The ZiG has kicked in
By April 10, 2024, Zimbabwe’s new currency—the gold-backed ZiG had waged a surprise fast, fiscal battle and gained value for a second straight day, according to the Reserve Bank of Zimbabwe, thus ascending from 0.2% to 13,50%to the US dollar.
I got a call from my enthused Jamaican brother. “I told you so, we’re kickin’ the damn dogged ass of the dollar on our march from volatility to financial liberty,” he crooned and crowed.
A principle of positivity and confidence
In principle, it is good to inspire confidence, to have the positivity that seeks to ignite, raise and keep a growing appetite and demand for the new unit.
In practice and in earnest, the fresh structured currency is in its infancy and comes into the market with a number of “infantile” shortcomings and difficulties that one hopes it will outgrow and overcome.
By and large, the financial markets are abuzz with energy, news, upsurges, drops, and upsets. The factors are multi-dimensional. Some of the dynamics are local, international, radical, political and even residual. Hence, it is too early to conclude that it is or it could be the ultimate fiscal game changer.
Its immediate limitations and difficulties
The current settings display a currency that has yet to really gain currency and is synonymous with infancy. It has to prove its ability, value, grit and grace for it to be embraced locally, regionally and internationally.
On a local level, the new currency is in its emergent stage. It is nothing more than a local currency. We can only know how good or bad it is by trying it out or putting it to the test. After all, the taste of the pudding is in the eating. As ordinary citizens and observers, we have several unanswered questions.
What is its purchasing power? Its impact when buying locally produced goods and services? Can it reflect and contribute to a positive and satisfactory income and wages report? The majority of Zimbabweans are not formally employed, and for that reason, they seek a currency that will add value to their nominal earnings and lives. For now, the true economic value of the income is still being emaciated by hyperinflation. How is the ZiG going to respond to a diversity of local and international factors?
In fact, the ZiG cannot meet some of the local people’s needs like the buying of fuel. At this point, citizens cannot buy fuel using the ZiG. It has not been fully embraced across the business, political and social divides. Not all of Zimbabwe’s banks have completely readied themselves for the adoption and use of the newbie, including the fuel sector. Unsurprisingly, skepticism stalks it. It has an arduous duty to woo, convince and win over the perceptions and hearts of the local population and the world.
For instance, on an international level, the central bank has conceded that the ZiG cannot be used to make international payments and is yet to achieve convertibility. Again, it is not surprising, but instructive that it cannot play an instrumental role in the procurement of fuel and other imports. As things stand, the new currency has not achieved full convertibility despite marginally and initially gaining value against the US dollar. It is like a person slapping an elephant with their bare hand. It gained value against the US dollar, but a currency is considered strong when it is worth more than another country’s currency. As of now, the ZiG is far from being stronger than any known international currency. It is like a national team that has not played a real international game, home or away.
Figuratively speaking, the ZiG cannot immediately step into “the shoes of an international currency” and play the role of an international unit in an international transaction. It is yet to be recognized as an international currency. At the moment, its relative purchasing power as a national currency and its strength when traded for products or against other currencies is a discourse that is rather too premature to rope it in. How is it going to respond to the crescendos and diminuendos around the demand and supply in the foreign exchange markets? Only time will tell.
However, unless and until it grows to be a respected and accepted local and international tender— its initial gains will remain mere memories at best, and mean nothing at worst, especially if it stumbles and fumbles in the footsteps of its doomed predecessors. That would be tragic. For now, it is either existing or breathing— either way, it has a long way to go.
A history of dishonesty, harshness and haziness
ZiG, let us take a SwiG and see the dynamics and cousins of economics, politics and comics that brought us to this state of affairs — your birth. Suffice to say that the financial history of your monetary forerunners or forefathers has been less stimulating, if not utterly dreadful and unenviable. Zimbabwe has been dogged by several macroeconomic challenges like inflationary pressures, volatility driven by monetary instability and considerable exchange rate distortions for decades. The country struggles with sharp shortages of forex, fiscal deficits and high- interest payments on external debt.
Monetary policy irregularities, errors and experiments have triggered an eruption in the degree of currency in circulation by virtue of money printing instigated by a swift upsurge in prices. Additionally and evidently, government has not helped financial matters by being part of the problems, instead of being part of the solutions. For instance, the sternness of the hyperinflation in the country was, by the same token, prompted and promoted by systemic or institutional corruption and deterioration, an absence of confidence and transparency in the government and currency.
The economic sanctions, the scapegoats and slaughters
A glimpse into the years 1980-1999 and the economy. For starters, contrary to partisan government officials’ scapegoating tantrums and tricks in the form and fuss of persistent, peddled, tired tirades and frantic taunts around “illegal” economic freezes and sanctions that allegedly make their targeted businesses and our dear economy not only catch a terrible cold but also a series of sick sneezes, vicious vertigoes, nebulous nightmares and deadly desiccations — several economists and market analysts squarely attribute the titanic tumble of the once-robust Zimbabwe currency from honor to dishonor, authority to obscurity to the many, well-connected, unpatriotic, materialistic and callous slayers of ordinary peoples’ destinies, dreams and hopes for a better nation and the authors, pacifiers, denialists and aiders of the rot.
They ascribe it to a number of causes and developments such as: the mismanagement of public funds and firms, the imposition of wage and price controls, inadequacies in investment, training and hiring, a usually bloated cabinet coupled with amplified public spending — resulting in deficits to fund such expenditure, greed, rampant sleaze and scandals, populist policies, the implementation, intricacies and effects of IMF’s Economic Structural Adjustment programme (Esap), the DRC war saga, the unbudgeted war veterans payouts, the chaotic farm invasions and the underutilisation of land and assets.
Frightening, fooling and furious figures
In a nutshell, what are the threesome actors and factors that played a decisive role in the downfall of our once-resilient and rewarding economy? Well, to recapitulate this kind of comedy of errors, think of a manual titled: How to run down a country by fumbling with the economy, land and war? The “mischievous and mean authors” of this guidebook were not only greedy, but they were also an untouchable, unteachable, arrogant and visionless gang.
If in 1999 and 2001, inflation was 56,9% and 112,1% respectively, by 2007 and 2008, guess what? — it was 66 212.3% and 79 600 000 000%! Chilling figures by any definition or measure.
Dating the distant dollar, and ditching the local dosh and dollar
Year 2009 saw the Reserve Bank of Zimbabwe dump the Zimbabwean dollar for the US dollar. Hey, what had hit and come over the touted and tireless patriots’ heads? Still, did they have a choice at that point in time as hyperinflation was rioting, roaring, ruling, ravaging, dancing ,dribbling ,drinking, devastating and devouring the value of the Zimdollar with an avid appetite — a hurtful hunger that made a lousy louse look bearable, if not innocent? Prices were doubling up as untouchable, terrifying tags on a daily basis. For its part in the fiscal chaos, the reserve bank neither acted like a reserved or aloof overseer—nor like a state institution whose role is to guarantee low and stable inflation levels. Its responsibility— or rather its response was irresponsible.
True, the Zimbabwean dollar was harshly inflation-ravaged. It was brutal. True, it had debilitated by over 80% that year. Confidence was declining. Correct, the calamitous condition had to be corrected. But how was it done? It went on a wild, wayward and strange binge of printing banknotes worth… one hundred trillion dollars in a woozy bid to halt a crazy and rickety state! External costs for exports meant that more US dollar notes were hovering out of the country than those which were flowing in. Snaking and scary bank queues became the disorder and order of the day. A definite deficit. Cash talk is that the sight of the US dollar cash had become the thighs of a tortoise.
The unreliability and the fate of the proverbial plough
The Ndebeles proverbially state that: a borrowed plough has no role/impact/legacy. This is a loud, loose translation that literally warns one against getting comfy with someone else’s farming implement. What becomes of one if the owner suddenly decides to demand it back in the middle of the borrower’s farming activity? What happens to one’s plans? Jeopardy ensures. Is Africa not generally pushing for and pursuing home-grown models, systems, solutions, innovations and implements?
Did the economy bond with the bond notes?
By virtue of critical cash shortages, in 2016, the authorities hosted bond notes which were hyped as having the same value as the US dollar. Did the bond notes and coins become our homespun monetary panacea? Did they actually bond with the economy to produce positivity and stability? The answer is an emphatic no!
De-dollarisation and demonetisation
Year 2019 saw a decade of dollarization came to an end. There was the delicate demonetisation of the dollar. Did it mark a different and wiser way of doing business? Did the dirty dancing with the US dollar discontinue? Fiscally and officially, divorce papers were filed. However, personally and in practice, did the powerful and affluent ditch it? Why can’t we have our own currency? How can we progress proudly without our unit? Is there a country in the entire world that has succeeded economically without its own local currency? Can we follow our financial and economic trajectories and policies without our own currency? Can the U.S. stop meddling in our internal affairs when we rely on their currency? Besides, they don’t want to lift sanctions, and all they do is to scream and give sermons about development and democracy. All the furore was about the dominance of the US dollar. On the other hand, did the Zimbabwean big wigs not continue using the US dollar to conduct business or hire planes? They did. Did the informal market dump it like a cheeky concubine? Not actually. On the informal market, the illegal money dealers mooned, hugged and horded it. They still do — they trade illicitly in it in a big way. Are the big wigs not implicated in this scam in a big way too? The gold mafia kings and queens know better. Where is the long arm of the law? It doesn’t usually catch up with them. The net has a tendency of inexplicably catching the small fish, and letting through the big fish.
The advent of the real-time gross system
If the basic definition of a currency is something that is broadly accepted as a means to buy goods and services, so the Real-Time Gross System (RTGS) was one such form of legal tender? Talk of money that was electronically transferred into one’s bank account on “a real time basis” since it sought to avoid settlement risks or delivery risks, and that the payment transaction was instant. It was also carried out on “a gross basis” which means that the transaction or operation was settled on “a one-to-one basis”, without bundling or netting.
Wind back to October 2023. Fidelity or fickleness? The Zimbabwe currency is no stranger to man-made controversies and inconstancies yet it is expected to miraculously instil confidence in the investors, buyers and the generality of citizens. Is there faith? As recent as on October 27, 2023 the government announced that it was set to maintain its multi-currency system secured by the US dollar, all the way to 2030. They had previously stated that the multi-currency would come to an end in 2025. Your guess is as good as mine — all that lack of consistency and direction caused uncertainty in the banking sector.
The Reserve Bank of Zimbabwe should not be a reserve and irresponsible lot
The Reserve Bank of Zimbabwe has a crucial role: that of creating and enacting monetary policies directed at ensuring low and stable inflation levels. It is responsible for the maintenance of a stable banking system. Hence, any action by the same supervisory body that is clearly contrary to these functions can be deemed and termed as irresponsible.
The rolling out of a new currency will only be a impactful, successful and meaningful welcome and intervention if the relevant authorities play their parts effectively and address the issues and causes around— the inflation and growth in the domestic economy, (the revitalisation of companies is key), the country’s balance of trade and investment, the interest rates of central bank the demand and supply in the foreign exchange markets — with a freshness that has never graced our economic shorelines. Anything short of that freshness would be suffocating, suicidal and unacceptable.
When all has been said and done
We wish the ZiG well. It is not enough to say the ZiG should be equal to the task. The government cannot and should not have the luxury to withdraw this unit yet again. If it fails the suffering masses on this fiscal front again, the bill is on it to withdraw itself.
*Ndaba Sibanda is a Bulawayo-born poet, novelist, and non-fiction writer who has a passion for themes and topics around conservation, nature, development and justice. A three-time Pushcart nominee, some of his published works include A Curious Moment, We Are Not An Error But the Idioms of Our Era, When Wealth Dissipated Like Morning Dew, The Immigrant With a Difference and The Dangers of Child Marriages: Billions of Dollars Lost in Earnings and Human.