Is Zimbabwe heading in the wrong direction?

Dollarisation of revenue in Zimbabwe increased by 7 percentage points last year when it should have been decreasing, according to the latest survey by the Confederation of Zimbabwe Industries.

Zimbabwe introduced a new currency, the Zimbabwe Gold (ZiG), in April last year as part of its efforts to dedollarise by the year 2030.

At the time only 20% of the transactions were in the local currency. Central bank governor John Mushayavanhu hoped that this would increase to 30% by the end of the year.

Mushayavanhu hoped transactions in local currency would increase to 40% this year and 50% next year.

While he expected the country to have a monocurrency by 2030, Mushayavanhu said once transactions in local currency reached 50%, there would be no need to worry because the local currency would eventually dominate transactions.

But according to a survey by the CZI, sales in United States dollars rose from 65% in 2023 to 72% last year.

The same survey showed that domestic sales accounted for 83% of US dollars in the country. Exports accounted for only 4% while Willing Buyer Willing Seller trading accounted for only 8%.

Zimbabwe recently lifted all exchange controls saying that the local currency had stabilised against the greenback.

The ZiG was officially pegged at 26.82 roday but according to Zimpricechek, it is trading at between 35 and 40 on the open market.

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