Mutare, Zimbabwe – President Emmerson Mnangagwa has announced plans to phase out the US dollar and introduce the Zimbabwe Gold (ZiG) as the country’s sole currency.
Speaking in Mutare on Thursday, the President expressed concerns about reliance on foreign currency, stating that Zimbabwe must be self-sufficient to avoid potential sabotage.
“We can’t continue to use someone else’s currency, it’s like being in a marriage where one partner doesn’t love the other.
“Biden doesn’t love us, so we can’t keep using his money.
What if one day they decide to sabotage us and we’re left with no choice? That’s why we now have the ZiG,” Mnangagwa said.
However, economist Professor Gift Mugano has urged caution, stating the need for careful consideration and planning before introducing a new currency.
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He highlighted the importance of meeting basic minimum requirements, such as a current account surplus, fiscal consolidation, and a productive economy, to ensure the success of the new currency.
“The introduction of a local currency requires careful planning and consideration of economic factors. We must establish the minimum requirements for the introduction of a new currency if we want our currency to succeed.
“This includes a current account surplus, fiscal consolidation, a highly productive economy, single-digit inflation, and stable exchange rates,” Mugano said.
Mugano also stressed the need for confidence-building measures, nationwide consultations, and evidence-based policies to support the introduction of the ZiG.
He warned that the sudden introduction of a new currency could lead to market disarray and erosion of trust in government policies.
“The government must develop a culture of seeing through its policies to the expiration date before making conflicting statements.
“The introduction of a new currency requires a well-thought-out plan, and we must learn from past experiences. We need to build confidence, formalize the informal sector, and develop evidence-based policies,” Mugano added.
Mugano also drew attention to the country’s history with currency changes, noting that the introduction of the US dollar in 2009 was a response to market forces, and that the subsequent introduction of the bond notes in 2019 was met with resistance.
“In February 2009, the government adopted the USD as the main currency, and in June 2019, the government introduced the bond notes. We must learn from these experiences and develop a well-thought-out plan for the introduction of the ZiG,” Mugano said.
On April 5th of this year, Zimbabwe introduced a new gold-backed currency, known as the ZiG or Zimbabwe Gold, in an effort to alleviate the currency instability and hyperinflation that has afflicted the country for decades.
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