HARARE, ZIMBABWE — With the price of gold up globally, the Reserve Bank of Zimbabwe in April put the gold coins it stopped minting a year earlier back on the market.
But interested investors had to act fast.
By mid-June, the sale of coins from its accumulated stock was abruptly concluded and another chapter of the currency chaos that has characterized the nation’s economy for decades was in the books. This time, at least, economists say the experiment had little effect.
The short-lived sale is just the latest example in a long line of inconsistent policies, says Ithiel Mavesere, a lecturer in the economics and development department at the University of Zimbabwe. Storing value in a gold coin is not a viable option for the majority of the population, he adds.
“Ideally, what they should have done is come up with low-value coins, with denominations as low as equivalent to US$20 for the majority of the population to afford,” Mavesere says.
However, Reserve Bank of Zimbabwe Governor John Mushayavanhu says in a written response to Global Press Journal that the gold coins were effective as an alternative investment instrument and there was huge demand from both corporations and individuals. According to RBZ data, corporations bought about 79% of the gold coins and individuals bought about 21%.
About US$12 million’s worth sold
The lowest denomination of the coins represents a tenth of an ounce of gold, equivalent to 9,299.13 in Zimbabwe gold, or ZiG, the national currency, or about US$347. The highest denomination of the coins represents one ounce of gold, equivalent to ZiG 92,991.34 or about US$3,470.
In all, the central bank has sold gold coins worth ZiG 343 million, or about US$12.8 million, according to Mushayavanhu, who says the recent sale happened after the bank noted increased demand following the rise in international gold prices.
“In this context, the Reserve Bank re-issued an accumulated parcel of gold coins from a combination of gold coins which had been bought back from the market through redemptions and some coins which were still being held at the Reserve Bank from the previously minted stock,” the governor wrote.
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A statement from the bank in mid-June announcing the halt to the sale indicated it had been intended to clear the stock of gold coins it had and those that had been cashed in by their holders.
Mushayavanhu says the bank stopped minting gold coins in April 2024 to prioritize its gold reserve which, along with foreign currency reserves, backs the Zimbabwe gold currency.
He says foreign reserves increased from US$270 million in April 2024 to US$731 million as of the end of June.
The central bank first introduced the Mosi-oa-Tunya gold coins — which share an indigenous name for Victoria Falls — in 2022 at a time when the country was experiencing currency instability with high inflation and continued devaluation of what was then the national currency, the Zimbabwe dollar.
The coins aimed to reduce dependency on the US dollar and help stabilize the economy. The coins helped mop up excess cash in local currency that was circulating in the market. Coupled with other monetary measures in 2022, the monthly inflation rate dropped from about 31% in June to about 12% in August that year.
However, the exchange rate of the Zimbabwe dollar drastically fell against the US dollar and the government replaced it with the new Zimbabwe gold currency in April 2024. Since its introduction, the currency’s value has been cut in half.
A ‘drop in the ocean’
Lyle Begbie, an economist with Oxford Economics Africa, believes the sale of the gold coins when they were introduced in 2022 was more of a revenue-generating scheme, as it happened at a time when inflation was very high.
He says it makes sense that the recent sale of gold coins was influenced by the increase in gold prices on the global market. But he adds that the value of gold coins was too little to have an impact on the economy. Begbie says the US$12.8 million in coins the central bank reported selling is less than 1% of Zimbabwe’s gross domestic product — which the World Bank estimates at US$44 billion — a “drop in the ocean” when it comes to the country’s macroeconomic picture.
Prosper Chitambara, an economist based in Harare, agrees the impact of the recent sale was minimal. He says gold coins don’t have a significant impact on currency stability in an economy like Zimbabwe’s, which is highly informal and also highly dollarized — meaning it’s heavily reliant on the US dollar as a currency.
“Most economic agents in our economy prefer to transact using their US dollars because it’s a highly tradable and highly liquid asset. … So there’s a huge confidence and trust in the USD than in the gold coins or even in the Zimbabwe gold,” Chitambara says.
Samuel Wadzai, the executive director of Vendors Initiative for Social and Economic Transformation, an organization in Harare that advocates for the informal business sector, says there have been a few instances where members have tried to use gold coins for everyday transactions, but it hasn’t been widespread.
“Most traders still prefer cash due to the challenges of acceptance and the limited understanding of gold coins in everyday trade,” he says.
Isheanesu Kwenda, 31, a Harare street vendor with a sociology degree, says the recent sale of gold coins didn’t offer any benefit for him. Like many Zimbabweans, he has heard about the gold coins, but has never seen or opted to buy them. The vendor is part of Zimbabwe’s informal economy, which sustains over 80% of Zimbabwe’s population and contributes nearly 72% to the country’s GDP.
“Street economics informs that you should not attempt to get something you are not sure of or do not understand. … I prefer to sell my goods and keep my money in US dollars because it holds value, or I can keep my money in stock,” Kwenda says of the clothing he sells.
Last year, Kwenda lost more than half his earnings after Zimbabwe gold was introduced. After being paid the equivalent of US$1,000 in Zimbabwe dollars, he only managed to salvage US$360 and lost the rest in exchange rate losses.
For Kwenda, restoring confidence is simple: The government must stick to a plan, without making sudden U-turns.
