THE Reserve Bank of Zimbabwe (RBZ) has noted increased Zimbabwe Gold (ZiG) currency in the National Payment System transactions as confidence in the domestic unit grows.The ZiG was introduced last year to replace the battered Zimbabwe dollar in the country’s sixth attempt to establish a stable currency in 15 years.In a recent statement, RBZ noted the increased demand for the ZiG, which it said was critical to support the wider usage of the domestic currency in the economy.Statistics from the central bank show that ZiG transactions in the National Payment System peaked at 43% in May from 32% in April, before tapering off to 35% last month.RBZ said it was working with the government to put in place initiatives that support the use of the local currency.The measures include increased notes in circulation and the rolling out of point-of-sale machines (POS). The measures continue to bear fruit, according to monetary authorities.The ZiG has brought some stability, with analysts saying it has performed better than previous domestic units in recent times.Yet the stability has not seen the increased visibility of ZiG notes.Since last year, ZiG notes have been elusive, amid fears this will quicken the re-dollarisation pace.The local currency has struggled to penetrate the informal market where the United States dollar rules the roost.The reliance on cash in the informal market means that money is out of circulation, thereby creating shadow banks.In other jurisdictions, such as Nigeria, the informal sector uses POS or cash for transactions.The failure by the domestic currency to penetrate the informal market comes at a time when foreign reserves covering ZiG, consisting largely of gold, foreign currency cash holdings and Nostro bank balances, were more than three times the stock of ZiG reserve money as at end-June 2025.This should spur the usage of the ZiG.RBZ says foreign currency receipts averaged US$1,2 billion per month against external payments of around US$821 million per month from January to May 2025. This resulted in a surplus, averaging US$378 million per month, for the five months from January to May this year.However, confidence in the local currency is low in the informal sector. In addition, there are hurdles for the sector to formalise. Critics have called for the rollout of incentives that entice the sector to formalise.They need a simplified system to formalise their operations, which means that money will circulate in formal banking channels and tame informal banking.Work is cut out for the RBZ to promote a savings culture. High bank charges and low interest rates have meant that deposits are transitory.Any economy is built on domestic savings.Monetary authorities also need to strike a balance between the need to contain inflation and support for ZiG and economic growth.The prevailing liquidity crunch is bad for economic growth.While the increased uptake of the local currency is good for promoters of the de-dollarisation plan, the move requires meticulous implementation.It will be attainable once confidence in the local currency grows.The prevailing two economies in one tell a story of more ground that needs to be covered.As long as the informal sector is outside the formal banking channel, de-dollarisation will become a colossus with the feet of clay.The central bank has unveiled fantastic numbers on paper, which must be visible on the ground. We yearn for a day when traders at Siyaso, Magaba or the downtown tuckshops will prefer the local unit to the United States dollar.
