My dear Brothers,
Let me start by thanking and congratulating you for taking heed of my comments in my last article titled, “Stop dreaming of mono currency.”
Initially, some of your officers charged forward aggressively in defense and defiance to speak glowingly and protectively for the moribund ZiG currency. But wisdom finally prevailed when you introduced a pragmatic benchmarked approach in line with money supply factors and foreign currency reserve accumulation. Your departure from the initial unrealistic timelines must be applauded.
Let me share some thoughts on these two critical fundamentals.
In economics the term “M1” refers to money supply including cash, coins and easily accessible bank deposits in an economy. This is also known as the “money base” or “narrow money.” The function of this M1 is to facilitate transactions in the economy. The central bank of a country is responsible for issuing this money. Let us call this “M1ZiG.”
Zimbabwe has become unique in that the central bank does not issue out all the “M1” funds circulating in the economy. The most significant portion of M1 now comes from Diaspora remittances which were first identified in the year 2021 as a serious economic factor when the figures first reached the milestone of US$ 1 billion per month. Estimates are that this figure reached the US$ 1.3 billion mark in 2023. Let us call this “ M1US$)
However, in revealing money supply figures, the US$ component is not included in line with economic dictates and only the ZiG part of the combo is mentioned. This figure was ZiG 90 billion (equivalent to about US$ 3 billion) as at November 30, 2025.
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Let’s turn to diaspora funds. Barring previous remittances, over the period 2024/25 the incoming funds totaled about US$31 billion and went straight into M1US$. This effectively means the correct M1 figure is a combo total of US$ 34 billion.
In this calculation, the money supply issued from the central bank represents about 8% of the real and total M1. Now, because the diaspora remittances are coming in at the rate of US$1.3 billion per month and the portion from the central bank is restricted under a “tight monetary policy,” this means that the percentage of 8% is actually reducing every month and is in reality around 1% taking into account remittances before 2024.
The graph of such a declining figure is called an “asymptote” in mathematics, meaning that the value is approaching zero but will never quite arrive.
This simple analysis shows clearly that the ZiG is totally irrelevant in the real economic mechanics of the country. Therefore, stepping forward to tell the world that the ZiG is “stable, has low-inflation, has positive interest rates and is better than the American dollar” is the utmost deceitfulness.
To call a currency with three exchange rates against the American dollar “stable with low inflation” would have gone down as the joke of the year if the issue at hand wasn’t of grave national importance.
If the ZiG were to vanish overnight, nobody would notice.
Coin change in South African rand and Botswana pula would pour into the country as if by magic. And if the central bank itself closed down overnight and its key functions were transferred to a department in the Ministry of Finance, nobody would cry because the institution has failed to provide the country with a functional currency for the past 20 years.
In the last article I touched on the issue of foreign currency reserves. Maintaining foreign currency reserves is indeed the most vital component in establishing a successful mono currency system in an economy. It is also essential for the economic well-being of a country and it makes it easier to keep a tight rein on inflation and the exchange rate for the country’s currency. Repayment of the national debt also comes from the national foreign currency reserves. A peer group parity analysis involving Botswana, South Africa and Zimbabwe showed the sorry state of Zimbabwe in my last article.
Taking Botswana and South Africa as benchmarks, what optimum proportionate figure of reserves should the country have in order to have the same stable economic environment as the 2 peers to allow successful mono-currency?
This optimum figure is about US$ 35 billion adjusted for re-industrialization and re-tooling, given the population of 15 million. Over the years 2024/2025 the reserves “surged” from about US$ 500 million to US$ 1.2 billion. If we hold the “surge” figure constant at US$ 500 million per year and the optimum target reserve figure constant at US$35 billion it will mean that the country needs 70 (Yes, seventy) years to get to the optimum reserve figure needed TODAY to be at par with the two peers to safely introduce mono-currency. Let this sink in.
