By Mthokozisi Mabhena
THE recent announcement by the Reserve Bank of Zimbabwe (RBZ) to expand its compliance blitz across the country
is a step in the right direction towards achieving Vision 2030 of transforming Zimbabwe into an upper-middle-income economy. The refusal by some businesses to accept Zimbabwe Gold (ZiG) as legal tender not only undermines financial policies but also stifles national devel- opment, weakens local confidence, and perpetuates economic instability.
Zimbabwe’s decision to introduce the ZiG, alongside the use of foreign cur- rency, is a deliberate strategy to manage exchange rates effectively while ensuring the country has a strong local currency that can facilitate economic transactions and bolster confidence in the domestic economy. Despite the Government’s clear directive, some businesses across the country, particularly in major cities like Bulawayo and Harare, continue
to defy the directive to accept the local currency. They either refuse to use it or manipulate exchange rates based on the black market, leading to significant distortions in the economy. This is not
merely a technical violation of policy; it has real-world consequences that reach far beyond the transactions of a few busi- nesses.
When businesses reject the local currency, they undermine the very founda- tion of economic stability. It weakens the confidence of citizens, both local and foreign, in Zimbabwe’s economic policies and creates an environment where exchange rates become volatile and un-
predictable. This environment ultimately discourages investment both domestic and international which is vital for the country’s growth. Without a stable and predictable monetary system, potential investors will hesitate to commit their capital to Zimbabwe, knowing that the financial landscape is volatile and uncer- tain.
Furthermore, refusing to accept the
ZiG exacerbates a significant problem in the country financial exclusion. Those who are most affected by this are the ordinary citizens, particularly low-income earners, who do not have access to foreign currency. When businesses refuse to accept the local currency or accept it at highly inflated black-market rates, they force ordinary consumers to buy foreign currency at a premium, eroding their purchasing power and making it even harder for them to afford basic goods and services. The informal sector is also complicit in perpetuating this challenge, giving flimsy excuses like technical difficulties with point-of-sale (POS) systems, making it more challenging for consum- ers to transact using the ZiG.
The result is a deepening divide in the country’s economy. Only those who have easy access to foreign currency can navigate the marketplace, while the majority of Zimbabweans struggle to
survive, caught in a cycle of inflation and escalating costs of living. By adhering to the Government’s directive, businesses would help stabilise the situation, making it easier for everyday people to make purchases without the additional burden of black-market prices.
Moreover, the ongoing resistance to the use of the local currency weakens the productive sectors of the economy, particularly local manufacturing and trade. When businesses price their products based on foreign currency exchange rates rather than the official rates, they create an artificial inflationary environment.
This not only increases the cost of living but also makes it much harder for businesses to plan, budget and re-invest in their operations. If Zimbabwe wants to avoid becoming a nation that only imports goods while neglecting its own industries, it must encourage the use of the local currency, which will help stimulate local production and make Zimbabwe more self-sufficient.
The importance of a reliable local cur-
rency cannot be overstated when it comes to financial planning and national eco- nomic development. It’s the foundation of creating a strong local market, pro- moting industrial growth, and ultimately reducing the need for imports. Without confidence in the ZiG, Zimbabwe’s eco- nomic plans risk faltering, as reliance
on foreign currencies for transactions makes it harder for businesses to achieve sustainable growth. The more businesses adopt and adhere to the use of the ZiG, the more stable the economy will be. A steady and predictable local currency makes it easier for businesses to plan, reduces the risk of currency speculation, and builds confidence among investors.
Additionally, shops refusal to accept the ZiG feeds the black market, allowing speculative practices to flourish. When businesses use unofficial exchange rates, they contribute to the undermining of the country’s official financial frame- work. The black market becomes more entrenched, and exchange rates fluctuate unpredictably, making it difficult for
the Government to implement sound monetary policy. When the black market dominates, the country’s purchasing power is diminished, and the cost of liv- ing rises, further deepening the economic woes of ordinary citizens.
This situation is not just a problem for ordinary consumers it also weakens the Government’s ability to collect taxes and fund essential services. Unregulated transactions lead to a loss of revenue, which then hampers the Government’s ability to invest in critical infrastructure like roads, hospitals, schools, and other public services. A well-regulated currency system helps ensure that all financial
transactions are traceable, improving the country’s tax base and allowing the Gov- ernment to invest more in national devel- opment projects.
I commend the RBZ Governor, Dr. John Mushayavanhu, and the Financial Intelligence Unit (FIU) for their sterling
efforts to ensure compliance across the country. The extension of enforcement operations beyond Harare to include cit- ies like Bulawayo and Gweru is a strategic and necessary step towards curbing the misuse of foreign currency and ensuring that businesses adhere to the law. The introduction of stringent penalties for businesses that violate Exchange Control Regulations sends a strong message that the Government is serious about enforc- ing financial discipline. These efforts are crucial for national economic transfor- mation.
The FIU’s work will help root out businesses that refuse to comply, ensuring that local businesses start accepting
the ZiG and adjust their pricing according to the official exchange rate. This will help bring about long-term financial stability and encourage others to com- ply with the regulations. Compliance by small and medium businesses will also have a positive ripple effect on larger en-
terprises, encouraging them to follow suit and contribute to the economic growth of the nation.
Zimbabwe’s journey toward achieving Vision 2030 depends heavily on its ability to achieve monetary stability. If businesses continue to defy Government policies and refuse to use the local currency, they will not only hurt their own bottom line but also stifle the country’s growth potential. Zimbabwe must em- brace its local currency if it is to be taken seriously as an economic powerhouse in the region.
The Government and businesses alike must work together to ensure that the country’s financial system is not just stable but also inclusive and supportive of development. To achieve this, we must prioritise local economic growth, stabilise exchange rates, and invest in the infrastructure that will support long-term economic development. In doing so, we will build a strong, self-sufficient economy that can withstand global challenges.
