WHEN IN A HOLE, STOP DIGGING: THE STORY OF ZIMBABWE’S TROUBLED NEW CURRENCY
WHEN IN A HOLE, STOP DIGGING: THE STORY OF ZIMBABWE’S TROUBLED NEW CURRENCY
There is a saying that advises, “When you are in a hole, stop digging.” This is a perfect way to describe the current problems of Dr. John Mushayavanhu, the Governor of the Reserve Bank of Zimbabwe. At a time when careful steps are needed, Mushayavanhu seems to be making things worse with his handling of the new Zimbabwe Gold (ZiG) currency.
Introduced on April 8, the ZiG has faced problems from the start. Mushayavanhu has made several troubling statements. Firstly, he said that earlier claims about bond notes being backed by a US$200 million African Export-Import Bank facility were false. This statement has made people doubt the Reserve Bank’s policies under his leadership. He also claimed that the World Bank was involved in creating ZiG, suggesting that criticism of ZiG indirectly targets the World Bank.
These statements have hurt the public’s trust in ZiG. The bond notes problem leaves people wondering if Mushayavanhu is revealing a hidden truth or making up facts. Insiders involved in the US$200 million deal insist it was real but became useless due to government policies. Investigative journalists from The NewsHawks are determined to uncover the truth.
The claim about the World Bank is especially dangerous. If it is proven false, it could ruin Mushayavanhu’s reputation, just weeks into his job as governor. He made things worse during a meeting in Bulawayo, organized by the Zimbabwe Independent. He stressed the World Bank’s involvement, saying, “We didn’t know much about a structured currency. We got a consultant from the World Bank. A lot of the things you’re seeing about the structured currency actually came from the World Bank.”
By blaming the World Bank and admitting to incomplete advice, Mushayavanhu has not only made the issue international but also highlighted his own unsure steps in monetary governance. This move has not given the intended credibility to ZiG but has instead added to the controversy and doubts about the currency’s legitimacy.
Moreover, Mushayavanhu’s promise that there would be no money printing under his leadership clashes with the historical fiscal behaviors of the Zanu PF government, known for its extravagant spending and reliance on printing money to fund its activities. This contradiction puts Mushayavanhu in a difficult position, promising fiscal discipline in an environment historically lacking it.
The new currency itself has faced criticism for several reasons. It is said to be backed by gold and foreign exchange reserves—a claim met with skepticism given the country’s small gold reserves of just 2.5 tons and US$285 million in foreign exchange. These figures are small compared to the economic needs of a mineral-rich nation.
Despite Mushayavanhu’s many public statements, his efforts have been mostly unconvincing. The market has little faith in the claimed reserves, and the ZiG is seen not as a real currency but as another version of the discredited Zimbabwean dollar. It mirrors past economic mistakes like the bond notes and other temporary monetary solutions that have hurt Zimbabwe’s financial system.
In the end, Governor Mushayavanhu must follow the age-old advice: when in a hole, stop digging. His continuous mistakes and statements only make the crisis deeper, threatening to drag the ZiG, and possibly his career, into disaster. As the situation continues, both the governor and the ZiG find themselves in a dangerous dance, moving towards an uncertain future.
