Zimbabwe's mono-currency shift will be market-led

Zimbabwe's return to a mono-currency system will no longer be determined by a fixed date, but by the achievement of key economic conditions, Reserve Bank of Zimbabwe (RBZ) Governor Dr John Mushayavanhu has said.

Mushayavanhu made the remarks on Monday at the official opening of Ecobank Zimbabwe's new headquarters in Harare, an event attended by President Emmerson Mnangagwa.

He said the transition would be gradual and market-led, with the timing dependent on the country meeting conditions set out under the Second National Development Strategy (NDS2).

"Let me reiterate that the transition to mono-currency, which has been talked about, is going to be market-led. It is no longer date-based, but contingent upon meeting conditions outlined in the National Development Strategy 2," Mushayavanhu said.

The RBZ's 2026-2030 strategy identifies several conditions precedent for the transition, including durable macro-economic stability characterised by low and stable single-digit inflation, adequate foreign currency reserves, an efficient foreign exchange management system, stable exchange-rate dynamics and financial-sector stability.

Mushayavanhu also urged banks not to restrict lending tenures to 2027 based on an assumption that Zimbabwe will have adopted a mono-currency by then.

"Banking institutions should not limit lending tenures to 2027 because the transition to mono-currency is no longer date-based, but is based on the conditions presented," he said.

The clarification removes the assumption that loans extending beyond 2027 would automatically coincide with a change in the country's currency regime.

Mushayavanhu said Zimbabwe had made progress on some of the conditions, particularly in maintaining low and stable inflation and improving the foreign currency management system.

However, he acknowledged that the country still needs to significantly strengthen its foreign currency reserves. Zimbabwe is targeting reserves equivalent to between three and six months of import cover in the medium to long term, while current reserves stand at about 1.7 to 1.8 months of import cover.

"We are sitting at about 1,7 to 1,8 months of import cover, we still have a way to go, but we will get there," he said.

Import cover measures the period for which a country's foreign currency reserves can finance its imports and is an important buffer against external shocks and foreign currency shortages.

The RBZ's strategy makes reserve accumulation a key part of preparations for the eventual transition, alongside maintaining price stability and ensuring an efficient foreign exchange market.

The country's experience with previous currency changes has also highlighted the importance of establishing adequate foreign currency buffers before making a fundamental shift in the currency regime.

Zimbabwe introduced the Zimbabwe Gold (ZiG) in April 2024 as its domestic currency, while foreign currencies continue to be used under the country's multi-currency framework. The Government's earlier policy framework had envisaged a transition towards a mono-currency by 2030, but the latest comments from the RBZ indicate that the timing will ultimately depend on the economic conditions being achieved.

Mushayavanhu said the RBZ had also made progress towards establishing a more efficient foreign currency management system designed to improve access to foreign exchange for legitimate transactions.

The Governor's latest remarks therefore place economic stability, reserve accumulation and the functioning of the foreign exchange market at the centre of Zimbabwe's eventual move to a mono-currency system, rather than a predetermined changeover date.