With gold-backed currency ZiG, Zimbabwe has taken a bold step towards economic stability. This move aims to address the longstanding economic challenges that have plagued the country for the past 25 years.
Central bank governor John Mushayavanhu unveiled the new notes, stating that the ZiG would be structured and set at a market-determined exchange rate. This initiative replaces the RTGS, the previous Zimbabwean dollar, which had significantly depreciated, losing three-quarters of its value this year alone. This drastic depreciation had led to an annual inflation rate of 55% in March, reaching a seven-month high.
To facilitate the transition to the new currency, Zimbabweans have been given 21 days to exchange their old, inflation-impacted notes for the new ZiG banknotes. Despite the introduction of ZiG, the US dollar, which accounts for 85% of transactions, will remain legal tender.
The new ZiG banknotes come in denominations ranging from 1 to 200, and coins will also be introduced to address the shortage of US coins, which has led to unconventional means of giving change, such as using sweets, small chocolates, and pens.
Mr. Mushayavanhu emphasized that the new currency would be backed by equivalent value in precious minerals, primarily gold, or foreign exchange. This measure is intended to prevent the currency from losing its value, as had happened with its predecessors.
Zimbabwe has made several attempts to stabilize its currency since the hyperinflation crisis of 2008, which saw the printing of Z$10 trillion notes. Subsequently, the country abandoned its own currency and relied on foreign currencies like the US dollar and the South African rand.
The introduction of ZiG comes at a challenging time for Zimbabwe, as the country is grappling with the effects of a severe drought, which has devastated half of the country’s staple food crop, maize.
If successful, the adoption of a gold-backed currency like ZiG could serve as a model for other African countries seeking economic stability. By ensuring that the currency is backed by tangible assets, Zimbabwe’s move could pave the way for a free and prosperous Africa.
