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Does Mnangagwa intend stabilizing the economy by creating a phantom currency?

Tendai Ruben Mbofana


As a matter of fact, in the past two months, the ZiG (Zimbabwe Gold) has remained largely unmoved on the official foreign currency market. 

The interbank exchange rate stands at ZiG13.60 to US$1, whereas the parallel market is selling the greenback for ZiG17.

In spite of the seemingly big difference between the official and black market exchange rates, the prices of goods and services have been relatively stable. 

However, there is a glaring problem that can not be ignored.

Where is this new currency?

As much as we may praise its apparent stability, nonetheless, we need this currency to actually be present and visible on the ground. 

We can never genuinely claim that the ZiG is a stable currency when it is practically invisible and as rare as a pangolin. 

Quite frankly, since the ZiG was rolled out as notes and coins at the end of April, I have only come across one ZiG10 bill and a few coins. 

In fact, nearly all major retailers as well as informal traders continue to complain over a lack of change such that one is forced to buy another product in lieu of change.

This is due to the absence of the ZiG, which was supposed to satisfy this need.

In spite of RBZ (Reserve Bank of Zimbabwe) Governor John Mushayavanhu claiming that the apex bank had injected ZiG55 million of notes and coins into the Zimbabwe economy, the currency is nowhere to be seen.

Are we surely to believe that ZiG55 million can simply disappear into thin air since most Zimbabweans do not have this money?

Or, there was really never much ZiG injected into the economy to begin with?

This is a currency supposedly backed by 2.5 tons of gold and US$100 million in foreign currency reserves held by the central bank.

Can we, then, be faulted for believing that there are no such gold or foreign currency reserves at the RBZ to back this ZIG?

So, why all this charade?

Could this all be a scheme to force stability onto the Zimbabwe economy through the creation of a phantom currency?

It is quite plausible that the President Emmerson Dambudzo Mnangagwa administration is fully aware that they can never sustain a stable currency. 

Let us remember that they tried this experiment with the reintroduction of the Zimbabwe Dollar (ZWL] in June 2019 – after a decade of using mainly the US Dollar.

Nevertheless, the ZWL fell spectacularly – such that, by the time of its replacement with the ZiG, it was trading at ZWL30,000 to the greenback. 

This was largely attributable to a lack of trust in the currency by the Zimbabwean population as well as government indiscipline through the wanton printing of the currency. 

So, has anything changed with the ZiG?

One thing is undoubted, there is no over-printing of the new currency. 

What about public trust?

No one can deny that ordinary Zimbabweans still have zero faith in their own currency – which is indicative of a deeper lack of trust in the Mnangagwa administration itself.

This is a fact that can certainly not be lost on the government. 

They are fully aware that the ZiG will never be accepted by the general populace and as such likely to plummet on the foreign currency market within a short space of time. 

Is that not why the regime has waged war on illegal foreign currency traders – who have been having running battles with the police with scores arrested?

This is all being done to prevent the obvious. 

No one wants the ZiG!

A freely operating black market will lead to many Zimbabweans offloading the local currency in exchange for the greenback, thereby swiftly depreciating its value.  

So, the government’s plan is to close off all avenues for citizens to rid themselves of the unwanted ZiG – thereby forcing the currency down our throats. 

Nonetheless, it would appear even those draconian measures are not giving Mnangagwa peaceful sleep either. 

He has gone a step further. 

In order to ostensibly preserve the ZiG’s stability, the government has decided to make it virtually non-existent in the economy.

It has become nothing more than a ghost!

In effect, the Zimbabwe economy has completely dollarized  – save for one or two mobile or electronic transactions – without Mnangagwa necessarily admitting or officially announcing it. 

Let us remember that this is a man who has been adamant that no country can survive without its own currency. 

Therefore, he can never openly acknowledge that the local currency project has failed – dismally.

The best he can do is for Zimbabwe to pretend that it has its own currency when, in actual fact, it does not. 

The plan is to impede any trading in the ZiG on the foreign currency market, thereby keeping its value relatively unchanged.

How can a non-existent currency lose value?

The question now is: Is this crazy version of economics sustainable?

For how long can Mnangagwa keep the economy stable by using a phantom currency?

Only time will tell.

However, for now, those in authority seem content with moving along with this charade.

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