Merchants, public transport operators, and other institutions are rejecting the Zimbabwe Gold (ZiG) after the reserve bank devalued the currency by 40% on Friday. Anxiety over further devaluation of the ZiG, Zimbabwe’s sixth attempt at a currency since 2009, is driving the rejection.
“Our suppliers have been refusing to accept ZiG for a long time, and this devaluation is only going to worsen the situation, so why should we accept it?” asked a farmer in Bulawayo, Zimbabwe’s second-largest city.
On Monday, the ZiG traded at 24.88 against the greenback compared to 24.39 on Friday.
Zimbabwe’s headline inflation quickened to 1.4% in August and the currency devaluation is expected to worsen inflation. The government takes the opposite view and believes the devaluation will ease inflation.
According to the Consumer Council of Zimbabwe (CCZ), some traders are rejecting ZiG from customers.
“Most traders are not accepting ZiG swipe and if accepted, the rate will be too high, often above ZiG25 per US$1, which is an indirect way of not accepting the ZiG swipe,” Rosemary Mpofu, CEO of CCZ, told one publication.
Four cab drivers also told that they are rejecting ZiG because they cannot buy fuel with the currency. “If I cannot fuel with the currency, pay levies, and it’s also devaluing, why should I accept it then?” one cab driver said.
The story is the same with civil servants.
“I did not even have the chance to cash [the salary] and as a result, its half its worth but shelf prices haven’t budged,” said a secondary school teacher in Arcadia who received his salary on Thursday.
The Amalgamated Rural Teachers Union of Zimbabwe (ARTUZ) wants salaries adjusted to reflect the devaluation.
“[Minister of Finance] Mthuli Ncube and the government should not wait to be told that since ZIG has officially been devalued by 44% to the USD, the ZIG component of salaries should be automatically adjusted,” ARTUZ said in a statement.
Having experienced multiple currency devaluations in the past 15 years, Zimbabweans know first-hand the pain of savings turning worthless overnight. The government and central bank must convince Zimbabweans that the ZiG still has a fight in it.
