Will arresting ‘money changers’ increase confidence in ZiG?

Money changers, who typically operate outside the formal banking system, have become a crucial component of Zimbabwe's economy.

In the country’s ongoing battle to stabilise its economy and instill confidence in the newly introduced Zimbabwe Gold (ZiG), the government has initiated a crackdown on money changers operating in the black market.

This move, while addressing the immediate and visible issue of illegal currency trading, raises critical questions about its effectiveness and the broader implications for the economy.

With essential transactions such as rent and school fees predominantly conducted in US dollars and with a significant portion of the population relying on the black market for currency exchange, is arresting money changers a viable solution? Or does it merely address the symptoms of deeper, more systemic economic problems?

The role of money changers in Zimbabwe’s economy

Money changers, who typically operate outside the formal banking system, have become a crucial component of Zimbabwe's economy.

They provide an essential service by facilitating access to foreign currency, particularly US dollars, which many Zimbabweans prefer due to the instability of the local currency.

  1. Filling the forex gap

The formal banking system in Zimbabwe often fails to meet the demand for foreign currency.

Due to stringent regulations and limited supply, accessing US dollars through official channels can be challenging and time-consuming. Money changers fill this gap, providing a more flexible and accessible means for people to obtain the currency they need for daily transactions.

  1. Essential services

Many key transactions in Zimbabwe, including rent payments, school fees, and major purchases, are conducted in US dollars.

This reliance on foreign currency underscores the lack of confidence in the ZiG and highlights the critical role that money changers play in facilitating these essential transactions.

Confidence in the ZiG: A major challenge

The ZiG was introduced with the goal of stabilising the economy and reducing reliance on foreign currencies. However, the currency has struggled to gain acceptance and trust among Zimbabweans.

  1. Historical precedents:

Zimbabweans have endured hyperinflation and severe currency devaluation in the past, particularly during the economic crisis of the late 2000s. These experiences have left deep scars and a pervasive mistrust of local currencies, making it difficult for the ZiG to gain credibility.

  1. Inconsistent policies

The government's economic policies have often been inconsistent and opaque, further undermining confidence in the ZiG.

Frequent policy shifts and a lack of clear communication have created uncertainty, discouraging people from adopting the new currency.

  1. Inflation and stability:

For any currency to be trusted, it must demonstrate stability. Persistent inflation and economic volatility have eroded the purchasing power of the ZiG, making it less attractive for daily use and savings.

The impact of arresting money changers

  1. Short-term disruption

Cracking down on money changers can lead to immediate shortages of US dollars in the informal market. This shortage can disrupt everyday transactions, driving up the cost of foreign currency and increasing the financial strain on ordinary Zimbabweans.

  1. Market inefficiencies

The black market exists because the formal market fails to meet the demand for foreign currency.

Without addressing the root causes of currency scarcity and economic instability, the crackdown on money changers may only create inefficiencies, pushing currency trading further underground and making it more difficult to regulate.

  1. Impact on the informal sector:

A significant portion of Zimbabwe's economy operates informally. Small businesses and individuals who rely on money changers for currency exchange could face increased difficulties, leading to a decline in economic activity and further entrenching poverty.

Policy failures and the need for reform

Arresting money changers addresses a symptom rather than the root cause of Zimbabwe's economic challenges. The fundamental issue lies in the failure of economic policies to create a stable and trustworthy financial environment.

  1. Strengthening economic policies

To build confidence in the ZiG, the government needs to implement consistent and transparent economic policies.

This includes maintaining a stable monetary policy, ensuring that the ZiG is adequately backed by reserves, and avoiding abrupt policy changes that create uncertainty.

  1. Improving foreign currency access:

The government must improve access to foreign currency through formal channels.

This can be achieved by easing regulatory restrictions, increasing the availability of US dollars in the banking system, and creating more efficient mechanisms for currency exchange.

  1. Addressing inflation:

Combating inflation is critical to restoring faith in the ZiG. This requires sound fiscal management, reducing excessive government spending, and implementing policies that promote economic growth and stability.

  1. Enhancing financial inclusion:

Promoting financial inclusion by integrating more people into the formal banking system can reduce reliance on money changers.

This can be achieved by making banking services more accessible and user-friendly, particularly for those in rural and underserved areas.


While arresting money changers might provide a temporary solution to currency trading issues, it does not address the deeper economic problems facing Zimbabwe.

The government must focus on strengthening economic policies, improving access to foreign currency, combating inflation, and promoting financial inclusion.

Only by addressing these fundamental issues can Zimbabwe build a stable and prosperous economy, restoring confidence in the ZiG and reducing reliance on the black market.

For lasting change, the government must move beyond symptomatic solutions and implement comprehensive economic reforms that benefit all Zimbabweans.

*Mark Hussain Mtombeni is a qualified accountant with the Midlands State University and the Chartered Accountants Academy. He boasts expertise in audit, financial reporting, and tax issues having completed his articles with HLB Zimbabwe Chartered Accountants.He currently consults for several businesses across sectors and the views expressed here do not reflect the views of entities he associates with. He can be reached on [email protected] or +263 719 412 008.

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