Online Reporter
The biggest weakness, nay criticism of the Zimbabwe Gold (ZiG) was that it could not be used to buy fuel.
As such, critics always cited that flaw when debating the performance of the tender since its introduction in April 2024.
That observation was valid, we admit, but as we reported yesterday, the ZiG is now buying fuel in Bulawayo, a city known for its affinity for the dollar and the rand.
We cited Mr Charles Phiri, a local motorist, welcoming the development, which he said was important, particularly for buyers who earn in ZiG.
“The ZiG is a national sovereign currency,” commented Confederation of Zimbabwe Retailers president Mr Denford Mutashu.
“Expanding its usage across sectors strengthens its demand and confirms its growing stability. Service stations that are accepting ZiG are demonstrating both confidence and progressiveness.”
This represents yet another milestone not just for the note but also for the economy.
It asserts the point that the market’s confidence in the ZiG is strengthening. It hammers home the point that the currency is becoming a viable medium of exchange and store of value. It underlines the growing credibility of the currency.
More broadly, this is additional proof that the economy is growing and stabilising.
Annual inflation dropped to 4.1% in January from 15% in the previous month, declined further to 3.8% in February, but ticked up to 4.4% last month.
The Government announced mid-last month that it would pay all its local contractors and other service providers in ZiG. That strengthens the currency, creates demand for it, helps in controlling public spending and shows that the Government has confidence in the national currency.
Early this month, the Reserve Bank of Zimbabwe rolled out higher denomination notes, the ZiG100 and ZiG200 and reiterated the fact that the economy has enough foreign currency.
With these and other measures, it was just a question of time before the ZiG could be solid enough to buy fuel.
As we welcome the growing acceptance of the currency, we must highlight that there remain a few conditionalities.
Workers at some fuel stations told us that they are limiting purchases to large clients and the amounts they sell in local currency. Furthermore, the various forecourts are using exchange rates of their choice.
Mr Phiri warned that buyers must be mindful of the rates applicable at the service stations that they choose to refuel at.
History has taught us that retailers in this super, super sensitive industry must not be rushed, but we urge them not to put excessive margins on the exchange rates they use.
The wider economy is using between 26 and 34 ZiG per dollar, so we expect them to operate within those bounds as well.
Anything beyond that would be greed, which we discourage.
