eBusiness Weekly
Note from ZNCC
The 2024 Zimbabwe International Trade Fair (ZITF) is set to be a pivotal event, showcasing the world’s strides in innovation and its role as a catalyst for industrialisation and trade.
Scheduled to take place from April 23 to 27, 2024 in Bulawayo, Zimbabwe, the ZITF promises to be a platform for showcasing innovative products, services and solutions that drive economic growth.
Hosted by the Zimbabwe National Chamber of Commerce (ZNCC), the ZITF Business Luncheon on April 26, 2024 at the ZITF Grounds in the Tea Room will delve into the theme of Innovation: The Catalyst for Industrialisation and Trade.
This theme underscores the critical role of innovation in driving industrial growth and fostering trade relationships, especially in today’s rapidly evolving global economy.
The ZITF business luncheon will bring together key stakeholders, including government officials, business leaders, entrepreneurs and innovators, to discuss and explore innovative strategies for advancing industrialisation and promoting international trade.
The event will provide a platform for networking, sharing ideas and forging partnerships that can drive economic development in Zimbabwe and beyond.
Innovation is at the heart of economic transformation, driving productivity, competitiveness and sustainable growth. The ZITF business luncheon presents a unique opportunity to showcase Zimbabwe’s innovative potential and explore ways to harness innovation for economic development.
As Zimbabwe seeks to position itself as a regional hub for innovation and trade, events like the ZITF and the accompanying business luncheon play a crucial role in fostering collaboration, driving investment and unlocking new growth opportunities.
With a focus on innovation, the 2024 ZITF promises to be a catalyst for driving industrialisation and trade, propelling Zimbabwe towards a more prosperous and sustainable future.
Zimbabwe’s central bank introduces a new currency: The 3rd in a decade
Today, no country in the world uses the gold standard as its primary monetary system but some central banks still hold significant gold reserves as a form of monetary insurance.
Several central regulators in Asia and some Eastern European countries have stepped up their purchases of bullion this year, with the People’s Bank of China increasing its gold reserves for the 17th consecutive month to a total of 72,75 million troy ounces as of March 2024.
Against this background, the Reserve Bank of Zimbabwe (RBZ) introduced a new and structured currency backed by gold and foreign currency reserves on April 5, 2024, named the Zimbabwe Gold (ZiG). The ZiG is backed by 2,522kg of gold in reserves and US$100 million in foreign currency reserves.
The ZiG has been brought in as a saviour to the country’s currency and exchange rate woes that saw the ZiG’s predecessor, the Zimbabwean dollar, losing about 114 percent of its value between January and March 2024.
The introduction of the ZiG represents a third occasion in a decade where a new currency is being launched by the country’s monetary authorities.
In 2014, bond notes and coins were introduced as an export incentive until they were phased out in 2019 with the subsequent return of the Zimbabwean dollar which was abandoned in the 2008 hyperinflationary era.
The decision to return to the gold standard, which was abandoned in the early 20th century, signifies a significant shift towards a rule-based approach to monetary policy.
This rule-based approach to currency and exchange rate management may be advantageous to Zimbabwe given the country’s long and dark history of monetary and economic management.
However, some experts argue that the new currency may be more of a political gesture than a long-term solution, citing fundamental challenges such as unsustainable debt levels, governance issues, questions on rule of law, and alleged human rights violations.
The collapse of the Zimbabwean dollar is mainly attributed to economic mismanagement through excessive money printing as a tool in financing the RBZ’s quasi-fiscal activities.
While the RBZ has indicated that this practice will cease, experts warn that lasting stability will require comprehensive currency and foreign exchange management reforms to restore confidence in the local currency.
The continuation of quasi-fiscal activities will imply that neither a gold-backed nor a facility-backed currency will help solve the country’s currency woes.
Accordingly, the multi-currency regime may continue even after 2030 when the country is expected to return to mono-currency.
History has shown that once dollarised, it is an uphill task for any economy to de-dollarise. Countries like Argentina and Venezuela are good examples where efforts to de-dollarise have been a challenging task.
In its inception, the ZiG was introduced as a central bank digital currency on October 5, 2023 and this has since changed the name to Gold-Backed Digital Token (GBDT).
Zimbabwe’s Central Government still insists on households and firms to pay for taxes and gas in foreign currency despite introducing a new currency.
Such a scenario, coupled with central bank mistrust and lack of confidence in the monetary system are hurdles that need to be overcome if the new currency is to bring about price and exchange rate stability in both the short and long term.
Additionally, the RBZ announced while launching the new currency that the physical notes and coins will start officially circulating in the economy on the 30th of April 2024.
However, this delay has reinforced the use of the US dollar, which is already dominant in the economy, posing a challenge for the new currency. Looking ahead, the RBZ is exploring ways to make the ZiG convertible and is tightening exchange controls to support its stability.
In conclusion, the introduction of the ZiG represents another attempt by Zimbabwe’s monetary authorities to tackle persistent currency problems.
However, its success will depend on the implementation of comprehensive reforms to restore confidence in the local currency and address the country’s underlying economic challenges.
This article was prepared by the Zimbabwe National Chamber of Commerce (ZNCC) for Business Weekly.
