Zimbabwe's businesses sound alarm over volatile ZiG

Zimbabwe's business leaders have expressed deep concern over the persistent volatility of the Zimbabwe Gold (ZiG) currency, warning that ongoing instability is crippling industrial growth and eroding business confidence nationwide.

The warnings come in the wake of a sharp 43% devaluation of the ZiG in September 2024, which dashed hopes for currency stability and intensified scepticism about the government's latest monetary experiment. Inflation continues to surge, with year-on-year figures reaching 92.1% in May 2025, up from 85.7% in April, and expectations of further deterioration in June.

Addressing delegates at the Zimbabwe National Chamber of Commerce (ZNCC) Annual Conference in Victoria Falls yesterday, ZNCC Chief Executive Officer Christopher Mugaga highlighted the crippling effect of currency volatility on industrial operations and the broader economic recovery.

"The major issue dominating ZNCC discussions for 2024 and 2025 has been the persistent demand for a stable local currency," Mugaga said. "We are not opposed to having a local currency, but what businesses need is one that is stable and reliable. Only when that happens can we collectively focus on rebuilding the economy."

Since its introduction in April 2024, the ZiG has struggled to gain traction, despite being partly backed by gold reserves. Many businesses and consumers continue to prefer more stable foreign currencies due to persistent exchange rate pressures and inflationary concerns.

Economists warn that the instability is disrupting supply chains, stalling production, and making long-term business planning nearly impossible. A Harare-based economist noted, "Without a stable currency, production becomes a gamble. Pricing, wage negotiations, import planning - all of that is thrown into disarray."

Compounding the economic woes is Zimbabwe's mounting public debt. The International Monetary Fund (IMF) reports that Zimbabwe's total public debt reached US$21.2 billion in 2023 - about 96.6% of GDP - much of which is unsustainable. The IMF has called for urgent fiscal reforms, including improved debt management and resolution of external arrears to restore debt sustainability.

"The debt overhang restricts Zimbabwe from accessing patient capital due to elevated country risk," Mugaga said. "We need to address this urgently if we hope to secure affordable loans from international financial institutions."

The IMF's latest assessment stresses that persistent deficit financing has pressured the ZiG and that restoring macroeconomic stability requires transparency, consistency, and a market-driven approach.

ZNCC President Tapiwa Karoro echoed these sentiments, calling for comprehensive structural reforms and a clear, coordinated policy framework to restore confidence.

"For sustained economic stability and industrial resilience, Zimbabwe requires a holistic policy framework that includes structural reforms, improved governance, and a clear currency transition strategy," Karoro said.

Beyond currency issues, businesses also face challenges such as high tax burdens, aggressive revenue collection, depressed liquidity, and policy inconsistency, all of which risk further de-industrialisation.

While government officials defend the ZiG as a cornerstone of monetary sovereignty, industry leaders remain sceptical, pointing to ongoing exchange rate fluctuations and weak public trust.

As the ZNCC Annual Conference continues, the business community is expected to push for transparent and consultative policymaking that prioritises stability and accountability - key ingredients for restoring business confidence and fostering sustainable economic growth.

Until these issues are resolved, the volatile ZiG currency and Zimbabwe's unsustainable debt profile will continue to hamper industry, dimming prospects for a swift economic recovery.