SINCE 2008, Zimbabweans have endured relentless currency turmoil, beginning with a hyperinflation crisis that saw inflation soar to 500 billion percent and the collapse of the local currency.
In 2009, the decommissioning of the Zimbabwean dollar erased an estimated US$5,86 billion in pensioners’ lifetime savings, reducing them to paupers overnight. The devastation was widespread, affecting countless others. Pensioners are angry.
Today, those who lived through this nightmare remain apprehensive whenever currency changes are mentioned.
During his tenure as finance minister from 2009 to 2013, Tendai Biti championed efforts to compel insurers to compensate pensioners for their losses. However, despite this push, the same government that oversaw the end of that painful era has been slow to provide relief and continues its erratic currency policies.
In its latest shift, bond notes introduced in 2016 were scrapped this year, replaced by the Zimbabwe Gold (ZiG) in April. Even more unsettling, there have been hints of ending dollarisation by next year — rumblings that sent shockwaves through the markets before the plan was shelved. Yet, the desire to abandon the United States dollar persists.
Markets, particularly the informal sector which accounts for 60% of Zimbabwe’s GDP, are wary of ZiG. The new currency has already faced severe depreciation on the black market, signalling a lack of confidence. However, the Reserve Bank of Zimbabwe (RBZ) seems unfazed. In his mid-term monetary policy review last week, central bank governor John Mushayavanhu claimed that the ZiG has been “overwhelmingly embraced”, citing a perception survey showing over 90% acceptance nationwide.
Such optimism is hard to reconcile with the reality on the ground. While Mushayavanhu is determined to make ZiG work, nothing will succeed if policy is built on misstatements that distort the real situation.
Zimbabwe remains mired in economic challenges, as evidenced by the RBZ’s revision of GDP growth from 5,3% to 2% this year.
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The reluctance to adopt ZiG is palpable, and who can blame the people? After all, they were blindsided in 2009 when the currency was scrapped without warning. Today, ZiG is hardly a viable option for many. It is being rejected by some retailers and cannot buy essential goods and services, forcing citizens to turn to the expensive black market for US dollars.
Service stations reject ZiG, landlords refuse it for rent, and even government offices, like the passport office, prioritise US dollar transactions. Those paying in ZiG face endless delays, while those with US dollars receive expedited service. The governor must visit the passport office to experience first-hand the five star treatment showered to US dollar wielding clients.
In reality, ZiG is accepted only by businesses with no other choice, such as large retailers, and even then, at exorbitant rates. The claim of overwhelming acceptance rings hollow. Instead of relying on surveys and rosy narratives, the RBZ must confront the hard truth: ZiG has yet to gain the trust of the Zimbabwean people, and until it does, its success will remain elusive.
