The Illusion of Confidence in the Zimbabwe Gold
The recent rise in the usage of the Zimbabwe Gold (ZiG) to 40% has been hailed by some as a sign of growing public confidence in the local currency. However, this interpretation is deeply flawed and fails to account for the broader economic reality faced by Zimbabweans.
At first glance, an increase in transactions using ZiG might seem like a positive development. But what many overlook is that this statistic does not reflect trust in the currency itself. Instead, it highlights a survival strategy adopted by ordinary citizens who have learned from painful experiences that the local currency is unreliable.
Zimbabweans are not choosing to keep their money in ZiG because they believe in its stability. Rather, they are compelled to use it for daily expenses due to the nature of their income, which is often paid in the local currency. This means they must quickly convert or spend their earnings before they lose value, leaving them with little choice but to hold onto US dollars, which are still seen as the only reliable store of value.
This behavior is not irrational; it is a logical response to years of economic instability. History has shown that every time the government introduced a new currency—whether it was the Zimbabwe dollar, bond notes, or RTGS dollars—it ultimately collapsed, wiping out savings and incomes. These repeated failures have left Zimbabweans wary of any new currency, no matter how it is marketed.
The RBZ's assertion that a 14-percentage-point increase in ZiG transactions signifies progress ignores the context of its limited acceptance. In many parts of the economy, the ZiG is still shunned. Landlords, service providers, and informal traders often refuse to accept it, preferring to price goods and services in US dollars. Even the government, which aims to establish the ZiG as the backbone of a single-currency economy by 2030, continues to collect taxes and fees in foreign currency.
Moreover, the ZiG remains largely an electronic currency, which further undermines claims of market-driven stability. Most banks do not have it in their ATMs, and cash withdrawals in ZiG are often impossible. The RBZ’s plan to ensure that banks keep at least 3% of their ZiG deposits in cash is minimal and reveals how little of the currency is actually circulating physically. This artificial scarcity creates a controlled environment where the exchange rate can be manipulated, giving the illusion of stability without real market support.
A truly stable currency would not need to be shielded from competition. It would freely trade alongside other currencies, without exchange controls, and maintain its value over time. It would also be widely accepted internationally, allowing Zimbabweans to use it when traveling or conducting online transactions. However, the ZiG is not recognized or trusted abroad, making it a reluctant medium of exchange rather than a currency of choice.
The RBZ’s narrative that increased usage equates to public embrace is misleading. What is happening is not confidence, but desperation. When a salary is deposited into a Zimbabwean’s account, the race begins to either buy goods before the currency loses value or convert the ZiG into foreign currency. This is not trust; it is a reaction to a system that has failed repeatedly.
For the ZiG to gain genuine acceptance, the underlying economic fundamentals must change. Zimbabwe’s chronic inflation, reliance on imports, corruption, and weak productive capacity all undermine the potential for a stable local currency. Without real reforms—such as tackling corruption, restoring investor confidence, ensuring fiscal discipline, and reviving industry and agriculture—the ZiG will likely follow the same path as its predecessors.
The RBZ’s goal of phasing out the multicurrency system by 2030 is alarming. Many Zimbabweans remember the chaos that followed when they were forced to rely solely on the local currency. That period was marked by hyperinflation, shortages, and the collapse of savings. The fear of losing access to US dollar bank deposits by 2030 is a clear indication of the broken trust between the government and the people.
If the RBZ genuinely wants Zimbabweans to choose the ZiG over the US dollar, it must focus on creating an economy where the currency holds value over time. This requires more than marketing campaigns or forced usage. It demands real economic reforms that address the root causes of instability.
Stability cannot be decreed into existence. It must be earned through sound policies and transparent governance. Until then, the ZiG will remain the currency we spend, not the one we save. Zimbabweans are not rejecting it out of ignorance; they are making rational decisions in a fragile economy shaped by history. If the government truly believes in the ZiG, it should let it compete in the open market against other currencies. Only then will the people embrace it willingly.