Dear governor, the market is in a mess

12 Apr, 2024 - 00:04 0 Views
Dear governor, the  market is in a mess Reserve Bank of Zimbabwe Governor, Dr John Mushayavanhu

eBusiness Weekly

Economy Uncensored with Tapiwanashe Mangwiro

In the wake of the introduction of a new currency, the Zimbabwe Gold (ZiG), the country has gone chaotic down its food chain as goods become expensive on the informal sector.

Zimbabwe has been having its fair share of problems with currency stability for the past 17 years dating back to the infamous ‘Black Friday’ and last week it introduced another currency in the hope of hitting the right code this time around.

This week, we will talk about what the currency change has done in the seven days since the announcement and possible effects in the month of April.

Current currency situation

The Reserve Bank of Zimbabwe, Governor Dr John Mushayavanhu through his Monetary Policy Statement (MPS), said the country will see new notes and coins in circulation thus phasing out the existing ones.

“The introduction of the new structured currency will naturally require the issuance of new bank notes to facilitate transactions in the economy, whilst maintaining the bank’s policy of a cash-lite economy. These notes shall be issued gradually in the market to cater for small transactions and to ensure the availability of change, thus, mitigating the use of retail vouchers in the local economy.

“As such, the proposed denominations will bring convenience to the transacting public. Accordingly, ZiG notes and coins shall be issued in denominations made up of 1ZiG, 2ZiG, 5ZiG, 10ZiG, 20Zig, 50ZiG, 100ZiG, and 200ZiG, which will be distributed through the usual normal banking channels and, will be fully covered by the quantity and value of gold and foreign currency held as reserves,” the MPS read.

However, there has arisen a shortage of paper money in the economy as the public is shunning the old notes whilst the new notes are about three weeks out until they can be seen in the streets resulting in a chaotic situation in the economy.

The governor has tried to calm the situation down by issuing a press statement urging the use of the old notes for transactions till the close of the month.

Unfortunately, the situation on the ground is a result of past decades insecurities caused by the office the governor has just assumed and here are some of the consequences to follow;

Inflation in USD terms

In the current month, inflation figures will come in higher than the previous month even though it is a base month due to the change of currency. With traders shunning the Bond Notes due to the risk of prosecution from holding $100,000 bond cash which is just about US$3.00.

The market is out of change as there is no denomination below US$1.00 or any alternative for such a value, leaving the market adjusting prices up to eliminate the risk of needing to refund customers change.

Transport costs have gone up by 100 percent in most towns as the service providers are not able to give out change to their customers. This is a crucial service which accounts for a significant monthly cost on the citizens budget and they will definitely feel a pinch.

In some instances, people are being paired in order for the transporter to remove the risk of looking for non-existent decimal figures.

Small shops have resorted to selling goods at higher prices, for example a product retailing at US$1.65 is now being priced at US$2.00 which is a 21 percent increase in price.

Vendors’ nightmare

One of the most important sectors of our economy is currently in disarray as they are either being put out of business or forced to reprice their goods much to the decline of sales. Picture a vendor selling cigarettes, bananas, vegetables or boiled eggs where most of the bond notes were circulating.

At face value you can easily figure out that they are either selling goods valued at a dollar or not buying from them.

A customer who usually buys an egg for around US$0,20 will most likely forgo the good rather than buy four to five eggs because of lack of change.

It is a month that will see most who sell perishables feeling the pinch and suffering a sizable loss, so dear Dr Governor, the economy is truly in disarray.

 Lack of access to critical services

Although this can be noted as a problem solved, for future reference, notices to banks prior to announcements could help save lives lost during the 48 to 72 hour darkness people endured during the migration of systems.

For instance, imagine a citizen who needed to pay for an emergency operation at a hospital and all monetary systems were out?

Imagine those on critical drugs like insulins and blood pressure who needed to buy these drugs but could not access services in that short period.


The country is a function of all citizens and the effects of policies should be thought through from every citizen’s perspective.

We have seen the ‘Haves and the Have Nots’ facing different problems and it is those without that are being hit hard.

Seeing what has transpired this week, and possibly till the end of the month should be a lesson for future like changes (Hopefully not another currency change) as they leave the poor in a worse off position than they are.

Tapiwanashe Mangwiro is a resident economist with Business Weekly and writes this in his own capacity. @willoe_tee on X (formerly Twitter) and Tapiwanashe Willoe Mangwiro on LinkedIn


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