HARARE, Feb. 7 (Xinhua) -- The Zimbabwean government faces challenges in promoting the Zimbabwe Gold (ZiG) currency for financial stability, as some businesses remain reluctant to accept it, preferring the U.S. dollar, which remains legal tender under the country's multi-currency system.
While formal businesses accept the local currency, some people, particularly in the informal sector, resist using the gold-backed ZiG, which was introduced in April 2024 to reduce Zimbabwe's dependency on the U.S. dollar.
"Given past experiences with chronic high inflation and hyperinflation, many economic agents were traumatized by the loss of value caused by these conditions," Zimbabwean economist Prosper Chitambara told Xinhua on Friday.
"It will take time to fully restore trust and confidence in the ZiG. But that will depend on the authorities' ability to maintain low and stable inflation over time," Chitambara added.
Zimbabwe adopted a multi-currency system in 2009 after severe hyperinflation rendered the local dollar worthless. The ZiG replaced the Zimbabwean dollar, which was introduced in 2019 but failed due to inflation.
The introduction of ZiG aimed to curb inflation and reduce reliance on the U.S. dollar, which accounts for over 80 percent of domestic transactions, according to the Zimbabwe National Statistics Agency. The government plans to phase out the U.S. dollar and make ZiG the sole currency by 2030.
Despite efforts to stabilize the local currency, ZiG faces resistance, particularly in the informal market, where currency regulations are loosely enforced.
To encourage its use, the government has mandated businesses to accept ZiG and launched a crackdown on illicit currency trading, leading many traders to vacate their usual spots in Harare's central business district. The central bank has also set up a hotline for the public to report businesses that refuse to accept the currency.
However, business owners argue that using ZiG is challenging because suppliers typically demand U.S. dollars.
"Most business expenses are in U.S. dollars, including rent, supplier payments, and even some required licenses," said Gwen Satande, a small business owner in Harare, the capital.
She said that disparities between the official and unofficial exchange rates make it difficult to operate sustainably.
Currently, ZiG trades officially at 26 to the U.S. dollar, while in the parallel market, it is exchanged at around 36 per dollar.
To promote the use of ZiG, the central bank announced a reduction in exporters' foreign currency retention threshold from 75 percent to 70 percent in its 2025 Monetary Policy Statement.
"This measure is intended to maintain stability in the interbank foreign exchange market by increasing the supply of foreign currency and building critical reserves to support the ZiG," Reserve Bank of Zimbabwe Governor John Mushayavanhu said Thursday during the policy presentation in Harare.
