Year after year and for over a decade, almost two, Zimbabwe’s economy has continued to suffer tremendously. However, the country is rolling the dice with a brand new currency called “ZiG” which will be backed by Gold.
This gold-backed currency aims to be the answer to years of instability and out-of-control inflation. The ZiG replaces the RTGS dollar, which lost 75% of its value in just the first few months of 2024, and with inflation reaching 55% in March, Zimbabweans are desperate for a financial anchor.
The new currency boasts several features designed to inspire confidence. First, it’s backed by gold, a valuable commodity with a history of holding its worth. Second, the exchange rate will be determined by the market, a stark contrast to the manipulated rates of the past.
But can ZiG Regain Zimbabwe citizens’ Trust? Well, this is an uphill climb which means it will take time for the central bank and the Zimbabwean government to earn its citizens’ trust with this new currency proposal.
The ZiG is in for a tough fight to win over Zimbabweans. After years of broken promises, people are understandably skeptical about this new currency. Many Zimbabweans remember the disastrous hyperinflation in 2008 when the government printed money recklessly.
Adding to the challenge, the US dollar remains king in Zimbabwe, accounting for a whopping 85% of transactions. While the ZiG aims to become the primary currency, a significant portion of the population might stick with what they know.
The rollout is swift – Zimbabweans have just 3 weeks to exchange their old currency. Also, the plan includes new coins to address the shortage of US change, which currently leads to bizarre “candy and pen” transactions.
Governor John Mushayavanhu promises a responsible approach, vowing to maintain enough gold or foreign exchange reserves to back the ZiG’s value. This commitment is crucial, as overprinting was the downfall of previous currencies.
Public reaction has been muted, with some economists highlighting the need for a genuine change in government spending habits, not just reassurances.
The country is also facing a serious drought, threatening food security and adding another layer of complexity to its unstable economy. Only time will tell if the new currency “ZiG” can turn Zimbabwe’s economy around for good.
