Introduced on April 8, 2024, ZiG has demonstrated notable stability, with its backing reserves, comprising gold and foreign currency, more than doubling in the past year.

Speaking to Channel Africa Radio, Zimbabwean economist Dr Prosper Chitambara reflected on ZiG’s progress and prospects.

“Given the challenges we’ve had in the past with chronic inflation and hyperinflation, it’s still too early to say ZiG has triumphed. But we’re optimistic. With continued tight fiscal and monetary policy, we could achieve a stable macroeconomic environment,” Chitambara noted.

Initial reactions to ZiG were hesitant, particularly among businesses that continued to favour the US Dollar. However, government intervention and strong policy enforcement played a key role in embedding the currency into daily economic activity. Chitambara acknowledged that while scepticism persists, such policies have helped maintain ZiG’s relevance in the market.

Looking ahead, he stressed the importance of strengthening reserves and promoting economic output. “This year we’re expecting a rebound in the economy due to a successful rainfall season. Increased output and exports will improve the current account and help bolster our reserves, which is critical to maintaining currency stability.”

When asked about the timeline for ZiG becoming the sole national currency, Chitambara urged caution.

“It’s going to take time, perhaps two to three years, if we maintain a stable economic trajectory. Confidence in a currency doesn’t return overnight, especially considering the economic trauma Zimbabweans have experienced.”

He concluded by emphasising the need for a market-led approach, rather than a purely government-driven one. “We need to allow market forces to operate. That’s how trust and confidence will be restored.”

--ChannelAfrica--