ZiG sabotage

The introduction of the Zimbabwe Gold currency (ZiG) nearly five months ago has contributed to noticeable stability and low inflation, largely due to the Reserve Bank of Zimbabwe's (RBZ) rigorous measures and President Emmerson Mnangagwa's administration. Efforts to stabilize the currency have included controlling the money supply, building gold and foreign reserves, and channeling foreign currency for approved imports. The RBZ has also cracked down on those undermining the ZiG by freezing accounts and imposing fines.

Recently, the RBZ's Financial Intelligence Unit (FIU) and police issued a stern warning, emphasizing that no one is exempt from the nationwide crackdown on violations of the Exchange Control Act. The FIU has frozen 522 bank accounts and imposed heavy fines on 140 entities and individuals involved in exchange control violations. The crackdown is focusing on suspicious activities such as the use of multiple bank cards for foreign currency transactions and inconsistent shopping behaviors.

While these measures have contributed to stability in formal transactions, the informal market remains a significant challenge. Despite government efforts, the informal sector has become a hotbed for ZiG currency sabotage. Investigations by the Zimpapers Politics Hub reveal that many tuckshop owners and vendors are rejecting ZiG coins, demanding instead 10 ZiG notes for transactions, and pegging rates at 20 ZiG to US$1. This practice disrupts daily transactions and threatens the currency's stability.

If not addressed, the scarcity of ZiG coins could lead to higher prices and limited transaction options, potentially causing public discontent. To counter this, the government has been urged to enforce stricter measures against informal traders who refuse to accept ZiG or engage in black market activities. Proposed actions include fines, penalties, or imprisonment similar to those imposed on illegal money changers.

FIU Director General Oliver Chiperesa has acknowledged the issue, noting that while compliance from formal businesses is encouraging, the informal sector remains problematic. The FIU's ongoing blitz targets various informal sector operators, including tuck-shops, restaurants, vendors, and manufacturers who are either rejecting ZiG or using inflated black market rates.

Chiperesa also highlighted the need for educational campaigns to inform informal traders about the benefits of the ZiG currency. Incentives such as tax breaks or business grants could further encourage compliance and foster a cooperative environment.

Before the ZiG's introduction, Zimbabwe struggled with hyperinflation and currency devaluation. The current stability and low inflation rates reflect the success of the government's measures, but ongoing vigilance is required. Addressing informal market challenges while promoting compliance will be crucial in ensuring the ZiG remains a stable and effective medium of exchange, benefiting all Zimbabweans.