Singer prefers dollars
Zimbabwe promotes new currency with reggae song
31.05.2024, 16:49
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For many years, Zimbabwe has had inflation rates that are among the highest in the world. With the “ZiG”, the government wants to finally stabilize the currency. But the population is skeptical.
Reggae musician Ras Caleb’s advertising song for the new Zimbabwean currency earned him a new car and money. Ironically, he didn’t get his fee in the new “Zimbabwe Gold” notes, but in US dollars. The car and the $2,000 were sent to the musician by a businessman with close ties to the government.
The businessman explained that he wanted to reward Ras Caleb’s “patriotic” efforts. ZiG is the abbreviation for the new currency that is intended to bring the rampant inflation in the South African country under control – once again. And “Zig Mari” is the name of Ras Caleb’s song that is played over and over again on state radio.
Normally money doesn’t need PR, but Zimbabwe’s new currency needs all the support it can get – after all, its predecessors have all failed. It is the sixth currency in 15 years.
Inflation rates that are among the highest in the world have long plagued Zimbabwe. In 2009, the Zimbabwean dollar collapsed completely amid hyperinflation of five billion percent. 100 trillion notes were put into circulation to keep up with spiraling prices. A loaf of bread cost more than 500 million Zimbabwe dollars. Prices rose from the time you entered a shop to the checkout, just as they did during dinner in a restaurant.
Charm offensive and arrests
With the ZiG – backed by gold – Zimbabwe now wants to finally stabilize the currency. Since April 5th it has been the currency of the country of 16 million inhabitants. But there is great distrust among the population. The US dollar, which dominates everyday life, enjoys far more trust.
High-ranking representatives of the central bank and the ruling ZANU-PF party countered this with a charm offensive for the ZiG when it was introduced. At rallies and meetings, they promoted the new currency and called on people to use the ZiG instead of the American dollar. The radio stations were full of advertising jingles that played alongside Caleb’s ZiG song.
But the authorities are not only trying to support the ZiG in a gentle way: Companies accused of undermining the new currency can expect to have their accounts blocked and fines of up to 200,000 ZiG. Street vendors who do unofficial business with the new currency face arrest. According to the police, more than 200 have already been arrested on suspicion of violating the exchange regulations.
They include the 24-year-old twin brothers Tapiwa and Justice Nyamadzawo. According to prosecutors, they are said to have traded at a rate of 15 ZiG per dollar, while the official exchange rate was just over 13 ZiG. They remain in custody and face a maximum sentence of ten years.
However, support for the ZiG in the country is not entirely consistent. Some companies, such as petrol stations, are still allowed to insist on payment in US dollars. Some authorities, such as the passport office, also only accept dollars.
Black market still exists
Central Bank Governor John Mushayavanhu nevertheless sees the ZiG as the first step towards moving away from the dollar. According to him, more than 80 percent of transactions in Zimbabwe are currently in the American currency. The US dollar is used to pay rent, school fees and food. Many people exchange their income in local currency for dollars on the black market.
According to Mushayavanhu, the share of dollar transactions should fall to 50 percent by the year after next. The key prerequisite for this is likely to be that trust in the new currency is created. But pressure and violence are hardly the right way to achieve this, warn economic experts and associations. The black market cannot be stopped in this way either.
“They will work to ensure that the police do not catch them,” Sekai Kuvarika, executive director of the Zimbabwe Federation of Industrialists, recently told Parliament’s finance and industry committees. Since crackdowns on street vendors began in April, they have largely disappeared from the cityscape, but they appear to have moved their businesses underground. Many are using social media and messaging services to serve their customers.
Economist Prosper Chitambara explains that scepticism about the ZiG and the continued demand for US dollars will continue to drive the black market despite all the raids. “The solution is to strengthen public confidence in the national currency,” he stresses. Otherwise, people will continue to “starve for US dollars.”