🔒 Zimbabwe’s gold-backed ZiG currency: A symbol of economic desperation – Justice Malala

In this piece from Justice Malala, Zimbabwe’s relentless cycle of economic mishaps is scrutinised through its latest monetary experiment: the Zimbabwe Gold (ZiG). Despite the hopeful departure from decades of Robert Mugabe’s ruinous reign, his successor, Emmerson Mnangagwa, continues the legacy of corruption and repression. With the introduction of ZiG, mirroring the failures of its predecessors amid ongoing political turmoil, the country’s deep-seated issues appear insurmountable. The analysis reveals not just economic incompetence but a profound political crisis stifling Zimbabwe’s potential.

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By Justice Malala

When it comes to bringing a knife to a gunfight, Zimbabweans have got game. ___STEADY_PAYWALL___

In 2017, after 37 years of kleptocratic rule by the late President Robert Mugabe, the country’s army staged a coup ousting him. Thousands of Zimbabweans rushed into the streets in jubilation. Change was afoot, many said. Then they installed Mugabe’s right-hand man and vice president Emmerson Mnangagwa, to take over.

Instead of the promised revolution, Mnangagwa has run the country almost exactly as Mugabe had. The economy has remained moribund while political oppression has flourished.

And so, when the country’s central bank launched a new currency, the Zimbabwe Gold (ZiG), on April 8 to replace the Real Time Gross Settlement Dollar (RTGS), also known as the Zimdollar, my heart sank. I had seen this before: yet another silly, transparent attempt to solve the country’s deep political problems through a monetary policy sleight-of-hand. It’s a knife at a gunfight.

Launched with an initial rate of 13.56 to the US dollar, the ZiG will most likely weaken, crash and collapse just as its five predecessors have done. The RTGS had lost about 80% of its value this year and had been trading at 28,720 to $1 on April 8 — a precipitous fall from its debut at 2.50 to the greenback in February 2019.

The ZiG can expect the same fate because the kleptocratic, anti-democratic political culture that held sway in the worst days of Mugabe still rules supreme today. Zimbabwe under Mnangagwa is as repressive and corrupt as ever, with the economy being run by the same ministers who have sat in power for 44 years. This is the political class who oversaw the printing of money that started in the late 1990s and triggered one of the world’s worst cases of hyperinflation in the 2000s; the corrupt land restitution policies of the early 2000s that made Mugabe and his family the country’s largest agricultural landholder and led to food shortages; the repression of the late 2000s; and the wanton mismanagement of the economy through controversial policies such as forcing all foreign companies and White-owned business to sell 51% of their equity stakes to politically connected black Zimbabweans — which led to Western sanctions and investment flight.  

The introduction of a new currency will not lead to change in Zimbabwe — just like the various iterations of the Zimdollar didn’t for the last 16 years.

Zimbabwe’s post-Mugabe nepotism has flourished as if it’s Donald Trump White House. Last year, Mnangagwa, who has been accused by the US government of involvement in corruption in the alleged smuggling of the country’s vast mineral deposits, appointed his son to the powerful position of deputy finance minister.

Even before that, Mnangagwa’s army and secret services intimidated and jailed civil rights activists and opposition leaders ahead of elections in August 2023. In an unprecedented move, the regional bloc, the Southern African Development Community, said that the elections “fell short of the requirements of the Constitution of Zimbabwe, the Electoral Act, and the SADC Principles and Guidelines Governing Democratic Elections.” In short, Mnangagwa had stolen elections just as his predecessor and comrade had done in the  2000s.

It’s early days, but the new currency’s future woes are already apparent. Although it debuted stronger than the South African rand, which is used extensively in the country alongside the US dollar, the ZiG cannot be used to buy fuel in Zimbabwe. It is extraordinary that a government would launch an instrument that supposedly carries full value – and immediately undermine it. The government will also not accept payment in ZiG for its own passport applications. Just days after launching ZiG, Zimbabwe Reserve Bank governor John Mushayavanhu was charging US$100 for a seat at a breakfast he was hosting on monetary policy. The government reportedly demands taxes in mixed currency.

At least 63% percent of all households in Zimbabwe live in poverty, according to the US Agency for International Development, and 16% live in extreme poverty. No Zimbabwean should be living like this: The country’s mining sector boasts more than 40 different minerals ranging from platinum group metals to gold, coal, lithium and diamonds. Yet there will be little or no progress in exploiting this wealth without fundamental political change.

For that to happen, the SADC — and notably regional powerhouse South Africa, which has supported Zimbabwe’s leaders for decades — needs to speak up against Harare’s kleptocracy. That’s unlikely to happen given historical ties between the region’s liberation movements and their propensity to support each other. Which means, in a few years’ time, we will likely be writing long screeds about the next iteration of the Zimbabwean currency.

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