By Brian Okoth
Zimbabwe's new currency the Zimbabwe Gold – shortened as ZiG – has officially begun trading.
ZiG has replaced the Zimbabwean dollar, which has lost nearly 100% of its value against the US dollar.
On April 5, the Zimbabwean dollar was trading at about 30,000 against the US dollar in the mainstream market, and at 40,000 in the black market.
Zimbabwe's central bank says that the old Zimbabwean dollar notes will remain usable for 21 days to allow people exchange them for the new ZiG notes.
Legal tender
Prior to its formal launch in early April 2024, ZiG had been recognised as legal tender by Zimbabwe's central bank in October 2023.
"The (Central) Bank wishes to advise that with effect from October 5, 2023, ZiG will become one of the means of payment for domestic transactions, over and above its value-preservation purpose," Zimbabwe's former governor of the central bank, John Mangudya, said in a press statement in October.
Mangudya said at the time that the value of ZiG "will be at par with the value of the physical Mosi-oa-Tunya gold coin and will remain informed by the international gold price."
The Mosi-oa-Tunya (loosely translated to "the smoke that thunders" from the local Kololo and Lozi languages) is a gold coin introduced in Zimbabwe in 2022 to help contain the then-rising inflation.
ZiG denominations
As of April 5, 2024, one gold coin was selling at 2,408 US dollars.
The ZiG currency will be in the denominations of 1, 2, 5, 10, 50, 100 and 200. In addition, there will be 25 and 50 cent ZiG coins.
Though the currency started trading officially on April 8, the general population will have an increased access to it later April, the current governor of Zimbabwe's central bank, John Mushayavanhu, said.
Mushayavanhu said the new notes and coins were under production.
Awareness campaign
The governor said that Zimbabwe was starting with total local reserves of 285 million US dollars, 100 million US dollars held in foreign accounts, and 2,522 kilogrammes of gold valued at 185 million US dollars to back up the new ZiG currency.
"The ZiG notes will start circulating in the economy on April 30, 2024 to allow the Reserve Bank to undertake an intensive educational and awareness campaign on the key security features of the ZiG notes and coins," he said.
Gold ingots being minted and Zimbabwe's balancing rocks are among the distinctive images on the ZiG currency.
Some of the safety features on the new ZiG notes are security thread with colour shifting, tactile marks for the visually impaired, Zimbabwe bird watermark, and alpha numeric numbering.
Strong start at the forex
Mushayavanhu said that banks and payment system providers had already begun converting their Zimbabwean dollar reserves to ZiG currency.
On Tuesday, at the Zimbabwean forex market, one US dollar was selling at 13.53, a 0.2% gain compared with the previous day, when it officially started trading at 13.56 per dollar.
Introduction of the ZiG currency is the sixth time Zimbabwe is relaunching its currency in efforts to rein in inflation after the collapse of the Zimbabwean dollar.
Retail shops and other service providers, including the Zimbabwe Electricity Supply Authority (ZESA), have demanded only cash transactions in US dollars since most people have not been accessing the Zimbabwean dollar, which is being phased out.
"Please note that our conversion to ZiG is still underway," ZESA said in a statement on Tuesday.
Inflation
Businesses have until Friday, April 12, to fully transition their electronic systems to ZiG.
After the Zimbabwean dollar's value plummeted, nearly 80% of all transactions in the country were being conducted in US dollars, the central bank said.
Zimbabwe has been striving to contain inflation since it hit a record 500 billion per cent in 2008. The central bank even introduced a 100-trillion-dollar note before eventually abandoning the local currency.
Mushayavanhu has said he would limit central bank lending to the government only, and ensure that the reserve money is cushioned by Zimbabwe's gold and foreign currency reserves to protect ZiG against speedy depreciation.
People pushed into poverty
According to the central bank governor, the country's local vaults have about 1.1 tonnes of solid gold and nearly 1.5 tonnes abroad.
Inflation in Zimbabwe has led to substantially high food prices and cost of living, pushing a significant number of people into poverty.
According to the Zimbabwe National Statistics Agency (ZIMSTAT), more than 40% of Zimbabwe's 16 million people are living in extreme poverty.
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