The Reserve Bank of Zimbabwe’s (RBZ) decision to devalue the Zimbabwe Gold (ZiG) currency by 44% has ignited a firestorm of criticism across the nation.
Citizens, economists, and trade unions have voiced their outrage, accusing the government of worsening the already dire economic situation. The devaluation, which saw the official exchange rate against the US dollar plummet from US$1:ZiG13.9987 on September 26 to US$1:ZiG24.3902 on September 27, has effectively wiped out nearly half the value of salaries and savings held in local currency.
The Amalgamated Rural Teachers Union of Zimbabwe (ARTUZ) immediately demanded salary adjustments to reflect the devaluation.
“Mthuli Ncube and the employing authorities should not wait to be told that since the ZiG has officially been devalued by 44%, the salary component in ZiG must automatically be adjusted. The stability of this Republic rests on the shoulders of workers,” ARTUZ declared on Twitter.
The impact on ordinary Zimbabweans is devastating. One social media user, @Vahombe07, highlighted the plight of civil servants and pensioners: “If a civil servant earned 5,000 ZiG, the value of that money is now effectively halved. School fees and prices of basic goods are set to skyrocket by almost 100% to counterbalance the devaluation.”
Commentator Prisca Mutema warned of further erosion of public trust: “The black market players have received a go-ahead from the government to bury the ZiG.”
She predicted a sharp rise in inflation by year-end and further devaluation of the ZiG by December.
Businessman and lawyer Tawanda Nyambirai questioned the RBZ’s credibility, pointing out the irony of a gold-backed currency losing value while the price of gold rises: “The #ZIG is supposed to be anchored on gold. Since its introduction, the gold price has gone up significantly, yet the #ZIG has done the opposite. This devaluation undermines trust and creates the impression that the currency was anchored on lies.”
Prominent economist Gift Mugano called for the complete abandonment of the ZiG in favour of the US dollar until economic fundamentals improve. Even Zanu PF sympathiser and economic commentator Kudzai Mutisi criticised the government’s approach to gold-backing: “Filling a vault with gold and saying it’s backing a currency won’t create stability,” he tweeted.
The devaluation has also sent ripples through the business community. Bertha Mwonzora, daughter of MDC leader Douglas Mwonzora, accused the government of fuelling the black market. @admiredube reported a significant loss in market capitalisation on the Zimbabwe Stock Exchange (ZSE), equivalent to USD 1.9 billion, with further volatility anticipated. Another user, Matigari, succinctly summarised the situation: “This is playing with people’s lives.”
The RBZ’s accompanying measures, including interest rate hikes and tightened monetary policy, have done little to assuage public concerns. While the official exchange rate remains at US$1:ZiG24.3902, the black market rate has surged to US$1:ZiG40, further widening the gap and highlighting the lack of confidence in the official rate. This represents a 42.605% loss in value for the ZiG and a 74.232% appreciation for the US dollar since the devaluation.
NewsDay Weekender investigations revealed widespread rejection of the ZiG by retailers. Many shops and fast-food outlets are refusing ZiG transactions, citing “non-functional POS machines” or “network issues.” Economist Eddie Cross stressed the urgent need for a reliable currency that inspires public confidence.
The Consumer Council of Zimbabwe (CCZ) acknowledged the problem of non-functional ZiG swipe machines and pledged to address the issue. Their research indicates that even when accepted, the ZiG swipe rate is often inflated to above ZiG25 per US$1, a disguised form of rejection. In Masvingo, OK supermarket accepts ZiG swipe only for selected non-essential items, insisting on US dollar cash for basic goods.
The RBZ launched the gold-backed ZiG in April 2024 with high hopes of curbing inflation and stabilising the economy. However, the current crisis underscores the deep-seated economic challenges facing Zimbabwe.
Economist and government critic Gift Mugano reiterated his call to scrap the ZiG: “This is a deliberate move and a wise way of running away from the cancerous currency. The immediate solution in my view is just to do away with the ZiG and go for US dollars.”
He criticized the lack of consultation during the ZiG’s launch and urged the government to act swiftly to prevent further economic collapse.
Zimbabwe’s currency woes have created a fragmented economic landscape. While Harare and Mashonaland provinces predominantly use the US dollar, Bulawayo and Matabeleland lean towards the South African rand. This reflects the lingering distrust in the local currency stemming from the 2008 hyperinflation crisis.
He acknowledged the prevalence of rand usage in Bulawayo and Matabeleland due to their proximity to South Africa. However, the continued devaluation of the ZiG and the public’s lack of confidence raise serious questions about the long-term viability of the current monetary policy.
