Edited in Prisma app with Education
By Felix Pindura
WHEN the Reserve Bank of Zimbabwe authorities launched the ZiG “Zimbabwe Gold” currency in April 2023, government propaganda channels and immediately went into overdrive mode explaining the move as a masterstroke.
We were told that the new currency, backed by gold reserves and foreign currency reserves at the central bank, would stabilize the economy and take the misery out of Zimbabwean families and businesses that have suffered for over two decades due to currency volatility.
Even the police jumped in on the bandwagon, threatening to throw the book at anyone who dared “sabotage” the new currency, even though officially Zimbabwe is a multi currency economy. The threats were far from empty, as various dealers were indeed thrown into prison for current manipulation.
Fast forward to September 2024, and the ZiG is all but a failed currency whose presence in the economy is now doing more harm than good.
Even the army of “varakashi” (pro-Zanu PF social media fanatics) which overzealously pushed for adoption of the ZiG has gone quiet, as it becomes clear that the country’s sixth currency inside 15 years is all but dead.
Here are key things that went wrong for the ZiG.
Muscle versus finésse
Our Government relied more on force, police and brute threats instead of investing in good policies that would protect the ZiG. It was wrong to start threatening citizens with all sorts of harm and punishment if they “sabotaged” the ZiG.
Our Government needs to learn to treat citizens as stakeholders who must be brought into the fold for the good of the nation. Any current forced down people’s throats will suffer the same fate, even when backed by the Police from Heaven.
No confidence from Government
The Government itself wrote the ZiG epitaph when it rejected outrights demands that the ZiG be allowed to purchase fuel, pay for import duty among other transactions.
How can a responsible government reject its own currency and still hope for economic progress? As long as the Government thinks and acts in a manner that gives the impression that the ZiG isn’t as valuable as the US Dollar, we’re doomed.
Lies and more lies
The assurance by central bank authorities that the ZiG was tied to the value of standard gold soon fell flat after it emerged that the ZiG was actually a controlled currency just like its predecessor, the Zimbabwe Bond.
The last thing the markets want is a controlled currency. There was too much room for arbitrage with the ZiG, just as was the case with the Bond and other currency experiments we have seen before.
Competition against the US Dollar
Economists agree that any currency that is pitted against the US Dollar in the same economy is destined for the graveyard.
I very much doubt the sincerity of the Government in backing the ZiG while knowing fully well that the market has the US Dollar as an option.
If the government really wants a local currency to succeed, the undisputed starting point is banning all other currencies.
It’s a decision fraught with lots of danger that no brave government would like to contemplate. It’s safe to say our Government is not brave enough regards our current
Half-baked policies
It’s easy for President Emmerson Mnangagwa to issue out one Statutory Instrument after another in support of the ZiG or any currency, but public confidence in the entire system is very low.
Perhaps a good start in future would be to get the buy-in from the ordinary people without the use of undue propaganda and megalomania.
Looking back now, it turns out much of what we were told about the ZiG were high-sounding lies and reckless propaganda.
Given the hundreds of economists at the central bank, Treasury and other government departments, it is unbelievable that the Government believed the ZiG would succeed. Perhaps it was a time-buying, which will be replaced by a similar or even more sinister scheme as we head towards 2028.
It’s clear the ZiG has flopped for reasons given about and many other factors. A Government that cares about its currency and the people must listen to reason and start doing what’s right for the economy to function.
By the way, what happened to the Gold Coin?
