HARARE – President Emmerson Mnangagwa was seen publicly handing out US$500 to a government minister to buy a suit, casting doubt on his confidence in the Zimbabwe Gold (ZiG) currency, a move that has left many questioning his commitment to the country’s economic reforms.
Mnangagwa was seen publicly doling out US$500 to Agriculture Minister Anxious Masuka at an event during the weekend.
This is not the first time the Zanu-PF leader has used foreign currency in a public display, leading many to question his confidence in the gold backed local dollar.
In an interview with Nehanda Radio, United Kingdom-based Zimbabwean economist Chenayi Mutambasere said Mnangagwa’s actions show that he has no confidence in the ZiG.
“His (Mnangagwa) actions suggest a lack of confidence in the ZiG currency,” she said.
“This perception is likely to resonate with investors, who may view the move as a sign of uncertainty in the country’s economic reforms.
“Moreover, with Zimbabweans already relying heavily on foreign exchange (forex) for over 85% of their transactions, it raises questions about the rationale behind the aggressive push for ZiG adoption, especially given its limited availability.”
Political activist Pride Mkono told Nehanda Radio that the Zimbabwean government’s introduction of the gold-backed ZiG currency is a ruse to print money for government costs, and that the President’s preference for US dollars over ZiG reveals a lack of confidence in the new currency’s ability to store value.
“No one has confidence that ZiG has the store of value characteristic of money. The President himself knows that hence he moves around with stashes of United States Dollar bills and not ZiG.
“There is no doubt that the whole gold backed currency is a ruse to print money for covering government costs especially worker’s salaries.
“Zimbabwe needs a currency of its own but the government continues to handle the process in ways that breed mistrust in the market,” he said.
Former Reserve Bank of Zimbabwe (RBZ) chief economist Masimba Manyanya highlighted the erosion of confidence in ZiG, citing the delay in introducing new notes and coins.
“Zimbabwe deserves a currency of its own, a currency that qualifies as a proper unit of account, store of value, medium of exchange. When a nation cannot properly account for its wealth, then there are serious challenges in the market.”
Manyanya cited the social and political implications of a flawed currency transition, particularly affecting the poor.
He stated that the ZiG launch lacked consultation and transparency, undermining public confidence. Manyanya said unavailability of small denominations hurts the poor, who face increased costs for daily transactions.
“The failure of the Government of Zimbabwe to even stick to their own schedule of introducing ZiG short-changes the poor, who particularly depend on small denominations for small transactions like transport and day-to-day household expenditure items.
“Because of the unavailability of small change, the poor have to pay double when they get on the bus or in the tuckshops.
“At an aggregate level, this represents a massive outflow of value from the poor, especially to propertied classes who run private transport and trading services,” Manyanya explains.
“The ruling class can manipulate national wealth figures to suit their political purposes. Our specific situation of transition from Bond to ZiG has particular challenges for the poor.
“Firstly, the ZiG launch did not follow standard protocols of consultation within the National Assembly.
“No one in the Legislatures really knew what Structured Currency meant at the time it was introduced. Which throws in doubt and undermines public confidence, an important ingredient of any monetary policy initiative,” Manyanya noted.
