African Countries move ahead with New Currencies: The Case of Gold as Currency in Zimbabwe

Flag of Zimbabwe
Flag of Zimbabwe

It is no secret that prices are high everywhere: at the gas pump, at the food store, rent, prices are going up and up, affecting everyone and making those who are poor even poorer. Many African countries are trying to find ways to alleviate inflation. Zimbabwe is one such country.

Robert Mugabe, president of Zimbabwe

It is no secret that Zimbabwe has been going through an economic embargo for many years. Many thought, the traitors who toppled Robert Mugabe, that by getting rid of him, the economy would be better and all the embargo restrictions placed by the UK, US, and EU would be lifted… Lesson to traitors: it never works as planned! Five years on, and Zimbabwe is no better, even though Mnangagwa has signed all sorts of deals with the westerners [Is Zimbabwe the New Haiti?]and returned land [Zimbabwe to Return Seized Land to Foreigners]. Well, as I was saying, it is no secret that inflation is particularly high in Zimbabwe and has been for many years. This week, the government of Zimbabwe has announced that it will issue gold coins as legal tenders, thus trying to alleviate inflation. Not sure that I trust Mnangagwa’s government to do anything right… particularly given that the price of gold is particularly high and exacerbated by the problems in Mali [France had become 4th world producer of gold from Mali’s gold mines; Mali Rescinds France Defense AgreementsFrance confirms it will withdraw from Mali … moving to neighboring countries and beyondTensions Escalating in Mali].  Excerpts below are from the AfricaNews; for more, read also this Guardian article.

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Zimbabwe’s central bank says it will start issuing gold coins as legal tender in late July, as the country battles to control soaring inflation that has considerably weakened the local currency.

The gold coin is named ‘Mosi-oa-Tunya‘, after Victoria Falls, and can be converted into cash according to the apex bank.

The latest measure comes as the country’s inflation rate more than doubled last month to 191%, bringing back memories of the hyperinflation of the 2000s that saw the Zimbabwean dollar redenominated three times. The local currency would later be abandoned in 2009.

Governor of the central bank, John Mangudya in a statement released Monday, said that the gold coins will be available for sale to the public in both local currency and US dollars and other foreign currencies at a price based on the prevailing international price of gold and the cost production”.

The coins are expected to act as a ‘store of value and to reduce the demand for US dollars’ – something that has been blamed for the weakening value of the local currency.

There have been mixed feelings over the news as Zimbabweans experience with the central bank’s policies is often of concern and uncertainty. Many Zimbabweans are known to have lost their savings including pensions when the Zimbabwean dollar crashed in 2009.

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