Zimbabwe’s new currency suffers chaotic start

Zimbabwe’s new gold-backed currency got off to a chaotic start with shops accepting only US dollars on Tuesday and vexed Zimbabweans queuing up outside banks for hours to withdraw their savings.

The ZIG — short for Zimbabwe Gold — officially started trading on Monday, just days after it was announced it would replace the Zimbabwean dollar, which has tumbled in value over the past year, pushing inflation through the roof. But many in the country were not ready for the switch.

Most banks had their systems offline on Tuesday, as they worked to transition them to the ZIG. This caused long queues outside some branches in the capital Harare, with hundreds of people waiting for hours to withdraw cash.

“I spent the entire morning ... waiting for the bank to be back online,” said one grumpy account holder. “No success. Stranded. They say they have no idea when they will be back online.”

The currency swop saw old banknotes — already of little value — become worthless overnight. In the Harare suburb of Kambuzuma, children played in the streets with wads of cash. Other notes lay abandoned on the pavements of the central business district, no one stopping to pick them up.

Getting hold of new notes was impossible. On Saturday, the central bank said it was still printing banknotes and these would become available only on 30 April.

Some people were left stranded when Harare public transport operators refused to accept Zimbabwean dollars, charging instead a pricey flat fare of US$1 — double the usual local currency cost for short journeys.

“We are being shortchanged,” one commuter, George Goliati, complained.

Many stores and street vendors similarly accepted only greenbacks, giving out biscuits or candies as change, because of a shortage of coins.

Julius Muza, a shopkeeper in the capital, said he had stopped accepting Zimbabwean dollars after noticing customers rushing to his and other shops to “dump” the old banknotes.

The central bank hopes the ZIG, which is backed by a basket of reserves comprising foreign currency and precious metals — mainly gold — would help stabilise the longfloundering economy.

The Zimbabwean dollar has lost almost 100% of its value against its US counterpart over the past year, leading to sky-high inflation, which after climbing well into the triple digits, was still at 55% in March.

Soaring prices have piled pressure on Zimbabwe’s 16 million people who already experience widespread poverty, high unemployment and a severe drought induced by the El Niño weather pattern. —