Zimbabwe Introduces New Gold-Backed Currency, ZiG
By Shingai Nyoka, BBC News, Harare
Published: 5 April 2024, 13:52 BST
Updated: 2 hours ago
Zimbabwe has taken a bold step in its economic reform efforts by introducing a new gold-backed currency named ZiG, short for “Zimbabwe Gold”. This move comes as the country strives to stabilize an economy that has faced ongoing crises for the past 25 years.
Central bank governor John Mushayavanhu unveiled the new currency, emphasizing that the ZiG’s value would be determined by the market exchange rate. This initiative replaces the RTGS, Zimbabwe’s previous currency, which had lost a significant portion of its value in the current year.
The introduction of ZiG aims to address the high inflation rate, which hit a seven-month high of 55% in March. Citizens have been given 21 days to exchange their old, inflation-affected notes for the new currency. Despite this change, the US dollar will continue to be accepted as legal tender, with the majority of transactions still likely to be conducted in USD.
The new ZiG banknotes will be available in denominations ranging from 1 to 200, with plans to introduce coins to alleviate the scarcity of US coins. Mushayavanhu assured that the new currency would be backed by the equivalent value in precious minerals, particularly gold, or foreign exchange to prevent devaluation.
Zimbabwe has a contentious history with its central bank, dating back to the excessive printing of currency during a period of hyperinflation in 2008. Subsequent attempts to stabilize the economy with other currencies like the bond note failed due to government mismanagement. The current administration is now pledging to prevent a repeat of past mistakes.
Despite the promising prospects of the new currency, public reception has been lukewarm. Economist Godfrey Kanyenze highlighted the importance of government discipline to ensure the currency’s success.
The announcement of ZiG comes amid challenges posed by a severe drought, further adding pressure to the country’s economic woes.
For more Zimbabwe stories, you can visit the BBC’s dedicated section on Zimbabwe.