In the spring of 2024, Zimbabwe unveiled its latest attempt to stabilize its beleaguered economy: the ZiG, a gold-backed currency touted as the nation’s ticket to financial redemption. The Reserve Bank of Zimbabwe (RBZ) promised that the ZiG would restore confidence in the local currency, reduce dollarization, and pave the way for a new economic era. Fast forward to 2025, and the ZiG’s journey has been anything but smooth.
Initially, the ZiG was introduced at an exchange rate of 2.50 to the U.S. dollar. However, within six months, the currency’s value plummeted to 13.56 to the dollar. By the end of February 2025, the ZiG had lost 95% of its value on the unregulated market, despite the RBZ’s efforts to support it with over $400 million. Even more telling is the government’s reluctance to use its own currency; officials continued to demand payment for services like passports and fuel in U.S. dollars, further eroding public trust.
The collapse of the ZiG is emblematic of Zimbabwe’s broader economic challenges. Inflation, which had been a persistent issue, showed signs of stabilizing in early 2025. The official inflation rate dropped to 0.59% in July 2025, a significant improvement from the previous year. However, this apparent stability masks deeper structural problems. Unemployment remains high, and the informal sector continues to dominate the economy. Many Zimbabweans still rely on remittances and informal trade to make ends meet.
The government’s attempts to diversify the economy have met with mixed success. While there have been positive developments, such as the growth of the blueberry export sector and the resumption of maize production, these gains are fragile. The agricultural sector, which employs a significant portion of the population, remains vulnerable to climate change and policy missteps. The recent decision to reinstate a maize import ban after a bumper harvest is a case in point. While the move aims to protect local farmers, it also risks alienating neighboring countries and could lead to food shortages if future harvests fall short.
In the mining sector, Zimbabwe has seen increased investment, particularly in gold and lithium. However, the benefits of this investment have been unevenly distributed. Large-scale mining operations often bypass local communities, leading to tensions and accusations of exploitation. Moreover, the government’s push for industrialization has been hampered by inadequate infrastructure and a lack of skilled labor.
The Mutapa Investment Fund (MIF), established to manage the country’s natural resource wealth, has come under scrutiny. While it holds assets worth $16 billion, questions have been raised about its transparency and governance. Critics argue that the MIF has been used as a political tool, with investments directed toward projects that benefit the ruling elite rather than the broader population.
Despite these challenges, there are signs of resilience. The recent compensation payments to white farmers whose land was seized during the land reform program are a step toward reconciliation. However, the $3.1 million disbursed so far is a fraction of the $3.5 billion pledged, and the process has been slow and contentious.
The political landscape adds another layer of complexity. President Emmerson Mnangagwa’s government faces mounting pressure from opposition groups and civil society organizations. The M31 Movement, also known as the Geza Revolution, has gained traction, calling for democratic reforms and an end to corruption. While the movement has faced crackdowns, it reflects a growing disillusionment among the populace.
In conclusion, Zimbabwe’s economic situation in 2025 is a tale of cautious optimism tempered by deep-seated challenges. The collapse of the ZiG serves as a stark reminder of the difficulties in implementing monetary reforms in a complex and volatile environment. While there are pockets of progress, the path to sustained economic recovery remains uncertain. The country’s future will depend on its ability to address structural issues, build public trust, and create an inclusive economy that benefits all Zimbabweans.
