Harare, Zimbabwe – The government is trying to persuade citizens to use its own currency more widely, with the longer-term aim of reducing reliance on the US dollar. But after years of currency instability, many remain reluctant to trust the latest attempt.
The Zimbabwe Gold (ZiG), introduced in April 2024, is a government effort to restore confidence in the local currency. The Reserve Bank of Zimbabwe (RBZ) says the currency is backed by foreign currency and precious metal reserves, including gold.
Yet the challenge extends beyond introducing a new currency or strengthening its reserves. Zimbabweans who have watched their savings lose value and their wages shrink through successive currency crises remain cautious about holding money in a currency whose purchasing power they fear could deteriorate.
Zimbabwe abandoned its local currency in 2009 after a period of hyperinflation and adopted a multicurrency system dominated by the US dollar. A domestic currency returned in 2018, but repeated instability has made rebuilding public confidence difficult.
The cost of lost confidence
For primary school teacher Charles Mbwandarikwa, the experience of earlier currency crises remains a warning.
He receives about a third of his salary in ZiG and says he exchanges it quickly rather than holding on to it. His caution stems from the losses he suffered when Zimbabwe’s previous currency collapsed.
He lost his pension savings during the 2009 crisis. When the local currency was reintroduced in 2018, he says, the value of his salary fell from the equivalent of $540 to $40 by the end of that year.
Such experiences help explain why official assurances about the ZiG have not necessarily translated into confidence among earners.
The RBZ has sought to strengthen the currency’s credibility. On April 7 , the bank introduced an upgraded series of ZiG banknotes with revised designs and security features.
According to the RBZ, annual ZiG inflation stood at 3.7 percent last month. But relatively low inflation alone does not guarantee that people will choose to save in the currency or use it for everyday transactions.
Economist Cornelius Dube says demand for the ZiG remains weak.
“ZiG has to be available in a ratio relative to its demand. Demand for ZiG is currently very subdued,” he says.
A currency few customers use
For businesses, the currency’s acceptance by customers is a practical test of whether it can gain a larger role in the economy.
Sesedzai Chigumira, a clothing retailer, says she has made only a handful of sales in ZiG. Her experience reflects the difficulty in encouraging wider use of a currency when customers and businesses remain more comfortable transacting in US dollars.
The government’s push to reduce dollar dependence also faces a broader challenge: the existence of gold and other mineral resources does not, by itself, guarantee confidence in a currency. People must believe that it will retain its value and remain useful for paying for goods, meeting expenses and saving for the future.
Where businesses expect customers to prefer dollars, they may be reluctant to price goods or accept payments in ZiG. Consumers, in turn, have little incentive to hold the local currency if they fear that its value could fall.
That creates a cycle that policy measures alone may struggle to break.
What it will take to win trust
The RBZ has moved away from its previous target of adopting a single currency by 2030, instead outlining a gradual, market-led transition towards greater use of the ZiG. The approach depends on sustained macroeconomic stability and conditions that encourage businesses and consumers to use the currency voluntarily.
The central bank has also sought to expand the ZiG’s role in domestic transactions, including through its use in tax payments and public-sector transactions, alongside measures affecting the foreign exchange and national payments systems.
But wider use in payments is not the same as confidence in a currency as a store of value. People may use ZiG when required or when circumstances leave them little choice without being willing to keep their savings in it.
For Mbwandarikwa, the memory of losing his pension savings remains part of the calculation. For Chigumira, the limited number of customers paying in ZiG shows how far the currency still has to go to become a routine part of business.
Dube says de-dollarisation is possible, but it cannot be achieved overnight. “History shows that it is possible to de-dollarise, though it’s not easy. It takes time,” he says.
For Zimbabweans who have lived through repeated currency crises, the test will be whether the ZiG can preserve their earnings and savings over time. Expanding its use through policy may be possible, but persuading people to trust it will require sustained stability and confidence in the currency.
“Policy should not try to force a conversion but should create the necessary incentives which will eventually see both businesses and consumers being indifferent to holding ZiG or US dollars,” Dube says.