ZiG Getting Positive Reception, Says RBZ Governor Mushayavanhu

Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu says the central bank’s recent nationwide ZiG awareness campaign showed overwhelmingly positive reception of the currency by economic agents.

In an interview with The Sunday Mail, Mushayavanhu said businesses are accepting ZiG for payment of goods and services, and prices have remained stable.

“There has also been a shift in the way the local currency is perceived in the market, as most companies are no longer charging discriminatory prices at more depreciated exchange rates,” said Mushayavanhu.

“As a result, the exchange rates being used by supermarkets have been gradually moving towards converging with the interbank exchange rate, and the observed difference now merely reflects transaction costs as opposed to the uncertainty premiums.

“The Reserve Bank has also noted increased demand for ZiG to settle payments to cotton farmers and to meet mandatory tax payments in ZiG at the quarterly payment dates.

“The Reserve Bank expects demand for ZiG to continue increasing in tandem with increased economic activity across the country.”

Mushayavanhu added: “The demand for ZiG has been on an increasing trend, as evidenced by a significant increase in ZiG transactions in the National Payments System from 26 per cent in April 2024 to current levels of between 35 and 40 per cent of electronic transactions.

“Government has also made significant efforts to support the local currency through the requirement to pay 50 per cent of QPDs (quarterly payment dates) in the local currency and the settlement of public sector suppliers in ZiG.

“To complement Government efforts, the Reserve Bank has issued attractive ZiG-denominated instruments.

“Furthermore, the effective management of inflation, coupled with ongoing ZiG awareness and education campaigns on the back of the high-quality BiG5 ZiG banknote series, has enhanced confidence in ZiG.

“Furthermore, monitoring by the Financial Intelligence Unit has shown that most companies are now accepting payments in both ZiG and US dollars.

“Importantly, there has been a reduction in discriminatory pricing practices, where businesses were using a more depreciated exchange rate to price goods in ZiG.”

Mushayavanhu said the central bank and the government will continue to explore ways to increase demand for ZiG, including additional taxes to be settled in ZiG, in line with the transition to a mono-currency.

To create a buffer to anchor the ZiG and further protect it from volatility, the RBZ plans to build enough reserves to cover two months of imports by year-end, closer to the international minimum target of three to six months.

Gold holdings, which have risen from 1.5 tonnes in April 2024 to 4.5 tonnes last month, make up 40 per cent of the reserves.

The government plans to increase its holdings to around 11 tonnes by the time of transition to a mono-currency.