Zimbabwe's Informal Sector Rejects Local Currency Ahead of New Gold-Backed ZiG Launch

In Zimbabwe, the impending introduction of a new gold-backed currency, the Zimbabwe Gold (ZiG), at the end of April has led to widespread apprehension among informal traders.

These traders are increasingly rejecting the current local currency, the Zimbabwean dollar (Zimdollar), fearing its imminent devaluation. The transition to ZiG marks Zimbabwe's latest attempt to stabilize its economy and combat inflation by introducing a more robust currency.

However, memories of past currency failures have left many wary, prompting a shift towards transactions in U.S. dollars, especially within the informal sector, which is predominantly cash-based.

Marceline Mupotaringa, a vendor in the outskirts of Harare, reflects the prevailing sentiment as she notes the reluctance of fresh produce farmers to accept Zimdollars, anticipating its further depreciation with the rollout of ZiG.

Similarly, Brian Muchemwa, a Harare-based trader, has observed a significant decline in the Zimdollar's value, with its exchange rate plummeting, making transactions in U.S. dollars more practical for his business.

The central bank of Zimbabwe has acknowledged these concerns and issued a statement urging businesses to continue accepting Zimdollars until the official transition to ZiG. Despite this, the allure of the more stable U.S.

dollar has intensified, particularly on the black market, where exchange rates have surged due to increased demand.

While large retail chains and supermarkets have begun to adapt, incorporating ZiG pricing, many still accept Zimdollars, contrasting with the informal sector's rapid shift.

This situation underscores the challenges Zimbabwe faces in navigating currency transitions, with the informal sector's response highlighting broader uncertainties about the new currency's potential to restore economic stability.