Zimbabwe’s ZiG Faces Slow Demise Amid Public Distrust and Policy Missteps
Zimbabwe’s latest currency, the ZiG, is heading toward failure—not through rapid devaluation, but through increasing irrelevance, according to Imara Asset Management, the country’s oldest independent brokerage.
Unlike previous currency collapses driven by hyperinflation, the ZiG’s struggle stems from policy missteps and a severe liquidity crunch now entering its sixth month, Bloomberg reports. Introduced in 2024 as Zimbabwe’s sixth attempt in 15 years to stabilize its currency, the ZiG is backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank.
Despite these efforts, approximately 80% of transactions in Zimbabwe are still conducted in U.S. dollars, with the South African rand also in use. While President Emmerson Mnangagwa has announced plans to make the ZiG the sole legal tender by 2030, public adoption remains low and confidence is weak.
The currency’s value has gradually declined, and government attempts to boost its usage have largely fallen short. The central bank’s strategy of raising interest rates to defend the ZiG and control inflation has instead incentivized greater reliance on the U.S. dollar, according to Imara.
Persistence Gwanyanya, a member of the Reserve Bank of Zimbabwe’s monetary policy committee, rejected Imara’s assessment. He claimed that liquidity issues are confined to the parallel market and that future shifts from U.S. dollar holdings to ZiG will help stimulate credit and economic activity.
“It’s not the extinction of the ZiG,” Gwanyanya said, “but the unwinding of U.S. dollar positions into the local currency that’s next.”
Nevertheless, Imara maintains that monetary policy alone is insufficient to resolve Zimbabwe’s broader economic challenges. The firm urges the government to prioritize revenue generation and reduce deficit spending.
In a stark conclusion, Imara stated: “It would be better simply to scrap [the ZiG] and move on.”
