ZiG notes milestone

Zimpapers Writer

NEW Zimbabwe Gold (ZiG) banknotes are beginning to ease cash shortages and improve everyday transactions, although economists say long-term confidence will hinge on the currency’s ability to retain value.

The ZiG notes, introduced in phases last month, are now circulating more widely through automated teller machines (ATMs) and banking halls. Denominations of ZiG10, ZiG20 and ZiG50 are improving access to cash for households and businesses.

The Reserve Bank of Zimbabwe (RBZ) has set weekly cash withdrawal limits at ZiG10 000 for individuals and ZiG100 000 for corporates as part of broader liquidity management measures.

Authorities say the currency is underpinned by strong fundamentals, with ZiG backed by about US$1,3 billion in foreign currency reserves as of March 31 — nearly double the value of deposits held in the banking system.

Early indications suggest that increased availability of physical cash is restoring the use of the local currency in transport, retail and other low-value transactions, particularly in urban areas. Kombi operators and informal traders are increasingly accepting ZiG notes, signalling a shift in everyday exchange patterns.

Economic commentator Mr George Nhepera said improvements in note quality and accessibility had helped boost market confidence.

“For the first time since 2009, Zimbabwe has introduced high-quality notes that meet international standards and this has positively influenced public and market sentiment.

“This has greatly improved confidence of the markets, including the public, with respect to the local currency. Liquidity in the form of notes is now readily available at most banks and many are now using it for transport and change in retail shops,” said Mr Nhepera.

Across Harare, kombi operators and informal traders continue to accept ZiG notes for small payments, reflecting early gains in its function as a medium of exchange.

“The current inflationary expectations are less affected by the new ZiG notes, instead the market is more concerned with geopolitical tensions in the Middle East, which are affecting the price of oil and gas, leading to imported inflation on goods and services. To help ZiG gain full acceptance as a store of value and unit of account, the currency should coexist with others while its use gradually expands in key domestic transactions, such as fuel and taxes,” he said.

Late last year, Treasury indicated that Zimbabwe had entered the final and most critical phase of its de-dollarisation roadmap, aimed at strengthening currency stability and laying the foundation for a domestic mono-currency by 2030.

The country adopted a multi-currency regime in early 2009, with the United States dollar as the dominant currency, alongside others such as the South African rand and Botswana pula, following a period of hyperinflation.

Economic analyst Mr Luxon Zembe said the central issue remains whether the currency can consistently preserve value.

“It is still too early to address the confidence question. What matters most is value retention, not the physical quality of the notes,” he said, adding that sustained stability over at least six months would be required to shift public perception.

“If stability continues, then you begin to see confidence picking up.”

Meanwhile, a member of the RBZ Monetary Policy Committee, Mr Persistence Gwanyanya, said the introduction of new ZiG notes had contributed to relative stability, even amid global shocks such as tensions in the Middle East.

He said addressing key attributes of money — such as durability and divisibility — was critical in strengthening the currency’s functionality and signalling commitment to its long-term viability.