Zimbabweans were transacting exclusively in United States dollars yesterday as the country began transitioning to the new currency following the unveiling of the new gold-backed unit by the Reserve Bank of Zimbabwe (RBZ) on Friday.
Financial institutions and mobile money platforms began converting customers’ Zimdollar balances into ZiG late Friday following the presentation of the Monetary Policy Statement (MPS) by RBZ Governor Dr John Mushayavanhu.
Banks notified clients that their local currency accounts were being converted into ZiG and that Zimdollar transactions had been suspended until further notice.
As a result, all point-of-sale (POS) and mobile money platforms were unavailable yesterday, while retail shops accepted only US dollars and Zimdollar notes.
According to the Bankers Association of Zimbabwe, the process of reconfiguring all Zimdollar accounts is set to be complete by tomorrow at most banks.
In a statement last night, RBZ Governor Dr Mushayavanhu said the ZiG notes and coins were presently in production “and will start circulating in the economy on 30 April 2024” to allow the central bank “to undertake an intensive educational and awareness campaign on the key security features”.
“The campaign is expected to reach out to a wide spectrum of society consistent with the Reserve Bank’s financial inclusion thrust,” he said.
“The Reserve Bank is taking all the necessary steps to ensure that the public is not prejudiced and there is value preservation and transactional convenience during this transitional period.”
He further indicated that the banking sector and payment systems providers had made “satisfactory progress” in converting Zimbabwe dollar balances into ZiG balances.
“The conversion process will continue for other economic sectors until Friday, 12 April 2024,” he added.
“Thereafter, the Reserve Bank expects that all the online payment platforms will be operating smoothly for all transactions in the economy.”
The transacting public has a transitional period of up to 21 days to convert their Zimdollar notes to ZiG, in line with Statutory Instrument 60 of 2024.
“Accordingly, the Zimbabwe dollar notes will continue to be used for transactional purposes at the ZiG: ZW$ conversion factor of 2498.7242 applicable on the 8th of April 2024 within the 21-day transitional period.”
However, electronic transactions for some banks are expected to resume by tomorrow, as Zimswitch, the country’s electronic financial transactions settlement platform, finalises adjusting its systems to accommodate the new currency.
The RBZ was yet to set cash withdrawal limits because “we want to see the reaction of the public before we set the limit”, according to Dr Mushayavanhu.
The gold-backed ZiG will be issued in denominations ranging from 1 ZiG up to 200 ZiG, as well as half ZiG and quarter ZiG.
Gradual introduction
Presenting the MPS, Dr Mushayavanhu said the new currency will be introduced into the market gradually.
“These notes shall be issued gradually in the market to cater for small transactions and to ensure the availability of change, thus, mitigating the use of retail vouchers in the local economy.
“As such, the proposed denominations will bring convenience to the transacting public,” he said.
In Harare, retailers were transacting exclusively in US dollars and Zimbabwe dollar notes.
Many people, who were caught off-guard by the currency changeover, were left frustrated, as they failed to transact in the local currency.
“We were not anticipating this changeover,” said Budiriro resident Mr Brenna Mandivava.
“Everyone who does not have US dollars is having trouble transacting.
“We hope they sort this out soon.”
Retailers were also busy converting prices of their goods into ZiG.
Confederation of Zimbabwe Retailers president Mr Denford Mutashu said: “We are complying with Government’s directive and we are in the process of converting the prices to the new currency.
“Currently, retailers are only transacting in US dollars to ensure that consumers are not inconvenienced by the migration process.
“We are confident that by Monday most retailers would have migrated to ZiG.”
Zimdollar accounts
Bankers Association of Zimbabwe president Mr Lawrence Nyazema said banks were reconfiguring all Zimbabwe dollar accounts.
He said the process is set to be complete by tomorrow at most banks.
“Remember, the old Zimbabwe dollar notes will be coming back as deposits as they are taken out of circulation,” said Mr Nyazema.
“Banks have been working flat out since midnight (Friday) to reconfigure Zimbabwe dollar accounts and balances to ZiG.
“Some will maintain the same account numbers, whilst others will have to open new accounts in the new currency.
“We expect ZiG accounts to start coming on stream at different banks this weekend and we are all targeting to be up and running by Monday morning.
“Zimswitch will be switched on for banks as and when they convert to ZiG accounts.”
Zimswitch marketing manager Ms Sharon Marira said the platform will be back online once banks have completed reconfiguring the balances.
“It will largely depend on the banks’ readiness and configuration,” she said.
“We have already sent notices to customers, informing them that the system is down.
“When the system has been restored, banks will inform the customers.
“This, however, will not be uniform as it will depend on banks.”
Economist and member of the RBZ Monetary Policy Committee Mr Persistence Gwanyanya said he believes “the new currency will perform better compared to its predecessor because it is backed by physical (gold and cash) reserves”.
The introduction of ZiG is part of several policy measures meant to address exchange rate volatility, curtail inflation and restore macro-economic stability.
The new currency replaces the Zimbabwe dollar, whose value has been depreciating rapidly over the past few months.
The new currency will be backed by the quantity and value of precious minerals — mainly gold — as well as foreign currency reserves held by the RBZ.
As of Friday last week, the central bank had in its reserves US$100 million in foreign currency and 2,5 tonnes of gold valued at US$185 million.
