The introduction of Zimbabwe’s newest currency in April has inspired a reggae artist to create a song celebrating the ZiG, or Zimbabwe Gold.
The catchy tune, titled “Zig Mari,” has received significant airtime on state television and radio. The musician, Ras Caleb, was rewarded with a car and $2,000—ironically paid in U.S. dollars, not the new ZiGs—by a businessman closely linked to Zimbabwe’s ruling party and President Emmerson Mnangagwa, who described the act as “patriotic.”
Although money usually doesn’t require promotion, Zimbabwe’s sixth national currency in 15 years desperately needs all the support it can get.
In an effort to address an ongoing money crisis highlighting the country’s economic struggles, the government launched the gold-backed ZiG. This latest attempt aims to replace the Zimbabwe dollar, which had suffered significant depreciation and widespread rejection.
Senior officials from the Reserve Bank of Zimbabwe and the ruling ZANU-PF party have held numerous public rallies and meetings to persuade the skeptical population to adopt the ZiG over the U.S. dollar, which also remains legal tender in Zimbabwe. Commercial jingles promoting the currency have flooded the airwaves alongside Caleb’s song.
Despite these efforts, the ZiG faces a familiar challenge: public mistrust and structural barriers that drive people to continue seeking U.S. dollars. While the ZiG has mostly maintained its value on the official market, it has significantly depreciated on the black market, where $1 can be exchanged for up to 17 ZiGs.
Authorities are also using force to support the new currency. Numerous street currency dealers have been jailed, and the accounts of businesses accused of undermining the ZiG have been frozen.
Law enforcement has arrested over 200 street currency dealers for violating foreign currency exchange regulations, according to national police spokesman Paul Nyathi. The government accuses them of devaluing the new currency by using exchange rates higher than the official one.
Twin brothers Tapiwa and Justice Nyamadzawo, 24, were arrested two weeks after the ZiG’s launch for allegedly selling cellphone airtime worth $10 to undercover detectives at a rate of 15 ZiGs per dollar, while the official rate was just over 13 ZiGs per dollar. Like other currency traders, the twins were denied bail and remain in pretrial detention on charges that carry a maximum prison term of 10 years.
The crackdown is seen as incongruous given Zimbabwe’s history of street currency dealers whose unofficial rates often prevail. Many shops and merchants ignore the official rate and accept the local currency at their own rates. Additionally, many vendors in the unlicensed sector, which employs over 80% of adult Zimbabweans, still only accept the dollar.
Moreover, the government permits certain businesses, such as gas stations, to refuse ZiGs in favor of U.S. dollars. Some departments, like the office for passport issuance and renewal, also only accept greenbacks. Many other entities list fees in U.S. dollars but accept the equivalent in local currency.
The government has announced fines up to 200,000 ZiG (approximately $15,000) for businesses not adhering to the official exchange rate. Authorities have also frozen bank accounts of some businesses accused of rejecting the new currency or trading at higher than official rates. The Reserve Bank has not disclosed the names of these businesses.
Zimbabwe has a long and tumultuous history of monetary instability. The ZiG is the sixth currency since the 2009 collapse of the Zimbabwe dollar amid hyperinflation of 5 billion percent, one of the world’s worst currency crashes.
In response to spiraling prices during the 2009 crisis, the government printed a 100-trillion Zimbabwe dollar banknote.
John Mushayavanhu, the governor of Zimbabwe’s central bank, has promoted the ZiG as a step towards de-dollarization. He aims to reduce the U.S. dollar’s dominance in transactions from over 80% to 50% by 2026.
However, the U.S. dollar remains widely used for rent, school fees, and groceries. Many citizens, including government workers, trade their local currency earnings on the black market for dollars.
The government is working on mechanisms such as opening bureau de changes for individuals to access dollars for small transactions. Economists and business groups warn that using force will not build confidence in the ZiG or stop black market trading.
“They will work to ensure that the police do not catch them,” said Sekai Kuvarika, chief executive of the Zimbabwe National Chamber of Commerce, to a parliamentary committee.
Street currency dealers, a common sight in Zimbabwe’s urban areas, have shifted their operations underground, using social media and messaging platforms like WhatsApp and Facebook to connect with customers.
Maxwell Chisanga, 28, a Harare resident, noted that while his employer pays him in ZiGs, he needs U.S. dollars for everyday transactions.
“My landlord needs her rent in dollars so I have no choice but to look for it on the black market,” Chisanga said.
Economist Prosper Chitambara stated that the lack of faith in the local currency and the demand for U.S. dollars will continue to drive the black market despite the crackdown.
“The solution is to build public confidence in the local currency. Otherwise, arrests will not work as long as people are hungry for U.S. dollars, which they cannot get from official channels,” Chitambara said.
(AP)
