Zimbabwe has officially got a new currency called Zimbabwe Gold (ZiG) to replace the Zimbabwean dollar, a currency with a notorious history of runaway inflation. However, there are signs the new currency is already zigzagging into trouble.
The Reserve Bank of Zimbabwe started circulating ZiG in April 2024, starting with electronic payments before rolling out notes and coins. A total of ZiG 80 million is currently on the market, set with an introductory exchange rate of 13.56 ZiG per US dollar.
While the old Zimbabwean dollar’s value was directly pegged to and supported by the US Dollar, ZiG is backed by the country’s reserves of foreign currency and precious metals, primarily gold.
Zimbabwe’s central bank said they made the switch to “foster simplicity, certainty, and predictability in monetary and financial affairs.” However, it looks like the new currency is suffering the same fate as its predecessors, with some government departments refusing to accept it, Associated Press reports.
There are also concerns that ZiG’s physical banknotes haven’t reached some members of the general public yet and mostly exist digitally. In a country where the electricity supply and internet is unreliable, most shoppers and traders are still using the old currencies.
The history of Zimbabwe’s finances has been chaotic, to say the least. In the 2000s, the Zimbabwean dollar underwent extreme hyperinflation, driven by excessive money printing to finance government deficits and economic mismanagement.
The crisis peaked in mid-November 2008 with inflation reaching an astronomical rate of 79,600,000,000 percent per month, with prices doubling every 25 hours.
The Zimbabwe dollar was scrapped in 2009 and the country used the US dollar and other foreign currencies for a decade. By 2019, the central bank was forced to return to the Zimbabwe dollar.
Needless to say, decades of financial stability has a terrible impact on human life in Zimbabwe, from mass unemployment and social unrest to famine and a crumbling health system.
ZiG is hoping to reinstall trust and stability, but many people in Zimbabwe are still suspicious of their government’s ability to balance the country’s books.
“I smell a rat here. What is the wisdom of introducing a new currency when many of us do not trust government policies? They will surely print more money before long,” Tino Kapesa, a 23-year-old college student, told the Wall Street Journal.
“I hope the new governor will stabilize the economy because we have suffered for too long,” added Yeukai Chiripanyanga, a taxi driver in the capital Harare.
