Innocent Sibonginkosi Ncube
Zimbabwe’s gold-backed currency, the Zimbabwe Gold (ZiG), has experienced a dramatic collapse, losing 100.6% of its value since its introduction just six months ago. Launched in April at a rate of 13.6 ZiG to the U.S. dollar, the official exchange rate has now soared to 27.2821 ZiG to $1 as of October 23, 2024.
Black Market vs. Official Rates
While the official rate reflects a significant depreciation, the black market presents an even bleaker picture, with rates fluctuating between 35 and 45 ZiG to $1. This disparity indicates that most transactions are now conducted in U.S. dollars, as traders and consumers lose confidence in the stability of the ZiG.
Impact on Businesses and Consumers
Many businesses have shifted to transacting almost exclusively in U.S. dollars due to the instability of the ZiG. For example, Profeeds, a major stock feed manufacturer, allows customers to purchase only one out of every ten bags of poultry feed using ZiG, with the rest requiring payment in U.S. dollars. This trend highlights the practical challenges consumers face when dealing with the depreciating currency.
Adjustments in Telecommunications
The sharp decline in the ZiG’s value has prompted the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) to approve tariff adjustments for local telecom companies. Major operators like Econet and NetOne have introduced new rates in ZiG, such as ZiG0.0177 per second for voice calls and ZiG0.1660 per MB for data. In contrast, U.S. dollar tariffs have remained stable, reflecting the need to maintain service quality amid rising operational costs driven by inflation and currency ddevaluation.
Future Outlook
With inflation continuing to rise and the ZiG’s value plummeting, the future of Zimbabwe’s latest currency experiment remains uncertain. The country has attempted to establish a stable currency multiple times over the past 15 years, and the current situation raises concerns about whether the ZiG will avoid the fate of its predecessors.
As the economic landscape evolves, it will be crucial for Zimbabwean authorities to address the underlying issues contributing to the currency’s instability to restore confidence among businesses and consumers.
Zim GBC News©2024