Why Is The ZIG Struggling? Parliamentarians and Cabinet Ministers Serving Their Businesses

By Dr. Masimba Mavaza
 
Zimbabwe launched a new currency in Harare on April 5, 2024. This came as Zimbabwe was the only African country without its own currency. 
 
It is important to note that Zimbabwe is a third-world country that is using first-world money practices. This situation is like supporting an elephant with matchstick legs. 
 
There is the need to seriously control imports of goods and services! Reducing the amount one can take out each time is a start; it would have been better if the number of times one travels out was limited to a few trips per year! This assumption that people have the right to do what they want with their money just does not work! Using one’s money for the good of the nation yes, but for harm must not be allowed!

Some are talking of a floating exchange rate! That works where the country has adequate stock of forex and not in our situation of demand, which exceeds supply from January to December! And then there is the black market! The black market is a crime! It must stop! It should not be used to fund business! How do you stop money laundering where street banks fund economic activities?

When the US finds the dollar under pressure, they engineer wars to stimulate the demand for the dollar! Poor Zimbabweans believe in a floating exchange rate regime and no restriction on imports! Let’s be real; that way our local currency can be stable!

Five months after its launch, Zimbabwe’s new currency is under pressure as increased grain imports eat away at foreign reserves, putting at risk the government’s plan to make it the only currency in the market by 2026. The hope on ZiG is fading very fast. The gold-backed ZiG, which stands for Zimbabwe Gold, is the country’s sixth attempt at a stable currency in 15 years. Since the launch of the ZiG, it has lost almost 80 percent of its value on the black market.

It can be argued that the devaluation pointed to a lack of confidence in the new currency that locals have been reluctant to embrace.
Even though uptake had been slow and a devaluation was announced a few days ago, it was too soon to consider the new currency a failure.
The challenges the ZiG is facing are man-made and perpetuated by the government’s failure to increase the use of the ZiG by charging more taxes in the local currency. “Government more than any other failed to show preference for its own currency. This planted serious doubts on the ZiG’s ability and eroded all the confidence that might have existed.The government needs to urgently intervene by injecting more foreign currency on the market. By so doing, it would have managed to knock a lot of confidence in the traders, the general market, and the public. 

Throughout history, money and payments have been constantly evolving. And this also holds true in the digital age. As we increasingly pay digitally and shop online, we rely less on cash. Our wallets are gradually moving from our pockets to smartphones and other electronic devices. But in the ZiG error, the ministry of finance failed to introduce digital money to match the world order. The ministry needed to understand that. 
These changes have profound implications for the nature of money itself, raising the question of whether the Reserve Bank should have issued digital currencies for retail use. 

It does not need robotic science in a digital world to preserve the role of central bank money as a stabilising force at the heart of the payments system and to safeguard monetary sovereignty and the ZiG itself. A careful design was needed to protect the ZiG. The ZiG did not need slogans but serious signs of seriousness. 
To be successful, the ZIG will need to add value for users, support competition rather than crowd out private innovation, and avoid risks to financial intermediation.People should never be forced to accept a currency, but they should jump at it. 

Our monetary system is based on the complementarity of private money with public money, which is available for retail payments in the form of banknotes. The banknotes must be seen to be used by the authorities as well. 

Confidence in private means of payment is determined by our ability to convert private money into safe public money. This is because reserve bank money is a risk-free form of money that is guaranteed by the state: by its strength, its credibility, and its authority. 

Other types of money are liabilities of private issuers; their value is based on the soundness of the issuer and is underpinned by the promise of one-to-one convertibility with the reserve bank money. 
Our readiness to hold private money, such as bank deposits, reflects the confidence that we can always go to a branch or a cash machine and convert our deposits into cash. The fact that we can do this tells us that our deposits are safe. It reassures us that we will be able to convert them into risk-free reserve bank money in the future, too. 

Bank runs and financial crises start when confidence in the convertibility of private money evaporates.
The ZiG has been getting weaker, so it does not make business sense to transact with it. People do not have faith in the ZiG.
The ZiG needs to be stable to be accepted by the people. 

In July, central bank chief John Mushayavanhu told Reuters that authorities would stick to promises to build trust in the new currency, but the truth on the ground is deferent.
“It is too early to consider that this may be the death of the ZiG, so a lot has to be done so that the ZiG will survive. 
The biggest problem Zimbabwe has is that our parliament is not run by patriots. Our cabinet does not have all committed patriots. We now have business people in parliament, and the policies they promote are to protect their businesses. 
If only we could have a patriotic and not a business parliament and cabinet. While it is good
for a policymaker to have business experience, as long as while involved in business and after, as a public servant, he does not get into corruption and self-interest. But our leaders are letting the president down. 
It is good for policymakers to have political experience, as long as, while involved in politics, they do not get into corruption and self-interest. Unfortunately, Zimbabwe is cursed with a lot of corrupt policymakers who are not happy to see the ZIG succeed. 

A policymaker also needs emotional, psychological, and cognitive traits. 
1. The ability to absorb huge amounts of information rapidly, evaluate its truthfulness, relevance, and completeness, and distil it into key points and concepts
2. An in-depth respect for and knowledge of the laws and regulations of Zimbabwe, especially how they govern his activities.
3. The impartiality to make decisions that are principle- and value-based, not based on what benefits him and his friends the most.
4. The ability to understand that he is not an emperor but a servant of the people, and that before and during his tenure he puts the people of Zimbabwe first and that he is beholden to a set of very complex laws and rules that are to be respected and followed.
5. The moral and ethical fibre that means he will always resist the lure of corruption, extremism, and personal vendetta
6. The moral and intellectual strength to keep his personal opinions and beliefs out of decision-making and stick to the law and what is best for Zimbabwean people. 
7. The ability to be an example to the Zimbabwean people of adhering to high ethical and legal business standards.

So, for example, if you pick a con artist with dozens of bankruptcies behind him, who took a huge family fortune and managed it so badly that he could have made more money buying a gold at 30% whose idea of ‘deal making’ is being the nastiest bastard in the room, flouncing around and threatening people and breaking as many laws as he can, whose fortune is going down the tubes and the only way to hang onto it is to force deals while in office and take as many under-the-counter favors as possible in return for manipulating people and laws, who has no patience with ‘reading’ or ‘facts’ or anything but extremely impulsive decisions that seem more like a loss of temper at not comprehending a complex situation, who courts dealers criminals and nut bars who want to destroy the government and let chaos reign, no, he’s not going to make a sound policy for our ZiG. 

We need to be bold and hold the bull by its horns if we want to keep our ZiG afloat. 
The ZiG’s introduction reflects the government’s latest effort to address its financial challenges. However, the lack of transparency surrounding the move and the lack of seriousness by many government officials and fiscal indiscipline make the new currency’s viability unlikely.
The truth has to be said, and we need to be bold as we deal with our financial problems. Every person in government is there for selfish reasons, and without a strong, bold decision and a couple of arrests, Zimbabwe will always be a country without its own currency. Without the anchor of sovereign money, people would constantly have to monitor the soundness of black markets in order to assess the value of each form of money. This would undermine confidence in the singleness of money and impair the functioning of the payment system. Without playing politics, Zimbabwe’s new ZiG is doomed by an overall lack of transparency and by the jackals in the high offices playing corruption and lining their pockets. These people have let down the president’s efforts big time. The behaviour of these sharks decorated as parliamentarians has stripped citizens’ trust in the government and threatens the new currency’s viability.

The struggle to stabilise Zimbabwe’s economy continues, with no signs of relief for ordinary citizens because we have people in power protecting their businesses.

Economists say the introduction of the new currency has not solved Zimbabwe’s old exchange rate problems, which are getting worse. They are right. 
Unless the parliamentarians enter politics for serving the people, together with our Zig, we are doomed. 
We need to see earnest and honest high-profile arrests to deal with these saboteurs. 

Together, we can save our sovereignty.