Staff Writer
As Zimbabwe continues to grapple with economic instability, the Reserve Bank of Zimbabwe (RBZ) remains committed to stabilizing the country’s local currency, the ZiG.
In its 2025 Monetary Policy Statement, the RBZ laid out key strategies to boost confidence in the ZiG, including adjusting deposit rates and continuing efforts to drive demand for the local currency. But the question remains: will the ZiG be able to overcome the challenges of convertibility and demand, and ultimately become a stable store of value?
Persistence Gwanyanya, an economist and member of the RBZ’s Monetary Policy Committee, explained that despite the challenges, the RBZ’s focus on the ZiG is critical for the country’s long-term economic stability.
ZiG’s Stability: The Importance of Convertibility and Market Confidence
One of the key goals for the RBZ is to ensure that the ZiG becomes fully convertible, backed by foreign reserves in the form of foreign currency and precious minerals. As of January 2025, Zimbabwe’s foreign reserves stood at ZiG14.3 billion (US$550 million), providing more than three times cover for the ZiG reserve money, which is a reassuring sign for the local currency’s convertibility.
However, Gwanyanya notes that while convertibility is crucial, it is not enough to guarantee permanent stability. “The real challenge is ensuring that the demand for ZiG continues to grow. Without robust demand, even a well-backed currency cannot function effectively as a store of value,” he says.
Driving Demand for ZiG: Government Initiatives and Business Response
In an effort to boost demand, the government has already started implementing measures such as paying farmers in ZiG for crops like maize and tobacco. This initiative, introduced in late 2024, aims to promote the use of the local currency in key economic sectors.
“Farmers receiving part of their payments in ZiG are a sign that the government is taking practical steps to drive demand for the currency,” says Gwanyanya.
“However, we need to see broader adoption across other sectors of the economy for the ZiG to stabilize.”
Another key measure from the RBZ is the increase in deposit rates for both ZiG and US dollar savings and time deposits. This is aimed at incentivizing savings in the local currency and restoring confidence in the financial system.
The increased rates—5% for ZiG savings deposits, 7.5% for time deposits, and 2.5% for US dollar savings—are expected to improve liquidity in the banking system and encourage local currency usage.
Challenges Ahead: A Need for Broader Economic Adjustments
Despite these measures, Gwanyanya cautions that external factors, such as the continued economic challenges in Zimbabwe’s trading partners and the volatility of global commodity prices, remain significant threats to the ZiG’s long-term success. Additionally, the informal economy, which operates largely outside the formal banking system, poses a challenge to driving the currency’s adoption.
“The role of the RBZ and the government is not just about managing the monetary policy. It’s about working with the private sector to make the ZiG an attractive and viable currency for both domestic and international transactions,” says Gwanyanya.
A Long-Term Vision: Restoring Confidence and Achieving Stability
Gwanyanya’s outlook for 2025 and beyond is cautiously optimistic. While he acknowledges the challenges, he believes that with a concerted effort from the government, businesses, and households, the ZiG can regain its role as a stable store of value. “It won’t be an easy road, but with the right strategies in place, the ZiG can become a stronger, more reliable currency for Zimbabweans,” he concludes.
For now, as the RBZ focuses on boosting demand for ZiG and ensuring its stability, it will remain to be seen whether Zimbabwe’s local currency can endure the pressures of economic uncertainty and emerge as a true symbol of economic resilience.
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