Zimbabwean Business Goes on Offensive Savage Attacks on ZiG
HARARE – Business leaders in Zimbabwe are urgently advocating for the removal of the six-month-old Zimbabwe Gold (ZiG) currency. These leaders are raising concerns about the currency’s volatility and its adverse effects on the economy, despite the central reserve’s steadfast assertion that the currency’s position is non-negotiable.
During a currency review breakfast meeting hosted by the CEO Africa Roundtable (CEO ART) in Harare, Oswell Binha, who chairs CEO ART, expressed sharp criticism of the ZiG. He described the currency as a mechanism for arbitrage, inferring it has brought significant harm to the nation’s financial equilibrium.
Binha drew parallels between the current situation surrounding the ZiG and its precursors — the Zimbabwe dollar, RTGS dollar, and bond notes. All these former currencies were eventually discarded due to their inherent instability. “I wish to spark this discussion by advocating for the immediate removal of the ZiG from our currency basket, allowing the free trade of other currencies until we stabilize on a definitive choice,” he declared.
He also proposed the idea of a “currency referendum”. Such an initiative, according to Binha, would engage all economic stakeholders to decide collectively on the currency Zimbabwe should endorse. He stressed the necessity of involving economic entities in key financial decisions.
This call for reform arrives at a tumultuous period for the ZiG. Despite the Reserve Bank of Zimbabwe’s (RBZ) claim that the currency is secured by gold and foreign reserves, it has been under immense strain. Recent months have seen the local currency’s value plummet against the US dollar in the parallel market, compelling the RBZ to devalue the ZiG by 43% last September to permit more flexibility in exchange rates.
As of recent market results, the US dollar was trading at ZiG27.28 on the interbank market and varied between ZiG35 to ZiG40 on the parallel market. To hedge against this volatility, some businesses have started reporting their financial results in US dollars.
Despite the growing dissatisfaction within the business community, the Deputy Governor of RBZ, Innocent Matshe, has stood firmly in defense of the ZiG. At the meeting, Matshe reassured stakeholders that Zimbabwe was not grappling with a currency crisis. “Make no mistake about the ZiG, it is here to stay,” he affirmed. Matshe elaborated that the currency’s depreciation aligned with natural market trends, dissuading notions of an impending collapse, and reinforced that existing monetary policies were adequate to foster short- to medium-term growth.
Matshe further denied assertions claiming the ZiG would meet the same demise as previous currencies, indicating that the central bank had introduced greater flexibility in the interbank market. He countered, “This cannot be called a crisis. Let us not deceive ourselves into believing that depreciation equals collapse.”
Nonetheless, economic analysts and business entities are advocating for more comprehensive reforms. An esteemed economist, Prosper Chitambara, remarked that while the multi-currency system should be sustained, a mix of monetary, institutional, and fiscal reforms is crucial for reviving confidence in the ZiG. He advised against the wholehearted embracement or outright rejection of the US dollar, suggesting that a balanced approach would be optimal.
Zimbabwe’s economic history is marked by its varied experiences with multiple currencies since discarding the Zimbabwe dollar in 2009 due to hyperinflation. The nation is currently making its sixth attempt to inaugurate a stable currency. Yet, in light of intensifying debates, the future trajectory of the ZiG remains uncertain.
