By Prof. Amath Ndiaye – Economist, FASEG-UCAD
Zimbabwe, the ninth largest gold producer in Africa with nearly 47 tons per year, demonstrates a simple but essential economic truth: mining wealth does not guarantee the value of a currency.
In 2008, Zimbabwe experienced one of the worst hyperinflations in contemporary history, wiping out household savings and ruining businesses. Zimbabwean banknotes worth billions of dollars had no real value, forcing the population to resort to the US dollar, which became the country’s de facto currency.
Faced with this uncontrolled dollarization, the government attempted to restore its monetary sovereignty. In 2022, it introduced gold coins to try to stabilize the local currency, and then in April 2024, a digital currency backed by gold, called ZiG (Zimbabwe Gold). Presented as an instrument of stability, ZiG was supposed to symbolize the country’s economic renaissance.
But reality quickly caught up with political ambition: in less than a year, ZiG lost nearly half of its value. On the parallel market, one US dollar exchanges for more than 30 ZiG, compared to 13.5 at the time of its launch. Once again, the experience proves that the yellow metal cannot replace economic credibility.
*Gold may shine, but it never replaces trust.*
Since the end of the Bretton Woods system in 1971, no currency in the world is convertible into gold. The value of a currency now rests on three fundamental pillars:
1️⃣ the credibility of the issuing state,
2️⃣ the strength of the economy,
3️⃣ and monetary and budgetary discipline.
Zimbabwe, plagued by deficits, corruption, and unstable governance, has accumulated structural weaknesses. Even backed by gold reserves, its currency remains unable to reassure citizens and markets. Trust, once lost, cannot be decreed: it is rebuilt through transparency, rigor, and economic performance.
Contrary to popular belief, the strongest currencies in the world are not those of countries richest in gold. They correspond to the five currencies composing the International Monetary Fund’s Special Drawing Rights (SDR): the euro, the US dollar, the Japanese yen, the British pound, and the Chinese yuan (renminbi).
None of these currencies are backed by a precious metal. They derive their strength from the size of their economies, the stability of their institutions, and the global trust they inspire. It is this trust – and not gold – that constitutes the true foundation of monetary value.
It is not gold that makes the currency, it is the credibility of the economy that ensures its value.
10 Comments
Please read and study before talking nonsense … Zimbabwe’s currency, the ZiG, has been stable for an entire year, and is the world’s only gold-backed currency. It was introduced in April 2024
What is the purpose of this article.The Zimbabwe currency has been stable for over a year now.Read the latest IMF comments on Zimbabwe economy and currency and you will realise how archaic you sound.
Why the Zimbabwe ZiG has stabilized
The ZiG currency has been relatively stable this year for several reasons. First, there are signs that the country’s economy is doing relatively well this year. Estimates are that it will grow by 6% this year and cross the important milestone of $52.3 billion.
The main catalyst for the economic recovery is the agricultural sector, which is expected to grow by 21% this year. This is an important thing because the country went through a slowdown last year, leading to more imports.
Also, the country’s tobacco exports surged this year. Data shows that the country exported 352.7 million kilograms of the crop, mostly to China, a big increase from what it sold last year.
The mining sector is also doing well, helped by more production and price increases. Gold, which accounts for about 53% of its exports, jumped to a record high, a trend that some analysts believe will continue. The country produced 36.5 tons of gold last year and now plans to produce 40 tons this year.
The rising gold price is important for the Zimbabwe ZiG because it has led to a significant increase in its reserves. Data shows that the reserves have jumped to over $750 million, which is enough to cover one month of imports requirements.
The currency has also done well this year because of the tight monetary policy in the country. Data shows that the benchmark interest rate has remained unchanged at 35% since September last year. In theory, this should lead to more demand for the currency because of carry trade implications.
Additionally, Zimbabwe has been engaged in talks with some of its top lenders, especially the IMF. These talks are aimed at resolving the multi-decade debt crisis that has locked it out of the financial market.
The IMF has expressed openness to help Zimbabwe, only if it agrees to restructure its external debt and clears its arrears to agencies like the World Bank and AfDB.
Zimbabwe hopes to phase out the US dollar
The Zimbabwe ZiG has held steady as the central bank and the Ministry of Finance have expressed hopes to gradually phase out the use of the US dollar by 2030.
This would be a big deal because most of the transactions in the country are handled in US dollars. Still, some analysts warn that ending the use of the greenback will lead to economic challenges. Precisely, it will remove the bout of stability that the greenback has brought. In a recent statement, the head of Imara Asset Management said:
“A free and widespread use of the dollar within the economy has made it easier for corporates and individuals to transact and plan.”
Still, the stability of the Zimbabwe ZiG is not a sign that it will continue doing well. Besides, the other currencies that ended up failing started well, only for them to implode a few years later.
Zimbabwe’s Economy has been forecast to grow by more than 6% this year by the IMF,making it the fastest growing economy in SADC and one of the fastest growing on the Continent.This comes on the heels of a highly successful Agricultural season which has witnessed a record Wheat harvest of 640 000MT a feat never achieved in the 53 years that Zimbabwe has been growing wheat,this far outstrips the annual demand of 360 000MT,making Zimbabwe one of only two countries on the continent to be wheat self sufficient, the other being Ethiopia.Zimbabwe is Africa’s largest tobacco producer and 4th in the world, a record crop of 353 Million kgs was produced this year earning the country USD1.17 Billion.Zimbabwe’s horticultural sector has rebounded immensely,with Zimbabwe emerging as Africa’s leading producer and exporter of Blueberries.The country’s blueberry industry has experienced exponential growth in recent years,driven by a favorable climate between May and October,which gives it a strategic advantage in global markets.The Mining sector has grown in leaps and bounds driven by the Gold sector as well as Platinum.Zimbabwe has the second largest reserves of Platinum in the world after South Africa,Platinum prices have actually performed better than gold in 2025,earning the country USD690 Million by June 2025.Zimbabwe is the largest producer of Lithium in Africa,lithium exports grew by 11 500% from 2018 to Sept 2023.The mining sector export earnings reached USD3 billion in the 1st half of 2025,boosting foreign currency reserves with the Reserve Bank which now sit on USD940 Million,cover for 1.2 months of imports, this excludes the USD3.7 Billion sitting in corporate accounts.Growth in foreign currency reserves has helped stabilise the ZiG which has been trading between ZiG25 to ZiG27 per USD,since September 2024.The IMF in their recent visit in November 2025,stated that the Zimbabwean Economic rebound is stronger than expected driven by Agriculture and Mining.
We Zimbabweans are proud of our money. We are not foolish to use all our Gold to hedge our Zig. If we list our money on the forex echange the world will trade against it and we will loose our Gold so first fix your country first before judging ours.We are doing well. We’re are not hungry by the way.
A nice piece to understand our Zimbabwean economy , the government should atleast promote SMEs’ growth and also do the minimum on rights to attract foreign investors , we aspire for the best as the youth.
sub saharan Africans are of weaker intelligence as shown by Watson…a man pilloried for telling the truth…
delete the truth if you like but that’s why your people starving…
Finally an article telling the truth! Zig is an imaginary currency, very difficult to find at the black market rate and so we don’t use it at all. That’s why it’s so stable… barely used
As at the writing of this article, are you certain the Zimbabwean currency is “worthless”? Is that really the word to use based on the facts on the ground? Weak I would take but worthless seems like a script with a destructive agenda. Your article ignored positive economic indicators from the recent couple of years – current rates, IMF GDP growth projections, positive previous GDP rates, increased outputs from mining, agriculture and tourism, increase in tax collection, increased power generation, increased investor confidence, positive changes in legislation and ease of doing business etc. Don’t those factors indicate that measures are being taken to address the economy? Indeed, there are still many areas that need attention in the country but the one sided bias is shocking coming from a fellow African. The perception printed here is that nothing good is happening in Zimbabwe – that is just purely disenginuos. A revised follow up document is necessary.