Zimbabwe introduces new currency through reggae tune
Zimbabwe has been plagued by high inflation rates for many years. To remedy this, the government introduced the "ZiG" currency, aiming to stabilize the nation's finances. However, the people are hesitant to embrace this change.
Reggae artist Ras Caleb was gifted a new car and money to promote the new Zimbabwean currency. However, he didn't receive the payment in the form of "Zimbabwe Gold" notes, but in US dollars. This was given to him by a businessman with connections to the government.
The businessman claimed to be rewarding Ras Caleb's patriotic support for the ZiG, which is the name of the new currency meant to control the nation's rampant inflation. A song by Ras Caleb, titled "Zig Mari," is often played on state radio.
Usually, money doesn't require promotional efforts, but the Zimbabwean currency's support is vital following the failure of its previous currencies. Zimbabwe has had six currencies in the last 15 years.
The devastating effects of inflation have been commonplace for decades. In 2009, the Zimbabwean dollar collapsed during a hyperinflation of five billion percent. Hundred-billion-dollar notes were issued to keep up with the rapidly increasing prices. It became normal for prices to soar from the moment you stepped into a store, right up until paying at the cash register, and even while dining in a restaurant.
Charm Offensive and Arrests
In attempts to stabilize the currency, the ZiG has become the new form of payment. Since April 5th, it has been the official currency for Zimbabwe's 16 million residents. However, mistrust in the population is significant. The US dollar is viewed as more reliable.
To increase trust in the ZiG, officials from the central bank and the ruling ZANU-PF party have launched a public relations campaign. At rallies and gatherings, they advertised the new currency and encouraged citizens to switch from using US dollars to the ZiG. Advertising jingles filled the airwaves, including Ras Caleb's ZiG-themed song.
Authorities have also taken more aggressive measures. Companies accused of undermining the ZiG face account freezes and fines up to 200,000 ZiG. Street vendors conducting unofficial transactions with the ZiG face arrest. Over 200 have been detained for breaking exchange regulations.
This includes the Nyamadzawo twins, Tapiwa and Justice, both 24 years old. They are accused of trading at a rate of 15 ZiG per dollar, while the official exchange rate is slightly over 13 ZiG. They are still in pre-trial detention and could face up to ten years in prison if found guilty.
Despite these measures, not all companies and institutions have fully switched to the ZiG. Some gas stations still accept US dollars, as does the passport office.
The Zimbabwean central bank governor, John Mushayavanhu, sees the ZiG as the first step toward normalizing the Zimbabwean dollar. Currently, 80% of transactions in Zimbabwe involve US dollars. The goal is for this figure to drop to 50% by next year. But trust in the ZiG is crucial, experts and business associations argue. However, they warn against using coercive tactics like arrests and fines. The black market will persist regardless.
Recently, Sekai Kuvarika, managing director of the Zimbabwean Industrial Association, voiced her concerns to parliament's financial and industry committees. "They will try to avoid being caught by the police," she said. The traders have mostly disappeared from the city, but they have likely relocated to the online market. Many now use social media and messaging services to trade with their customers.
Economist Prosper Chitambara argues that creating trust in the Zimbabwean dollar is essential. "Otherwise, people will keep seeking out US dollars," he explained.
[^1]: Pic of Ras Caleb: https://www.google.com/maps/d/viewer?mid=1_PbGIsF9SS9l-RnXIXGJUyg38AMFGak6aqAPnePlm4qL6-Xg&ll=16.957487766161093%2C83.05023439999998&z=10
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Despite the public relations campaign and promotional efforts, many Zimbabweans remain skeptical about using the ZiG due to the historical failures of previous currencies. The high inflation rates have led to a prevalent mistrust in local currencies, causing many to favor the US dollar as a more reliable option.
To effectively combat inflation and stabilize the Zimbabwean economy, it's essential to regain the people's trust in their national currency. Establishing stability in the market and ensuring consistent value of the ZiG can help overcome the public's hesitation and encourage more widespread adoption.
