With inflation soaring in Zimbabwe and the country’s currency in free fall as people abandon it for the U.S. dollar, the government of President Emmerson Mnangagwa is fighting back with a novel strategy: gold coins.
Starting Monday, Zimbabwe is selling one-ounce, 22-carat gold coins bearing an image of Victoria Falls, its world-famous natural wonder. Each has a serial number, comes with a certificate and will be sold at a price “based on the prevailing international price of gold and the cost of production,” the central bank said in its announcement on July 4.
The coins will be tradable both in Zimbabwe and overseas, the bank said, and can be exchanged for cash. The goal is to reduce the quantity of Zimbabwe dollars in circulation to eventually restore that currency’s value.
Named Mosi-oa-Tunya in Tonga – loosely translating to “the smoke that thunders” the local reference to the Victoria Falls the country’s prime tourism destination – each coin weighs one Troy ounce with a purity of 22 carats.
The first batch of 2 000 coins was dispatched to banks and the RBZ said it was working on producing lower denominations coins.
While the coins are mostly beyond the reach of many civil servants who earn an average of R3 500 in the local currency, some economists said for high-value transactions the idea could work.
Colls Ndlovu an award-winning banker, formerly with the SA Reserve Bank, said:
“Zimbabweans need to create a robust secondary market for the gold currency and begin to proactively use it for their daily transactions through converting them to American dollars while using the gold currency for high-value transactions such as buying cattle, houses, or even paying lobola.
Based on the relationship people have with the government and its policies, there are suspicions the coins will breed other forms of corruption.”
Others felt since government workers have for years failed to get their salaries in US dollars, it was time for them to ask for their salaries to be paid in the gold currency.
Asked why the coins were a better bet at this point, Ndlovu said: “The gold coins are produced in Zimbabwe, therefore, a homegrown local currency is much better than the local dollar.”
More than 90% of gold deposits in Zimbabwe were associated with greenstone belts which were the richest in the world and the mineral was the country’s main export product accounting for nearly R20 billion, according to World Bank data.
Most of Zimbabwe’s inflationary pressures emanate from its currency troubles. But rising prices are also being fueled by Russia’s invasion of Ukraine, which has sparked a global wave of inflation amid supply shortages of grains and fuel.