bank of Zimbabwe must adopt disciplined, transparent monetary policies aimed at stabilizing the currency, controlling inflation, and managing public debt.
• ????????????? ?????? ???????????????: Zimbabwe must capitalize on a weaker currency to boost exports, particularly in agriculture and mining. Simultaneously, investment in local production must be prioritized to reduce reliance on costly imports.
• ????????? ?????? ??????????: The government must curb unnecessary spending and reduce the fiscal deficit, which is a significant driver of currency instability.

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The devaluation has eroded public trust in the economy, but this trust can be rebuilt through transparency and active engagement with citizens. Labour Economists and Afrikan Democrats call on the government to:

• Engage the public in policy-making. Create open dialogues with citizens, businesses, and labour unions to ensure collective input on decisions impacting the economy.
• Establish public-private partnerships. Partner with the private sector to stabilize key industries and improve supply chains, which can help reduce inflation and provide long-term stability.

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To ensure the long-term stability of the ZiG currency, immediate measures must be taken:

• to tighten foreign exchange controls and to strengthen regulations to control capital flight and ensure that foreign currency reserves are efficiently managed.

Labour Economists and Afrikan Democrats believe that the devaluation of the ZiG currency is a critical issue that demands a swift and thoughtful response. The livelihoods of millions of Zimbabweans are at stake, and we can not afford to take a wait-and-see approach. Immediate social protections, economic reforms, and transparency in monetary policy are essential to mitigate the negative impacts and restore stability.

We urge the government to act swiftly, with the welfare of Zimbabwe’s citizens at the forefront of its agenda. Labour Economists and Afrikan Democrats remain ready to collaborate with all stakeholders to find solutions that ensure a stable, prosperous, and equitable future for all Zimbabweans.