ACTIONAid Zimbabwe, an international non-governmental organisation, has expressed concern over the introduction of the new ZiG currency, saying the country risks falling into an economic abyss as the government seeks a temporary solution to long-standing problems at the expense of providing the much-needed confidence and reforms to ensure economic growth and stability.
NATHAN GUMA
ActionAid is a global federation working with over 41 million people in more than 71 countries. It advocates social justice, gender equality, and poverty eradication, striving for a just, fair, and sustainable world.
Zimbabwe has replaced its battered local currency which was on a freefall with a new unit called ZiG in a bid to stem currency volatility and runaway exchange rate-driven inflation.
Zimbabwe, reeling from a protracted economic crisis for over two decades and an attendant currency turmoil amid stratospheric inflation, has had several different versions of the local currency before such as the bearer cheques, traveller’s cheques, special agro-cheques and bond notes.
Hyperinflation exploded in 2008, reaching some of the highest levels ever seen, leading to an economic meltdown, falling standards of living and total disruption of the marketplace.
Zimbabwe’s 2008 hyperinflation saw the country’s monthly inflation climbing to 79.6 billion percent, while the annual rate of increase surged to 89.7 sextillion percent in mid-November 2008.
The local currency, which was on a tailspin, dramatically lost 95% of its value since the beginning of December last year, according to the International Monetary Fund (IMF).
In response to the introduction of the new currency, ActionAid said the government should put in place modalities that restore confidence in the economy.
“ActionAid Zimbabwe stands firm in its commitment to the economic well-being of Zimbabweans. We have closely monitored the recent announcement regarding the introduction of the new Structured currency called Zimbabwe Gold (ZiG) with deep concern,” ActionAid said in a statement.
“While the initiative may be presented as a solution to Zimbabwe’s economic challenges, we believe that what Zimbabweans truly need is the restoration of confidence in the economy, not the introduction of yet another currency.
“For years, Zimbabwe has grappled with the consequences of currency instability. We have witnessed the introduction of various currencies, each accompanied by promises of economic recovery. However, the reality on the ground has often fallen short of these promises, leaving Zimbabweans vulnerable to economic uncertainty and hardship.”
ActionAid said the government should prioritise measures that will help rebuild trust in the economy, which include fostering an environment that is conducive to investment, promoting accountability and good governance, and prioritising the needs of ordinary Zimbabweans.
“The introduction of the ZiG currency risks repeating the mistakes of the past. Instead of addressing the root causes of our economic challenges, it offers a temporary fix that fails to inspire confidence among Zimbabweans. We believe that true economic recovery can only be achieved through comprehensive reforms that address issues such as corruption, mismanagement, and lack of transparency.
“ActionAid Zimbabwe calls on the government to prioritise measures that will rebuild trust in the economy. This includes fostering an environment that is conducive to investment, promoting accountability and good governance, and prioritising the needs of ordinary Zimbabweans. We urge policymakers to engage in meaningful dialogue with stakeholders from all sectors of society to develop sustainable solutions that will benefit the entire nation.”
ActionAid said Zimbabwe requires a fundamental shift towards a more inclusive and equitable economy, through genuine reform and commitment to the well-being of all citizens.
“As an organisation dedicated to social justice and poverty eradication, ActionAid Zimbabwe remains committed to advocating for the rights and interests of the most vulnerable members of our society. We will continue to monitor developments related to the ZiG currency and will work tirelessly to ensure that the voices of ordinary Zimbabweans are heard, and their concerns addressed,” ActionAid said in a statement.
“We reiterate that what Zimbabweans need is not just a new currency, but a fundamental shift towards a more inclusive and equitable economy. Only through genuine reform and commitment to the well-being of all citizens can we truly build a prosperous future for Zimbabwe.”
According to the 2024 Monetary Policy Statement presented by new central bank governor John Mushayavanhu, the ZiG currency shall be backed by a composite basket of reserves comprising foreign currency and precious metals (mainly gold), received by the Reserve Bank as part of in-kind royalties and kept in the vaults of the bank.
Foreign currency balances are projected to be accumulated through market purchases from the 25% surrender requirements, as well as sale of some precious metals received as royalties.
“As at 5 April 2024, the bank’s reserve asset holdings comprise of US$100 million in cash and 2 522kg of gold (worth US$185 million) to back the entire local currency component of reserve money which currently stands at ZW$2.6 trillion requiring full (100%) cover of gold and cash reserves amounting to US$90 million.
“The total amount of gold and cash reserve holdings of US$285 million represents more than 3 times cover for the ZiG currency being issued.”
