Does Mnangagwa intend to stabilize the economy by creating a ghost currency?

Tendai Ruben Mbofana

In fact, in the last two months, the ZiG (Zimbabwe gold) has remained practically unchanged in the official foreign exchange market.

The interbank exchange rate stands at 13.60 ZiG per 1 dollar, while in the parallel market the greenback is sold for 17 ZiG.

Despite the seemingly large difference between official and black market exchange rates, prices of goods and services have remained relatively stable.

However, there is one glaring problem that cannot be ignored.

Where is this new currency?

As much as we can praise its apparent stability, we need this currency to be truly present and visible on the ground.

We can never genuinely claim that ZiG is a stablecoin when it is virtually invisible and as rare as a pangolin.

Frankly, since the ZiG was released as bills and coins at the end of April, I have only come across one ZiG10 bill and a few coins.

In fact, almost all large retailers, as well as informal traders, continue to complain about the lack of change, so that one is forced to buy another product instead of change.

This is due to the absence of the ZiG, which was to satisfy this need.

Even though RBZ (Reserve Bank of Zimbabwe) Governor John Mushayavanhu claimed that the apex bank had injected 55 million ZiG worth of notes and coins into the Zimbabwe economy, the currency is nowhere to be seen.

Surely we are to believe that 55 million ZiG can simply disappear into thin air since most Zimbabweans do not have that money?

Or was much ZiG never injected into the economy to begin with?

It is a currency supposedly backed by 2.5 tons of gold and $100 million in foreign exchange reserves held by the central bank.

Can we then be reproached for believing that there are no gold or foreign currency reserves in the RBZ to support this ZIG?

So why all this charade?

Could this all be a plan to impose stability on Zimbabwe’s economy by creating a ghost currency?

It is quite plausible that President Emmerson Dambudzo Mnangagwa’s administration is fully aware that it will never be able to sustain a stable currency.

Recall that they attempted this experiment with the reintroduction of the Zimbabwe dollar (ZWL) in June 2019, after a decade of primarily using the US dollar.

However, the ZWL fell dramatically, so that at the time of its replacement by the ZiG it was trading at ZWL 30,000 per dollar.

This was largely due to a lack of confidence in the currency by the Zimbabwean population, as well as the government’s indiscipline through rampant printing of the currency.

So has anything changed with the ZiG?

One thing is certain: there is no overprinting of the new currency.

What about public trust?

No one can deny that ordinary Zimbabweans still have no faith in their own currency, indicating a deeper lack of trust in Mnangagwa’s own administration.

This is a fact that certainly cannot go unnoticed by the government.

They are fully aware that ZiG will never be accepted by the general population and is therefore likely to crash on the forex market in a short space of time.

Isn’t that why the regime has waged a war against illegal currency traders, who have been having clashes with the police and dozens of them have been arrested?

All this is done to avoid the obvious.

Nobody wants the ZiG!

A freely functioning black market will lead to many Zimbabweans dumping the local currency in exchange for the dollar, thus rapidly depreciating its value.

Therefore, the government’s plan is to close all avenues for citizens to get rid of the unwanted ZiG, thus forcing the currency down our throats.

However, it seems that even these draconian measures are not giving Mnangagwa a peaceful night’s sleep.

He has gone one step further.

To apparently preserve the stability of the ZiG, the government has decided to make it practically non-existent in the economy.

He has become nothing more than a ghost!

Indeed, Zimbabwe’s economy has become completely dollarized – save for one or two mobile or electronic transactions – without Mnangagwa necessarily admitting it or officially announcing it.

Let us remember that this is a man who has insisted that no country can survive without its own currency.

Therefore, it will never be able to openly acknowledge that the local currency project has failed… miserably.

The best it can do is for Zimbabwe to pretend it has its own currency when, in fact, it does not.

The plan is to prevent any trading of the ZiG on the currency market, thus keeping its value relatively unchanged.

How can a non-existent currency lose value?

The question now is: Is this crazy version of the economy sustainable?

How long will Mnangagwa be able to keep the economy stable using a ghost currency?

Only time will tell.

For now, however, those in authority seem content to continue with this farce.

Post published in: Featured

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