Since 2008, Zimbabwe’s economy has suffered greatly as inflation surpassed a maximum percentage. The government has since attempted six times to establish a local currency, most recently in April 2024 with the introduction of the Zig, which is supported by USD 285 million in foreign exchange reserves, gold, and other precious metals.
Furthermore, since its launch, the Zig has had difficulty strengthening versus the USD. According to the RBZ, at the start of September, the Zig was trading at 13.79 to the USD, 1.6% below its debut trading value of 13.56 in April.
After nine months, the gold-backed Zig that was hailed as a remedy by president Mnangangwa and his government for the currency crisis is having trouble gaining trust by the Zimbabwean citizens. The country is still suffering from high inflation rates and increase in poverty.
Some citizens and many business owners are increasingly trading the Zig for the US dollar as it continues to decline sharply on the black market, further depressing the local currency out of fear of a 2008 recurrence.
For using USD in their transactions, some people and foreign exchange merchants were forcibly detained. In May of this year, President Mnangangwa gave a minister a stash of hundreds of US dollars that he had taken out of his pocket to go buy a suit for himself. That was just after him and his government officials had announced a decree for every citizen to use Zig instead US dollars or foreign currency.
As president and a leader, he ought to have set an example, yet many Zanu-Pf leaders still show off their USD stashes on the internet while the people live in poverty. This demonstrates the Zimbabwean government’s lack of confidence in its own currency.
