Kenya President backs Zimbabwe’s radical revitalisation with ZiG currency

By Bloomberg

BULAWAYO: Kenyan President William Ruto hailed Zimbabwe’s gold-backed currency as a potential driver of economic recovery in the southern African nation.

The introduction of the so-called ZiG demonstrated the authorities’ commitment to reviving the country’s economic fortunes, despite a a host of setbacks and pressures, Ruto told delegates gathered at an international trade fair over which he officiated Saturday in Zimbabwe’s second-biggest city of Bulawayo.

The ZiG, short for Zimbabwe Gold, was launched earlier this month and is the sixth attempt to create a functioning local currency. Zimbabwe has been battling exchange rate instability and surging inflation for years. The ZiG is backed by 2 1/2 tons of gold and $100 million in reserves held by the central bank.

Zimbabwe’s untapped substantial reserves of copper and lithium as well as gold, platinum, silver and other precious metals represent tremendous wealth, Ruto said. “It is appropriate that they should be deployed to back the national currency.”

Earlier this week, Zimbabwe’s vice president Constantino Chiwenga said that the ZiG is a step toward abandoning the use of US dollars in the economy. Dollars are legal tender until 2030.

The previous local unit, the Zimbabwe dollar, had lost value every single trading day of this year. Its slide prompted a widespread preference for dollars, which are used for more than 80% of all transactions.

ZiG banknotes will be released next Tuesday, according to the central bank, which is on an awareness drive to promote use of the new currency.