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ZIMBABWE’S GOLD-BACKED CURRENCY FAILURE HITS BUSINESSES & JOBS HARD

ZIMBABWE’S GOLD-BACKED CURRENCY FAILURE HITS BUSINESSES & JOBS HARD
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Faith  Nyasuguta 

Zimbabwe’s ambitious introduction of the gold-backed Zimbabwe Gold (ZiG) currency in April 2024 has quickly unraveled, creating a ripple effect of economic woes. Initially pegged at 13.6 ZiG per USD, the currency rapidly lost value, plunging to 26 ZiG per USD on the black market within months. This depreciation has severely impacted businesses, employment, and public trust.

Despite government efforts to promote confidence in the ZiG, businesses and consumers remain hesitant to adopt it, preferring the stability of the US dollar. However, accessing foreign currency has proved challenging, inflating operational costs for companies. The uncertainty surrounding the ZiG’s value has disrupted businesses, with small and medium enterprises (SMEs) bearing the brunt.

As the backbone of Zimbabwe’s economy, SMEs struggled to adapt to the unstable currency, forcing many to close down. These closures triggered a wave of job losses, worsening Zimbabwe’s already high unemployment rate. Many workers displaced by these closures face difficulties finding alternative employment, further straining the country’s fragile labor market.

/The East African/

The Reserve Bank of Zimbabwe (RBZ) attempted to control the crisis by officially devaluing the ZiG, aiming to narrow the gap between official and black market rates. Unfortunately, this move deepened public distrust and failed to stabilize the currency. Critics argue that the RBZ underestimated the magnitude of economic instability and public resistance.

Human rights organizations, including the Zimbabwe Human Rights Association (ZimRights), have condemned the government’s hasty rollout of the ZiG. They highlighted a lack of public consultation and accused officials of imposing the currency without adequately addressing citizens’ concerns.

Economic analysts emphasize that the ZiG’s failure reflects broader systemic issues, including hyperinflation, limited foreign exchange reserves, and poor fiscal management. Without tackling these underlying problems, any attempt to introduce a new currency is likely to fail.

To address the ongoing crisis, experts urge Zimbabwe to implement comprehensive reforms. These reforms must focus on fiscal discipline, curbing inflation, stabilizing exchange rates, and creating a transparent monetary system. Building public trust is also critical to achieving sustainable economic recovery.

Zimbabwe President Emmerson Mnagangwa /Wikipedia/

The collapse of the ZiG has exposed Zimbabwe’s deep-rooted economic challenges. With businesses shutting down and jobs disappearing, the nation faces a pivotal moment. Restoring economic stability requires bold reforms, inclusive decision-making, and a renewed focus on rebuilding trust among Zimbabweans.

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Faith Nyasuguta

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