The unveiling of Zimbabwe’s new currency, the Zimbabwe Gold (ZiG), has thrown the nation into turmoil, significantly affecting the poor and vulnerable who lack access to financial services. Since the introduction of ZiG last Friday, citizens who previously depended on Real-Time Gross Settlement (RTGS), bond notes, and Ecocash for their daily transactions have faced severe disruptions.

The chaos escalated over the weekend as many found themselves unable to access their funds, leaving them struggling to purchase everyday essentials. Initially, John Mushayavanhu, the New Reserve Bank of Zimbabwe’s governor, promised a swift transition to the new system within days. However, complications have extended the deadline to the end of the month, leaving many in a state of distress and uncertainty.

Econet, a leading player in Zimbabwe’s financial market, has managed to integrate Ecocash with ZiG. Despite this success, other systems like RTGS and bond notes continue to be non-operational. The reluctance to accept the new currency stems from deep-seated fears of adverse exchange rates and potential financial losses, given the country’s complex multi-currency environment.

Over the weekend, banks like Stanbic Bank have been scrambling to update their systems, causing further delays. “We performed the currency conversion from ZWL to ZiG over the weekend on our core banking system. However, we are working on system verification checks, therefore we will delay the provision of some digital services,” a bank notification read.

The ongoing disruption has led to panic among consumers and businesses alike. Informal retailers are either refusing to accept bond notes or drastically increasing prices. Additionally, public transport operators are taking advantage of the confusion, insisting on payments in US dollars.

Zimbabwe’s battle with currency instability is not new. The nation still reels from the memories of the 2008 economic crisis, which saw hyperinflation soar and led to the issuance of one-hundred-trillion-dollar notes. The introduction of ZiG aims to stabilize and restore confidence in Zimbabwe’s currency by anchoring it to the country’s gold reserves.

Despite these efforts, the initial reception to ZiG has been lukewarm at best, with over 80% of transactions in the nation still conducted in hard currencies like the US dollar. Retailers and service providers are showing a clear preference for the US dollar over the newly introduced ZiG. On its first day, ZiG debuted with an exchange rate of US$1 to ZiG 13.5616, a rate intended to eventually phase out the bond notes used since 2016.

Following the currency shift, the price of goods has skyrocketed. What used to cost US$0.50 in bond notes, equivalent to ZW$3,500, has jumped to ZW$5,000, and in some cases, as high as ZW$10,000. Retailers seem to be exploiting the arbitrage possibilities before the old currency is completely withdrawn later this month.

Banks are now closely monitoring large bond note deposits, particularly those attempting to deposit ZA$100,000 or more – worth less than US$20 on the parallel market. According to Fanwell Mutogo, chief executive of the Bankers Association of Zimbabwe, “All banks are diligently working on the conversion from ZWL to ZiG, and we are hoping most banks will be back online on the ZiG platform by the end of the day tomorrow.”

To assist those without bank accounts, a 21-day window has been established to allow the public to deposit their old banknotes at designated points. This transition is a crucial step as Zimbabwe attempts to navigate its latest economic reform, aiming for a more stable and inclusive financial ecosystem amidst these challenging times.

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