THE year 2024 will be remembered as a period of unprecedented economic upheaval in Zimbabwe.
At the centre of this turmoil was a spiralling currency crisis that disrupted financial stability, undermined investor confidence, and deepened the struggles of ordinary citizens.
At the start of the year, Zimbabwe’s economy was already fragile, weighed down by years of hyperinflation, corruption, and mismanagement.
By March, the Zimbabwe dollar (Zimdollar) had depreciated by nearly 100% compared to its 2023 value.
Officially trading at ZW$30 000 per US dollar — and at ZW$40 000 on the black market — this devaluation fuelled inflation, which, although officially measured at 55%, was widely believed to be much higher.
In a bid to curb inflation and stabilise the economy, authorities introduced a new currency, the Zimbabwe gold (ZiG), on April 5.
However, this move only intensified the chaos.
Initially pegged at ZiG13,6 per US dollar, the currency quickly depreciated, trading between ZiG40 and ZiG50 on the black market by September.
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The government devalued the ZiG by 43% on September 27, triggering another wave of inflation and making essential imports more expensive, leading to widespread shortages.
The financial sector was severely impacted, with banks struggling to cope with changes in the currency market.
Investors lost confidence, and the stock market plummeted. Businesses were forced to shut down or scale back operations, leading to widespread job losses.
The humanitarian impact was severe, with millions of Zimbabweans struggling to access food, medicine, and clean water.
The situation was particularly dire for vulnerable groups, such as the elderly, children, and those living with disabilities.
“When it comes to the ZiG, it has depreciated by nearly 230% according to formal rate standards since its launch. What this tells us is that there is no confidence in a local currency,” economist Chenayimoyo Mutambasere told the Zimbabwe Independent.
“So, it will continue to be badly timed for a local currency to be introduced to resolve currency issues.
“Why this is happening is because the broad money is showing us that it is only 20% of the time that we are using the local currency.”
This depletion, Mutambasere added, was having no benefit being passed on to consumers.
“This needs to be re-looked at, and I would say that the monetary policy has failed for all intents and purposes,” she said.
In the 2025 National Budget, the government pinned its hopes for economic recovery on better rains after a fall of 1,5 percentage points in the gross domestic product this year to just 2% growth.
The reality, however, is that the volatile ZiG has made economic recovery difficult, according to economists.
The weakening ZiG has driven up the cost of imported goods like fuel, machinery, and consumer products, which has contributed to inflationary pressures.
For economies reliant on foreign debt, such as Zimbabwe, the weakening of ZiG has also raised the cost of servicing those obligations, straining public finances and limiting government capital projects.
Additionally, the weakening ZiG reduced consumer purchasing power, further eroding confidence and dampening domestic spending, slowing overall economic growth.
The weakening ZiG has also raised the cost of doing business in terms of increases in taxes, fees, and regulatory costs, as well as production and servicing expenses.
Yet, amid all this, Treasury expects 6% growth next year, which would be the fastest in the region.
“The GDP (gross domestic product) growth rate is set on very unrealistic assumptions. They are assuming that since there will be good rainfall, there will be increased agricultural productivity,” Mutambasere said.
“But we know that in the last year, we are recovering from a contraction of nearly 15% in the agriculture sector due to El Niño and just a lack of investment in the factors of production in agriculture. Agriculture cannot grow just because there is increased rainfall.”
She said the country needed infrastructure, apart from better rains.
“So, even if the rain were to fall today, we would not necessarily receive the benefit of that rainfall without the required investment in infrastructure for agriculture to grow,” Mutambasere stated further.
Commenting on the 2025 National budget, economist Brains Muchemwa said the jump in the government’s revenue expectations would result in an increased money supply putting pressure on the exchange rate.
