A Zimbabwean business lobby group has said the country's plan to return to a mono-currency system earlier than originally announced is undermining the Zimbabwe Gold (ZiG) tender which was introduced in April 2024.

The southern African nation, which has suffered up to five currency collapses since 2000, announced in October 2023 that usage of a basket of foreign currencies, which includes the dollar, would be in place until December 2030.

However, in July 2024, President Emmerson Mnangagwa said, given the strong performance of the ZiG by then, there was potential for the country to revert to a mono-currency system by 2026.

This, the Zimbabwe National Chamber of Commerce (ZNCC) said, is discouraging households and businesses from holding on to the gold-backed note for extended periods, Pindula News wrote on December 6.

"--- with the government being the largest employer and the ZiG essentially functioning as a ‘small change’, civil servants, other employees, and employers — whose incomes are predominantly in ZiG — face challenges," the publication wrote citing a ZNCC newsletter.

"Despite earning in ZiG, they must pay for essentials such as transportation, fuel, rent, and groceries, which are generally cheaper in US dollars.  As a result, many are offloading their ZiG earnings on the parallel market, irrespective of the prevailing rate, while others are offloading their ZiG balances on the formal market, taking advantage of the rate differentials."

At launch, the ZiG was pegged at around 13.5 per dollar but it came under pressure in August, forcing authorities to devalue it by 43% in late September. 

On December 9, it had further weakened to 25.6 to the greenback on the formal market.  It was far weaker on the parallel market at between 35 and 40, according to Zimpricecheck, an online platform tracking local markets.

Commenting on foreign currency reserves, ZNCC said at just $540mn as at October 31, they were at an unsustainable level as in that month, the country's imports were worth $835.8mn and its exports amounted to $698.1mn.

“This means the country’s official reserves are insufficient to cover even one month’s import bill, raising serious concerns about the sustainability of the nation’s foreign currency management and the goal of exchange rate stability,” ZNCC noted, per Pindula News.