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Last year, Zimbabwe introduced a new gold-backed currency known as the ZiG, or Zimbabwe Gold, as part of its efforts to address the currency instability and hyperinflation that have affected the nation for decades.
According to a statement from Zimbabwe’s central bank, the country is “recalibrating its monetary policy framework to re-anchor price and exchange rate stability and to boost confidence in the local currency.”
Experts emphasize that achieving a stable currency is crucial for Zimbabwe’s economic recovery. The World Bank highlights that the nation continues to face challenging economic conditions, with “macroeconomic volatility fueled by monetary instability and significant exchange rate distortions keeping Zimbabwe’s economic activity below its potential.”
Zimbabwe has faced persistent challenges with high inflation, with rates surpassing 500% in recent years. As of March 2024, the annual inflation rate reached 55.3%, marking a seven-month high.
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The Reserve Bank of Zimbabwe, the country’s central bank, indicated that the depreciation of the exchange rate has played a significant role in driving up annual inflation, highlighting the urgent need for stability.
In its statement, the central bank emphasized that “the Bank’s priority policy focus is essential for supporting the economy’s growth prospects by restoring stability, convertibility, and transactional convenience of the local currency.”
Effective April 5, banks in Zimbabwe began converting the previous national currency, the Zimbabwe dollar, into the new ZiG.
The central bank stated that this process is intended to “foster simplicity, certainty, and predictability in monetary and financial affairs.” The ZiG will circulate alongside various foreign currencies within the economy.
Confidence is crucial for success. In 2008, hyperinflation reached unprecedented levels, leading to a drastic devaluation of the Zimbabwe dollar, which prompted the government to abandon it in 2009. Since then, the US dollar and other foreign currencies have become widely adopted throughout the economy.
At the time It was uncertain whether the new ZiG will earn the public’s trust and establish itself as a stable local currency, or if it would enable officials to regain control over monetary policy.
Many Zimbabweans prefer the security of the US dollar, which accounts for approximately 85% of all transactions according to reports. This reliance is why the central bank has opted for a multi-currency system that incorporates both the ZiG and foreign currencies.
Authorities then reportedly started targeting unofficial traders who continue to reject the ZiG.
Experts emphasize that stable currencies and reliable economic conditions are essential for developing industries and attracting foreign investments.
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Across Africa, initiatives are being implemented to improve payment systems for local currencies. One notable example is the Pan-African Payment and Settlement System (PAPSS), created by the African Union and the African Export-Import Bank. This centralized financial market infrastructure facilitates the secure transfer of money across African borders.
The PAPSS enables users to make near-instant payments in their local currency, eliminating the need to convert to foreign currencies or rely on third-party institutions or banks.
According to an insight report from the World Economic Forum titled “AfCFTA: A New Era for Global Business and Investment in Africa,” PAPSS “will help African businesses avoid the delays in confirming payments that have long been a barrier to trade” and will “lead to increased trust and time capacity to enhance trade volumes.”
The Zimbabwe Gold (ZiG; code: ZWG) has been the official currency of Zimbabwe since April 8, 2024. It is backed by hard assets valued at US$629 million, which include foreign currencies, gold, and other precious metals. The ZiG replaced the Zimbabwean dollar, which had experienced rapid depreciation, with the official exchange rate exceeding 30,000 Zimbabwean dollars per U.S. dollar on April 5, 2024, while the parallel market rate reached 40,000 per U.S. dollar. By March 2024, annual inflation in Zimbabwe had surged to 55.3%.
The ZiG is divided into 100 cents, which were initially used by the Zimbabwe Stock Exchange before the currency was assigned an ISO code. Cents were officially recognized by the Reserve Bank of Zimbabwe when the currency code for the Zimbabwe Gold was introduced in June 2024. However, the smallest denomination currently available is a 1 ZiG coin.
Despite fluctuations in its devaluation rate, the ZiG has consistently lost value since its launch.Many economic analyst were of the view that , the situation was a s a result of persisitience large grain imports and government culture of overspending, which eventually increased the country’s external debt at US$21 billion by Novemeber 2024.
Currently ,the reality of the situation with Zimbabwe’s ZiG, has not really changed government makes a u-turn to reverse almost all condition that came along during the introduction of the gold-backed ZiG currency.
The government’s repeal of exchange rate controls is likely to accelerate the downfall of the Zimbabwe Gold (ZIG) currency, just one year after its introduction.
This decision by the Finance Ministry on April 15,2025 is the latest in a series of contradictory policy moves by officials struggling to stabilize the ZIG, which represents the Zimbabwe African National Union-Patriotic Front (ZANU-PF) government’s sixth attempt to establish a viable currency since 2009.
In March, Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu announced that companies could choose their own exchange rates, only to reverse this policy a few days later. The government has now reverted to a floating exchange rate system.
Since its launch, the ZIG has lost approximately 50% of its value, starting at an exchange rate of 13.56 against the U.S. dollar.
“The ZiG is rapidly heading toward extinction,” wrote Imara Asset Management CEO John Legat and Chief Investment Officer Shelton Sibanda in a note to clients last week. They noted that its demise will not be due to the rapid devaluation that plagued previous local currency efforts but rather due to its growing irrelevance.
While the ZIG is backed by Zimbabwe’s gold and foreign currency reserves, a significant issue remains: businesses and consumers have not shifted away from using U.S. dollars for transactions.
Legat and Sibanda estimate that around 80% of transactions in Zimbabwe are conducted in dollars, with payments in South African rand also surpassing those made using the ZIG.
The ongoing economic turmoil is fueling opposition to President Emmerson Mnangagwa, who has faced protests calling for his resignation. These protests were initiated by senior ZANU-PF figure and war veterans’ leader Blessed “Bombshell” Geza, who is garnering support against a faction within the ruling party that seeks to extend the president’s rule until 2030, beyond the two-term limit.
