Reviewing Zimbabwe’s ZIG currency since launch

Zimbabwe's newly established ZIG currency, backed by gold, is facing challenges in gaining acceptance and utilization in a market where the majority of transactions are still conducted in US dollars. The Director of Insights & Research at M&A Consulting Group, Batanai Matsika, sheds light on the currency's progress and the hurdles it needs to overcome to become the primary medium of exchange in the country. Matsika acknowledges the efforts of John Musanyavani, the driving force behind the ZIG currency, in instilling confidence in the market. The appointment of a new governor with a zero-tolerance policy towards the parallel market has contributed to a relatively stable exchange rate of 13.69 ZIG to USD. The announcement of increased reserves and a minimal inflation rate of zero percent have also bolstered confidence in the new currency. However, concerns linger about the sustainability of this stability amidst potential economic pressures. The implementation of the ZIG currency largely relies on electronic platforms, such as mobile money transfers and card transactions through financial institutions. While physical notes and coins are still in circulation for smaller transactions, the emphasis is on promoting digital transactions to drive the adoption of the new currency. Despite efforts to encourage the use of the ZIG, public feedback indicates a preference for USD transactions, highlighting the challenge of shifting entrenched currency practices. Despite the ambitious goal of phasing out 70 to 80 percent of alternative currencies within two years, Matsika expresses skepticism about the timeframe. With an estimated 85 percent of transactions still conducted in USD, building confidence in the local currency remains a significant hurdle. He emphasizes the importance of policy reforms, central bank independence, effective communication, and clear monetary policies to instill trust in the ZIG currency among the population. As Zimbabwe navigates the transition towards the ZIG currency, the success of the new medium of exchange hinges on the government's ability to address deep-rooted skepticism and foster confidence in the country's financial system. The journey towards a fully functional ZIG economy will require a careful balance of policy measures, communication strategies, and sustained efforts to shift public sentiment towards embracing the new currency.