Informal traders in Zimbabwe are rejecting the local dollar for fear it will be useless in a few weeks, when the government’s new gold-backed currency enters circulation at the end of April.
The Southern African country is replacing its collapsing Zimbabwean dollar with the new currency – called Zimbabwe Gold (ZiG) – in the hopes that it will be more stable and help tame inflation.
Distrustful of the country’s third attempt at a new currency in a decade, informal traders mainly in the cash-driven informal sector are opting to transact in U.S. dollar.
“Fresh produce farmers are refusing Zimdollar. They fear that the money may be worthless by the time the ZiG comes,” said Marceline Mupotaringa, a vendor in Mt Pleasant Heights, 15 km north of Harare.
“I had a box full of Zimdollar, which is now worthless.”
The central bank said on Wednesday it had noted public concerns on the rejection of the Zimdollar by some traders.
In a statement, the central bank said “business entities where the notes have been widely used, including commuter omnibuses, shops, fresh vegetable markets, and vendors, are advised to continue accepting payment in ZW$ notes until April 30, 2024.”
Brian Muchemwa, a fresh produce trader in Harare, said the Zimdollar had lost considerable value after the introduction of ZiG.
“We were accepting Zimdollar until last Friday. It is now selling at 40,000 to $1 which does not make business sense; hence we started accepting U.S. dollar only,” Muchemwa said.
The Zimdollar was trading at 28,720 to the greenback prior to the introduction of ZiG.
The development has seen an increase in demand for the U.S. dollar on the black market, to the delight of some currency traders.
“Consumers are bringing their Zimdollar here in exchange for the U.S. dollar, but we have spiked rates to take advantage of the demand,” a black-market forex trader told Reuters.
While larger supermarkets have started displaying prices in ZiG, retailers such as Zimbabwe’s OK and South Africa’s Pick n Pay were still accepting the Zimdollar.
“There is no big retailer that has rejected Zimdollar, that is done by the informal sector,” said OK CEO Max Karombo.
