In a significant economic shift, supermarkets, vendors, commuter omnibus operators, and tuckshops across Zimbabwe have ceased accepting payments in the local ZiG currency. This decision follows Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu’s unexpected announcement of a 43% devaluation of the currency last week, leaving many Zimbabweans skeptical about its viability.
With prices increasingly pegged in US dollars, citizens are growing concerned about potential losses if they continue using the less-than-a-year-old ZiG. A tuckshop operator in Dzivarasekwa Extension, Harare, expressed frustration, stating, “We do not know the rate to use, so it has become difficult for us to continue using the ZiG. What if we accept it and it is further devalued while in my possession?”
This uncertainty has led to fare hikes on some routes, with charges that previously cost ZiG10 now set at US$1, as operators seek to avoid being burdened with depreciating coins introduced in April. Furthermore, the ZiG has not been accepted for critical purchases, such as fuel, duty payments, or rentals, all of which remain priced in US dollars.
Introduced in April, the ZiG initially traded at US$1: ZWG13 and was touted as a solution to Zimbabwe’s prolonged economic crisis. However, it has faced severe devaluation, largely due to rampant black market activities. While the RBZ’s official exchange platform listed the rate at US$1: ZWG14, the black market reportedly traded it at around ZiG24.
In the face of widespread confusion and frustration regarding the devaluation, Mushayavanhu defended his decision, asserting that it would ultimately benefit the economy in the long run. In an interview with state-controlled publication The Sunday Mail, he remarked, “The resurgence in exchange rate pressures since mid-August has necessitated a firm response.” He attributed the recent inflation rate of 1.4% in August—up from an average of -0.82% between April and July—to market dynamics that he claimed had destabilized the economy.
Critics have been vocal in condemning the rapid decline of the currency. Bulawayo Mayor David Coltart raised serious concerns, questioning the legitimacy of Mushayavanhu’s claims that the currency was gold-backed. “Has there ever been a more rapid and precipitous collapse of a currency than the ZiG?” he asked. “Has there ever been a more brazen misrepresentation regarding the backing of a currency – i.e., that it was backed by gold?”
As the economy grapples with ongoing instability, the rejection of the ZiG currency by traders and operators signals a growing lack of confidence in the local currency. This situation raises pressing questions about the future of Zimbabwe’s monetary policy and the prospects for economic recovery. With critical purchases remaining in US dollars and local businesses hesitant to accept the ZiG, the path forward for Zimbabwe’s economy appears increasingly uncertain.
In other news – Musician Baba Harare changes his stage name to King David
Musician Baba Harare has officially changed his stage name to King David, fulfilling his promise to fans. The announcement marks the end of an era, as he bids farewell to the name Baba Harare harina hu Mwari mukati. This transition comes as part of a significant shift in his musical career, moving from Jiti music to gospel.
King David’s new gospel album showcases a completely different sound and style, reflecting his spiritual journey and artistic evolution. Read More
