Recent indications by the Zimbabwean government that it intends to de-dollarise the economy by 2026, with the announcement of a roadmap to end the use of the US dollar, appear to be a move doomed from the start, according to politicians, economists, and the general public.
These concerns are rooted in the country’s economic history under Zanu PF.
The government has unveiled a new strategy to phase out the use of the US dollar in favour of the ZiG bullion-backed currency, with Finance Minister Professor Mthuli Ncube set to present a detailed roadmap next week.
This decision has raised significant concerns about the feasibility of transitioning away from the US dollar, which remains deeply entrenched in Zimbabwe’s economy.
Political figures, economists, and the general public have questioned the potential impact on Zimbabwe’s economy and daily life, considering the country’s troubled history with currency changes.
“President Emmerson Mnangagwa’s hint at a sole Zimbabwean currency regime brings to the fore several pressing concerns that need to be addressed before such a policy can be successfully implemented,” said Admire Dube, Secretary for Information and Communication for The Patriotic Front (TPF) party.
Dube expressed scepticism about the plan, citing past economic instability under Zanu PF.
Dube noted that while a sole Zimbabwean currency could enhance national sovereignty, significant challenges, including policy inconsistency and economic mismanagement, must be addressed for de-dollarization to succeed.
“The first hurdle in the path to a sole Zimbabwean currency is the deep-seated lack of market confidence. Zimbabweans have witnessed a series of policy inconsistencies that have eroded trust in the government’s ability to manage the economy,” he stated.
“Without restoring faith in the consistency and credibility of economic policies, any move towards a single currency is likely to be met with scepticism and resistance.”
Dube also highlighted the pervasive issues of corruption and economic mismanagement, which have hindered Zimbabwe’s economic progress. He stressed the importance of combating corruption and improving governance to build trust in the local currency.
“This requires not just rhetoric but the implementation of tangible reforms that hold corrupt officials accountable and ensure that economic decisions are made in the public interest,” said the TPF official, calling for sound monetary policies and measures to align the official exchange rate with market conditions.
“To successfully transition to a sole Zimbabwean currency, the government must first tackle inflation decisively.”
General Secretary of the Zimbabwe Communist Party (ZCP), Ngqabutho Nicholas Mabhena, expressed uncertainty regarding the implications of this policy shift.
“We are not yet sure how this will affect the economy of Zimbabwe,” Mabhena stated. “We are yet to analyze the performance of ZiG, considering that one cannot purchase goods outside the country using ZiG.”
Mabhena also raised concerns about the practical challenges of conducting international transactions without the US dollar.
“Some businesspeople purchase goods using the US dollar in neighbouring countries. Fuel is paid for in US dollars, and we wait to see how this is going to affect the performance of the economy,” he explained. “Most of the products we consume are imported, so we will have to see how this will impact the economy.”
The potential for a return to the economic instability of the late 2000s, characterized by hyperinflation and shortages of essential goods, looms large in the minds of many Zimbabweans.
“We hope we are not going to return to 2007/2008 when we had long queues for fuel and shortages of commodities,” cautioned Emmanuel Sibanda, a Bulawayo resident. “There must be clear communication and careful planning to avoid potential disruptions. This doubt is the outcome of trying to re-establish a local currency in a challenging economic environment that Zanu itself brought to ruin.”
Another resident, Sinanzeni Nyathi, added: “Whether the government can successfully move to ZiG amid these challenges remains to be seen.”
The discussion on the possible transition from the US dollar played out on online platforms, with economic analyst Tinashe Nyenyedzi echoing concerns about the reliance on remittances, which are beyond the government’s control.
“Unfortunately for the Cabinet, they have no control over the US$150 million a month in remittances that fuel the economy. It is remittances that drive consumption and investment in Zimbabwe, and it’s beyond the state’s grip,” Nyenyedzi remarked.
The economist noted that much of the US dollar circulation in Zimbabwe occurs outside the formal banking sector, posing a challenge to the government’s plan to end dollar use.
The Zimbabwe Institute for Accountability, which aims to promote values of democracy and transparency, also expressed doubts about the government’s control over the economy.
“The Zimbabwe government likes to fly kites. The Zimbabwean economy is not really under their control except for a few corrupt government contracts and the civil service. The Diaspora is what fuels the Zimbabwean economy. Outside Harare, there is virtually no economic activity to speak of,” the institute commented.
