Sylvia Dhliwayo, an expert at navigating Zimbabwe’s crisis-ridden economy with its constantly changing currency, is upset. As a mother of four, she works hard to keep her children in school, starting her day at 4 a.m. to shop for produce at the bustling Mbare market in Harare. There, she buys maize, peanuts, doughnuts, eggs, and buns to sell at her street stall in her neighborhood.
Mbare market is a dynamic hub where prices change daily due to the country’s economic fluctuations. It’s not just food that’s on sale—traders deal in everything from tomatoes and avocados to pots and second-hand clothes, setting prices based on a volatile economy.
What has angered Ms. Dhliwayo and other traders is the government’s sudden introduction of a new local currency, known as the Zig or “Zimbabwe gold.” This new currency was rolled out a month ago, replacing the digital RTGS currency and cash “bond notes.” The government’s aim is to address the rampant inflation that has plagued Zimbabwe for decades, leading to the elimination of the Zimbabwe dollar in 2009. Since then, most transactions have been conducted in US dollars.
The currency change created chaos and uncertainty for people like Ms. Dhliwayo. Before the Zig’s introduction, a packet of peanuts from her stall cost $0.50 or Z$2,500 in bond notes. However, after Reserve Bank Governor John Mushayavhanu announced the three-week period to exchange bond notes, they lost what little value they had, and the same packet of peanuts skyrocketed to Z$40,000. In response, Ms. Dhliwayo and many others stopped accepting bond notes, requiring payment in US dollars instead.
The new Zig currency is primarily digital, posing a problem in a country where electricity blackouts are common, and access to technology is limited. Cash is king, and without a reliable physical form of the new currency, the transition has been problematic. Ms. Dhliwayo still trades exclusively in US dollars, reflecting the lack of confidence in the new currency.
Government officials, including Mr. Mushayavhanu, have defended the new currency, stating that it follows advice from the World Bank. However, the rushed implementation and the history of failed currencies in Zimbabwe have left many people skeptical. Zimbabweans have witnessed the collapse of various currencies, including the original Zimbabwe dollar, bearer cheques, agro cheques, RTGS, and bond notes, often resulting in significant losses of savings.
The lack of communication about the currency switch has further complicated matters. Supermarkets, phone companies, and public transport operators stopped accepting bond notes, creating confusion. Tourists have faced challenges as their Visa cards no longer worked, adding to the chaos.
Businesses are hesitant to embrace the Zig due to its fluctuating value. An independent gardener in Harare showed that the exchange rate on his phone was 12.91 Zig to 1 US dollar, while others in the same area quoted 13.50 or even 15 Zig to 1 US dollar, illustrating the uncertainty surrounding the new currency.
Maxwell Gombe, a trader in old Zimbabwean banknotes, has seen business as usual. He buys old billion and trillion-dollar notes and sells them to tourists at a profit, capitalizing on Zimbabwe’s history of economic collapse. Even the process of bail for those arrested for illegal currency dealing requires US dollars, underscoring the continued reliance on foreign currency.
In a country where most goods and services, including school fees, rent, and even housing, are priced in US dollars, the lack of trust in local currency is palpable. The majority of the population survives through remittances from relatives who have left Zimbabwe, a trend often referred to as the “brain drain.”
Economists, like one who asked not to be named, express frustration over the persistent currency issues. Civil servants often receive part of their salary in US dollars and part in local currency, if they’re paid at all, contributing to the ongoing uncertainty.
Despite these challenges, there are signs of wealth and stability in Harare’s northern suburbs, where shopping malls stock imported goods, and transactions are exclusively in US dollars. However, for most Zimbabweans, the reality is much grimmer. The Zig’s uncertain future has led to jokes about Zimbabwe’s zigzagging economy, and some use Shona slang to express their discontent, saying “Zimbabwe i gehena,” or “Zimbabwe is hell.”
