Renowned lawyer Advocate Thabani Mpofu, famed for representing former Citizens’ Coalition for Change (CCC) leader Nelson Chamisa in the 2018 election challenge, has declared the Zimbabwe Gold (ZiG) currency legally defunct.
His assertion throws the country’s latest monetary experiment into disarray, just six months after its launch. The ZiG, introduced in April 2024 at a rate of 13.6 ZiG per US dollar, has since plummeted, losing nearly 80% of its value on the black market.
Mpofu’s claim hinges on the legal framework underpinning the ZiG’s existence. “Unless I missed the law when it was promulgated, the ZIG is no longer currency,” he stated.
He points to the Presidential Powers (Temporary Measures) (Amendment of Reserve Bank of Zimbabwe Act and Issue of Zimbabwe Gold Notes and Coins) Regulations, 2024, which operationalised the ZiG. Crucially, he highlights the six-month lifespan of statutory instruments promulgated under the Presidential Powers Act.
“In this case, the six (6) months would have lapsed on the 4th of October 2024. This means that by the end of that day, the ZIG ceased to be currency. It is not possible for the statutory instrument once it has lapsed to be validated by legislation. Further, the statutory instrument having lapsed no further regulations identical to the lapsed ones can be promulgated within six (6) months of such lapse. This means that no statutory Instrument extending the life of ZIG can be issued in terms of the Presidential Powers Act,” Mpofu explained.
The implications, according to Mpofu, are severe.
“For these reasons, the ZIG is no longer legal tender. The consequences are immense. I think we have a big problem on our hands. (I sincerely hope for the life of me that the authorities did the needful. If they didn’t, this needs to be fixed by the only lawful way available),” he warned, underscoring the urgency of the situation. Zimbabwe, he reiterated, finds itself in a precarious position demanding immediate redress.
Meanwhile, the business community is echoing calls for the ZiG’s scrapping, citing its extreme volatility. This sentiment was voiced forcefully at the CEO Africa Roundtable (CEO ART) currency review breakfast meeting in Harare last week. CEO ART chairperson Oswell Binha declared the ZiG a tool for arbitrage, causing more economic damage than benefit. He drew parallels with previous failed currencies – the Zimbabwe dollar, RTGS dollar, and bond notes – all eventually discarded.
He further advocated for inclusive decision-making: “We need to have time to have these serious conversations of a currency referendum involving everybody to navigate and decide which currency to use. I think it is time that all economic players be given the opportunity to be involved and be able to make the right choices.”
The ZiG, officially backed by gold and foreign reserves, has faced intense pressure in recent months, particularly on the parallel market. Last month, the Reserve Bank of Zimbabwe (RBZ) was compelled to devalue it by 43%, setting the rate at 24.39 ZiG per US dollar. Despite this intervention, the interbank market saw the dollar trading at ZiG27,2821 last week, while the parallel market ranged from ZiG35 to ZiG40. The currency’s instability has prompted some businesses to abandon the ZiG in favour of the US dollar for reporting financial results.
However, RBZ deputy governor Innocent Matshe maintains a contrasting view. Speaking at the same CEO ART meeting, he dismissed the notion of a currency crisis, asserting that market forces are simply determining the exchange rate.
“Make no mistake about the ZiG, it is here and it is here to stay,” Matshe declared.
He differentiated the ZiG from its predecessors, stating, “Another thing that you need to remember is that ZiG is not like the RTGS or the Zimbabwe dollar we used to have. The starting point here is that the country is not facing a currency crisis.”
Matshe further argued that the ZiG’s fluctuations reflect market flexibility, not collapse.
“The Reserve Bank has allowed for greater flexibility in the interbank market. The flexibility is what you wanted, and now you are saying that the ZiG is now in the graveyard. This cannot be called a crisis. Let us not fool ourselves and think that just because there was a depreciation, the currency is collapsing,” he explained.
He expressed confidence in the current monetary policies, predicting short-to-medium term economic stability and a decrease in month-on-month inflation.
“Even if you look at the current prices, they have stabilised because the exchange rate is now in line with the prices that the retailers were using before all this…If you ask me, if the current measures that are in place are adequate to restore stability in the economy, I would say yes in the short to medium term. We expect that as growth picks up, it will translate into long-term growth,” he concluded.
The ZiG represents Zimbabwe’s sixth attempt at a stable currency since the 2009 abandonment of the Zimbabwe dollar due to hyperinflation. Economist Prosper Chitambara suggests a continuation of the multi-currency regime, coupled with reforms to bolster confidence in the ZiG.
“A combination of monetary, institutional and fiscal reforms are critical in my view for the full restoration of confidence and trust in the local currency. So, I think the current system is good without necessarily going either extreme to full de-dollarisation or full dollarisation,” Chitambara advised.
