Zimbabwe is making progress towards sole ZiG use

Reserve Bank of Zimbabwe (RBZ) Governor John Mushayavanhu says conditions for the eventual adoption of the Zimbabwe Gold (ZiG) as the country's sole currency are steadily falling into place, although market indicators suggest demand for the local unit remains significantly weaker than official assessments.

Government has previously indicated that the ZiG would become Zimbabwe's exclusive legal tender by 2030. However, the RBZ now says the transition will no longer be driven by a fixed deadline but by the fulfilment of specific economic conditions.

The shift from a time-based target to a conditions-based approach reflects growing recognition that restoring confidence in the local currency, rather than adhering to a calendar date, will determine the success of a return to a mono-currency system. However, the change also creates uncertainty, as existing legislation still provides for a 2030 deadline and has yet to be amended.

Speaking to The Sunday Mail, Mushayavanhu said several of the Reserve Bank's key benchmarks had already been achieved.

According to the governor, the ZiG has remained stable, inflation has been contained and the premium between the official and parallel exchange rates has narrowed to within the targeted 20 percent.

However, he acknowledged that two critical conditions remain outstanding.

"The two CPs that are yet to be met and are in progress are on the adequate foreign currency reserves and on the increased demand for the local currency," he said.

On foreign currency reserves, the central bank is targeting reserves equivalent to between three and six months of import cover.

Zimbabwe's reserves stood at approximately US$1.6 billion in June, representing around 1.6 months of import cover, still below the minimum target.

Mushayavanhu said the Reserve Bank had nevertheless made significant progress in strengthening the reserves backing the ZiG.

Gold reserves supporting the currency have increased by about 200 percent since April 2024 to approximately 4.5 tonnes.

"The significant build-up of foreign currency reserves is a critical success factor for restoring market confidence, entrenching macroeconomic stability and supporting the transition to mono-currency," he said.

While the governor maintains that demand for the ZiG is improving, available market data from several of Zimbabwe's largest companies presents a different picture.

Mushayavanhu said ZiG transactions had increased from 26 percent of electronic payments in April 2024 to between 35 and 40 percent currently, attributing part of the growth to regulations requiring companies to settle at least half of their quarterly tax obligations in ZiG.

However, financial results published by major corporations indicate that consumers and businesses continue to overwhelmingly favour the United States dollar.

Beverages giant Delta Corporation reported that 94 percent of its sales are now conducted in foreign currency, an increase of 14 percentage points over the past year.

Food and dairy producer Dairibord Holdings similarly disclosed that 96 percent of its sales volumes during 2025 were transacted in US dollars, compared to 83 percent the previous year.

PPC Zimbabwe also reported that 99 percent of its cash holdings at the end of its last financial year were denominated in hard currencies.

The trend extends beyond the retail sector into financial services.

According to the Insurance and Pensions Commission (IPEC), Zimbabweans continue to favour US dollar-denominated insurance products as a store of value.

Life insurers generated US$43.4 million in US dollar premiums during the first quarter of 2026, representing a 32 percent increase from the same period last year.

US dollar business now accounts for 56 percent of total insurance premium income, up from 51 percent previously, while life reassurers derive approximately 94 percent of their revenue from foreign currency business.

The contrasting data highlights the challenge facing policymakers as they seek to build public confidence in the ZiG. Although macroeconomic indicators have shown greater stability since the currency's introduction, consumer and corporate preferences continue to favour the US dollar for transactions, savings and long-term value preservation.

Whether the remaining conditions for a full transition to a mono-currency system can be achieved may ultimately depend less on regulatory measures and more on sustained confidence among businesses, investors and the public.