Staff Writer

Zimbabwe Chamber of SMEs welcomes the ZIG and makes key recommendations to the Parliamentary Portfolio committee on Budget, Finance & Investments Promotion.
Zimbabwe Chamber of SMEs, an organization that oversees the development and wellbeing of all Micro, Small and Medium enterprises in Zimbabwe has welcomed the recently introduced new Gold backed currency ZiG.

This was confirmed in a presentation to the Parliament Portfolio Committee on Budget, Finance & Investments Promotion made on Behalf of the Chamber’s Secretary General, Mr V Kurauone by Mr Last Matema of Alinial Chartered, the Official Financial Advisors of Zimbabwe Chamber of SMEs.

“My name is Last Matema , a Director with a company called Alinial Chartered Accountants (Official Advisors to the Zimbabwe Chamber of SMEs) , I am here accompanied by Mr L Moyo the National Organizing Secretary for Zimbabwe Chamber of SMEs both of us representing , the Secretary General of the Zimbabwe Chamber Of SMEs , Mr V Kuraoune , who could not be here due to other pressing commitments .Zimbabwe Chamber of SMEs and its broad membership who are all Micro, Small & Medium Enterprises in Zimbabwe welcomed the recently pronounced Monetary Policy which birthed the new Zimbabwean Currency called ZiG (Zimbabwean Gold)” Said Matema in a presentation.

The potential of the ZiG to fight inflation, to restore savings and investment culture, to increase trust in the Zimbabwean economy by both Local and international Investors, to reduces uncertainties on currency issues, to becoming regional preferred currency were cited in the presentation as the reason why the Chamber and its broader membership who constitutes more than 75% of the businesses in Zimbabwe and accounts for more than USD8 Billion of the Country’s GDP as the reasons for welcoming the ZiG.
Further to welcoming the ZiG, Zimbabwe Chamber of SMEs has made recommendations that it thinks if adopted, ZiG will ensure accelerated attainment of Vision 2030.

“To realize all these potential benefits to the nation that can be realized as a result of a strong and stable ZiG, Zimbabwe Chamber of SMEs implores the government to seriously consider the following;

Fiscal Discipline: The government must prioritize responsible spending and avoid budget deficits that can fuel inflation. This should involve cutting unnecessary expenditures or broadening the tax base through concessionary fiscal tax policies particularly to untapped Micro, small & Medium Enterprises Sector.

The government needs to carefully evaluate its spending. If there programs or subsidies that aren’t delivering value, these could be trimmed to free up ZIG for essential services.

Interest Rate Management: Central banks use interest rates to influence inflation. Raising rates can curb inflation, but it can also slow economic growth. The government needs to find a balance. A stable and predictable interest rate environment can help build trust in the currency.

Transparency: Our members and Zimbabweans in general have a recent painful history with hyperinflation, where the Zimbabwean Dollar lost all value more than thrice in a decade. This has understandably created a lot of skepticism about the any new currency.
Clear communication about ZiG’s management and how gold reserves are being held will build public trust.
Regular updates and explanations can address concerns. Our Membership need to understand what’s protecting the ZIG’s value?
Who is responsible for overseeing the ZIG’s issuance and circulation?
Is there a clear process for managing the money supply?
How much gold is actually backing the ZIG?
How and where is the gold stored?
Are there going to be independent audits to verify the gold reserves?
Will the Reserve Bank of Zimbabwe (RBZ) hold regular press conferences or release reports explaining ZIG management decisions and the status of gold reserves?
Will the information be clear and easy to understand, even for people without a financial background?

Will the RBZ address any public concerns about the ZIG through open and honest communication?
We recommend the Government through the RBZ to balance transparency with some level of confidentiality regarding the key issues around the ZIG.

Stability: Maintaining a consistent exchange rate for ZiG will be crucial. Frequent fluctuations can erode trust and discourage our membership from using the new currency.
Our members need some certainty when planning investments. If the ZIG’s value keeps fluctuating, it becomes difficult to calculate costs and profits accurately. This can discourage our members and potential foreign investors from investing and or saving in Zimbabwe, hindering economic growth.
A lot of our members imports from various countries including South Africa and China. If the ZIG weakens, it becomes more for our membership to import, leading to inflation.
A consistent exchange rate makes the ZIG more predictable. Our members will be knowing what their money is worth, making them more likely to use it for transactions and savings, thus they can plan and make sound investment decisions with a stable ZIG.

We recommend that Government through the RBZ must through various tools and strategies maintain a consistent exchange rate for the ZIG to build trust and encouraging its use and maintain the stability.

Access to ZiG: The government should ensure there are adequate channels for people to easily obtain ZiG and exchange old Zimbabwean dollars. This may involve working with banks and other financial institutions.
The government and the Reserve Bank of Zimbabwe (RBZ) can incentivize banks, especially those in urban areas, to open branches or kiosks in rural areas. This expands ZIG’s reach and makes it more accessible to everyone.
Partnering with mobile money platforms like EcoCash or OneMoney is crucial. This allows people to easily deposit, withdraw, and potentially even make payments directly in ZIG through their mobile phones
Utilize existing agent banking networks that reach remote areas. These agents, typically shopkeepers or entrepreneurs, can act as ZIG distribution points, allowing people to exchange old currency and access basic ZIG transactions closer to home
Partnering with banks to launch financial literacy campaigns can educate the public about ZIG, its benefits, and how to use it effectively. This can be done through workshops, radio announcements, or even SMS campaigns.

The government, in collaboration with the RBZ and banks, should issue clear and consistent information on the exchange process. This includes, Eligibility criteria for exchanging old currency, Exchange rates and any potential fees, Deadlines for exchanging old notes.

Streamline the exchange process to minimize wait times and paperwork. Consider allowing for a certain amount of old currency to be exchanged directly for ZIG without extensive documentation, especially for low-income individuals.

We recommend the Government to employ tools and strategies that will ensure easy access to the new currency and a well-managed old currency exchange program to foster trust and encourage citizens who include our members to embrace the ZIG, paving the way for a more stable and financially inclusive Zimbabwe.

Combating Black Markets: Measures to prevent a black market for foreign currency are necessary. If Citizens who includes our members lose faith in ZiG, they may seek alternatives, undermining its effectiveness.
Loss of faith in the ZIG’s stability, will trigger our members to seek foreign currency as a store of value. This will reduce demand for ZIG and weakens its value, potentially creating a vicious cycle.
If the ZIG isn’t widely used for transactions particularly on key livelihoods expenditures ie Domestic taxes, Government levies, Councils rates, medicines, fuels, electricity, education etc , it loses its effectiveness as a medium of exchange and unit of account.
If there are underlying economic problems like high inflation or limited access to foreign exchange for legitimate reasons, addressing these issues directly in a holistic manner can reduce the demand for black-market currency.

The government, along with law enforcement agents , needs to crack down on black-market activities. This could involve stricter penalties for currency smuggling and better monitoring of foreign exchange transactions.

For legitimate foreign currency needs by individuals and businesses, Government must explore ways to ensure that people and businesses access foreign currency through official channels. This could involve; Relaxing some foreign exchange controls & Facilitating easier remittances from abroad.

We recommend that Government must do all in its control to build trust in the ZiG, addressing underlying economic issues, and implementing a combination of preventive and enforcement measures, to create an environment where the ZiG thrives as the primary medium of exchange for Zimbabwe.

Small scale Gold Miners : Small-scale gold miners who fall into the category of MSMEs can potentially contribute to the success of a strong and stable ZiG currency in a few ways if they are integrated into a well-regulated and supported formal system

A thriving small-scale gold mining sector can contribute to a higher overall gold supply in Zimbabwe. This gold can then be used to back the ZiG currency, potentially strengthening its value.

Legally mined and exported gold can generate foreign currency for Zimbabwe. This foreign currency can be used to stabilize the ZiG by supporting the central bank’s foreign currency reserves

A flourishing small-scale mining sector can create jobs and stimulate economic activity in rural areas. This can lead to increased demand for goods and services, ultimately benefiting the entire economy.

Formalized small-scale mining operations contribute to government revenue through taxes. This tax revenue can be used to support infrastructure development, social programs, and other initiatives that can further strengthen the economy.

To maximize the positive impact of small-scale miners, we recommend that Government do all in its powers to develop clear regulations and support systems. This includes formalisation programs that help small-scale miners transition to formal operations, ensuring environmental responsibility and adherence to regulations, providing training on responsible mining practices and access to better equipment that can improve efficiency and safety for miners, establishing fair and transparent mechanisms for small-scale miners to sell their gold to incentivize them to participate in the formal system,

Diversification: While gold is a valuable asset, a successful economy shouldn’t rely solely on one commodity. Government should encourage economic diversification into other sectors outside mining.
The global price of gold can fluctuate significantly. If the price falls, it weakens the ZiG’s value and can negatively impact Zimbabwe’s export earnings.
An economy reliant on gold is limited by the gold mining industry’s growth potential. There’s a finite amount of gold to be extracted, and relying solely on it restricts opportunities for broader economic expansion
A gold-dependent economy concentrates jobs in the mining sector. If the mining industry struggles, it can lead to widespread unemployment and economic hardships.

A diversified economy is less vulnerable to external shocks. If the price of gold falls, other sectors can pick up the slack and maintain economic stability.
A diversified economy allows for wealth creation across various sectors , not just those directly linked to gold. This can improve living standards for a wider range of Zimbabweans.

We recommend that Government invest in infrastructure, fostering new industries, and developing a skilled workforce, to reduce its reliance on gold mining and create a more sustainable and dynamic economy for the future.

Economic Growth: The ultimate goal of introducing the ZiG is for Zimbabwe’s economy to grow. Policies that create a business-friendly environment, attract investment, and promote job creation are essential for Zing’s long-term success.
Reduction of unnecessary regulations and bureaucratic hurdles for businesses makes it easier to start and operate a business, thus will encouraging domestic entrepreneurship by MSMEs and Foreign investment .
A clear and stable tax system that recognizes the importance of MSMEs in the national development matrix fosters a more predictable business environment and a formalized MSMEs sector thus broaden the fiscal revenue base.
Sustenance of strong property rights, strengthening of the bankability of the 99 year leases on land will ensure businesses secured ownership of their assets, and that will encourage investment and innovation by both locals and foreigners.

Investors both local and International seek and prioritize stability. A stable political environment with clear economic policies reduces perceived business and investment risks and attracts foreign direct investment (FDI) and Direct Domestic Investment (DDI)
MSMEs are a major engine of job creation and economic growth, Policies that support formalisation and or development of a sustainable MSMEs sector, like access to Decent Workspace and safe markets, financial services, SMEs Social Protection Services and SMEs business Training programs etc can significantly boost economic growth.
We recommend Government to do all in its powers to create a business-friendly environment, attracting both foreign & Domestic investment, and promoting job creation, through laying the groundwork for a thriving Zimbabwean economy so as to bolster public confidence in the ZiG, that will eventually leads to its wider adoption and a more stable and prosperous future for Zimbabwe.

Financial Inclusion : Formal institutions like banks offer deposit insurance safeguards savings in case of bank failure. This provides peace of mind compared to keeping cash at home or using informal systems where there’s a higher risk of theft or loss.

Formal systems offer a wider range of financial products beyond just storing money. This includes: Savings Accounts, Loans, Insurance Products, and Payment Services

Also formal financial systems operate under regulations designed to protect consumers and these includes Know Your Customer (KYC) Rules that help prevent money laundering and terrorist financing. While some might see this as an inconvenience, it ultimately contributes to a safer financial environment. Consumer Protection Laws ie laws that ensure fair treatment by financial institutions and provide recourse mechanisms in case of disputes.

To ensure that the 90% of 4.5Million MSMEs who are reported to be financially excluded be attracted to transact within the frameworks and platforms provided by the formal financial system we recommend that the Government , RBZ and the Financial Institutions in the country do all within their control to increase public awareness about the benefits and workings of formal financial systems, Build trust by promoting financial literacy initiatives, increase access to formal financial services, particularly in rural areas, by expanding bank branches and promoting mobile banking solutions, develop financial products that cater to the specific needs of low-income earners and the unbanked MSMEs population. This could include micro-loans, simplified savings accounts, informal sector pension packages, informal sector medical & funeral insurance packages, and mobile money wallets with user-friendly interfaces. ” Explained Last Matema.

Zimbabwe Chamber of SMEs urged the Government to continue with the positive attitude towards the ZiG as overall success in terms of its general acceptability in the economy as a medium of exchange and store of value largely depends on the Government’s own attitude in its capacity as a major supplier of services, major employer and major consumer of domestic and imported goods and services.

“Zimbabwe Chamber Of SMEs remain available to compliment all legitimate and constitutional efforts by the Government of the day and its agencies to ensure that ZiG remain strong and stable as this will not only guarantee the attainment of Vision 2030 but serve as illegal sanctions basting strategy that will foster sustainable economic Growth.

However the overall success of the ZiG as a store of value, medium of exchange and unit of measure in economic transactions largely depends on the Government’s own attitude towards its own currency, in its capacity as the major employer, major supplier of services (taxes & licenses), and major consumer of both local and imported goods and serves. We believe and pray that there is synchronization within the Government on unity of purpose as it is within the Chamber of SMEs to ensure that ZiG will remain relatively and sustainably strong and stable”. Concluded Last Matema

Zimbabwe Chamber of SMEs is the latest key stakeholder in the National Development Matrix (NDM) that has just added its voice on the new gold backed currency .The organization under the administration of its National Secretary General Mr V Kurauone who doubles as its Provincial Chairperson for Masvingo Province has on its recently concluded highly subscribed 3 days Strategic Conference that was co-organized with its Financial Advisors , Alinial Chartered Accountants , in Chiredzi, Masvingo, last week, has set a target of formalizing 5 Million MSMEs by 2030 though a raft of adopted measures and strategies in conjunction with its secured partners that includes but not limited to Government Departments, Local Authorities , Media Houses , Development Partners, Contractors , Advisory Firms , Banks , Insurers etc.