Zimbabwe’s Finance Minister Mthuli Ncube has reaffirmed the stability of the country’s gold-backed currency, the Zimbabwe Gold (ZiG), despite recent sharp devaluation and soaring inflation. Speaking to The Africa Report at the InvestAfrica conference in Dubai, Ncube underscored the ZiG’s resilience, even as economic pressures fuel skepticism.
Launched as a digital currency backed by gold, the ZiG was designed to tackle inflation and currency instability by offering Zimbabweans a secure store of value. However, a swift devaluation since its introduction has raised doubts over its sustainability. Many citizens, facing rising inflation, have shifted to foreign currencies like the U.S. dollar, reflecting a broader uncertainty around Zimbabwe’s economic landscape.
Ncube, however, remains steadfast in his support, stating that the ZiG is a long-term solution requiring patience. “We are working to instill confidence in this currency, and our commitment is unwavering,” he remarked, dismissing speculation about its potential withdrawal. He stressed that the ZiG is a critical component of Zimbabwe’s broader economic strategy and highlighted plans to stabilize the currency market over time.
Beyond the ZiG, Ncube promoted a newly launched $16 billion sovereign wealth fund, aimed at securing Zimbabwe’s assets for future generations. The fund, designed to draw revenue from gold reserves, mineral royalties, and other national assets, has sparked debate among experts. Critics have questioned the fund’s feasibility, citing Zimbabwe’s high debt and limited foreign reserves, though Ncube maintains that it will provide a much-needed economic buffer.
Ncube’s stance on the ZiG and the sovereign wealth fund forms part of his strategy to bolster Zimbabwe’s financial stability, but the plan has encountered significant scrutiny. Economists argue that Zimbabwe’s volatile economic environment, coupled with citizens’ past experiences with failed local currencies, may hinder the ZiG’s acceptance. For the ZiG to succeed, analysts insist, the government must implement sound policies and ensure transparency.
Economist John Makoni, who has been closely following Zimbabwe’s financial policies, remarked, “Trust in the local currency cannot be restored overnight, and it will take more than a gold backing to inspire confidence.” Analysts caution that unless Zimbabwe can exercise fiscal discipline, control inflation, and manage its gold reserves transparently, the ZiG may face further devaluation.
Despite these concerns, Ncube remains optimistic, envisioning the ZiG as a foundational tool for economic stabilization and growth. “Our commitment is clear, and we believe the ZiG can act as a stabilizing force for the economy. We are dedicated to seeing this through,” he stated.
As Zimbabwe navigates a challenging economic path, the ZiG stands as a bold but uncertain attempt to rebuild trust in the local currency. For now, Zimbabweans remain cautious, watching to see if the ZiG will live up to its promise as a stable and reliable currency.
