Zimbabweans Bear Cost of Changing to New ZiG Currency

HARARE, Zimbabwe – At a shopping center in Glenview, a busy working-class suburb of Zimbabwe’s capital, Harare, carpenter Arnold Mutiri stopped to buy a 2-liter (half-gallon) Mazoe Raspberry drink.

“The price tag said US$3.70,” Mutiri said. “With Zimbabwe’s volatile currency and years of economic crisis, most goods are priced in more stable United States dollar amounts with customers receiving their small change in local currency.”

Mutiri handed the shopkeeper four US$1 bills and waited for his change. But the shop had none available. The 37-year-old then tried to pay the full amount in ZWL, Zimbabwe’s outgoing currency, which locals call bond notes, but the till operator refused to accept it, telling him to buy something else or forfeit the balance.

“The scenario is one many Zimbabweans now face on a daily basis since the country launched its new currency, Zimbabwe Gold, or ZiG, two weeks ago,” Mutiri said, lamenting how people have to budget more for basics just to make it through the day.

New Currency, Old Problems

On April 5, Zimbabwe’s central bank announced the new gold-backed currency, immediately implementing changes on digital platforms with local banks converting ZWL to ZiG amounts on their systems.

“However, the new bank notes will become available only at the end of the month after the central bank’s governor put in place a grace period to enable the transition,” Al Jazeera reported. “In the meantime, the central bank made assurances that bond notes would still be in use.”

Despite this, many businesses like the shop in Glenview have already ceased trading in ZWL, significantly impacting millions who depend on cash for their daily needs, including people working in the informal economy.

“This comes at a time when we are already struggling with unemployment and the drought,” Mutiri said. “Shops cannot give change, meaning they are rounding up all the transactions. They are profiteering a lot during this period of poorly coordinated currency transition. One has to double or triple the usual spending,” he told Al Jazeera.

A History of Currency Chaos

The ZiG is set to replace both existing ZWL bond notes and the Zimbabwean dollar, launched in 2016 and 2019, respectively.

“Zimbabwe has been struggling with its currency for more than a decade,” Al Jazeera reported. “The ZiG is the country’s sixth attempt to launch a new one since 2008 when the rate of inflation reached 79.6 billion percent per month before soaring to an unprecedented level of 89.7 zillion percent by November that year, according to the International Monetary Fund.”

The decision to move to the ZiG was an attempt to tackle inflation and also foster “simplicity, certainty [and] predictability” in Zimbabwe’s financial affairs, John Mushayavanhu, the governor of the Reserve Bank of Zimbabwe, said at the launch.

But simplicity is not what many consumers in Zimbabwe are currently experiencing.

Several people in Harare and nearby towns and rural areas told Al Jazeera that despite assurances the old notes were still in use this month, government entities and the private and informal sectors were all rejecting them, leaving people in the lurch.

“This is beyond the shops,” Mutiri said. “Last week at the tollgate, the government agency ZINARA was rejecting the bond notes, yet people do not have the ZiG cash. Bond notes are still a legal tender for transactions, at least until April 30. The government itself is expected to reflect confidence and lead exemplarily, but they are also rejecting it altogether.”

People were also unable to use online platforms to pay for telecommunications and electricity services in the immediate wake of the changeover while some banking services temporarily went offline from April 5 to 8, local media reported. This also affected US dollar transactions.

New Currency, Same Challenges

Clara Choti from the suburb of Kuwadzana said transport was now more expensive because operators were taking advantage of the situation.

“Local destinations within our suburbs where we used to pay between 30 and 50 [US] cents are now priced at $1, unless you are travelling as two or three people, which is rare,” she said. “Operators say they do not have the change.”

According to Craig Nhodo, a financial expert: “All these efforts by the government to change currencies are in search of stability of a freefall economy. [But] without the government itself committed to the use of the local currency, currencies have failed. Now ZiG is here, but you can’t buy fuel, pay import duty with it. Already the new currency is set for failure.”