• Zimbabwe’s push to end dollarisation by 2030 is highly conditional, with progress on inflation and reserves offset by deep structural dollarisation, weak confidence and limited policy transmission in an economy where over 80% of transactions remain US-dollar based
• Disinflation driven by tight monetary policy, including a 35% policy rate, has stabilised the ZiG in nominal terms but at the cost of acute liquidity constraints
• The mono-currency timeline remains exposed to fiscal arrears, trust deficits and external shocks, particularly fluctuations in gold prices linked to global geopolitical tensions and shifts in commodity demand

Harare - On 8 January 2026, the Reserve Bank of Zimbabwe (RBZ) launched  its Five-Year Strategic Plan (2026–2030), placing a transition to a mono-currency economy at the centre of its long-term monetary ambition.

The strategy signals a renewed attempt to restore monetary sovereignty after nearly two decades of reliance on foreign currencies, primarily the US dollar. Yet history, structure and current market behaviour raise a more difficult question: is the economy ready to sustain such a shift, or is the timeline running ahead of reality?

Zimbabwe’s dependence on foreign currencies is rooted in the hyperinflationary collapse of 2007–2008, when the Zimbabwe dollar lost virtually all value, wiping out savings and destroying trust in domestic monetary institutions.

In response, authorities adopted a multi-currency regime in 2009, anchored by the US dollar alongside the South African rand, Botswana pula and other regional currencies. The system stabilised prices but came at the cost of monetary policy autonomy.

The first serious attempt to reintroduce a local currency began in 2014 with the launch of bond coins, officially framed as a measure to ease small change shortages and incentivise exporters. This was followed by bond notes in 2016, which were initially pegged at parity with the US dollar. By 2019, the authorities formally ended the multi-currency regime and introduced the RTGS dollar, declaring it sole legal tender. That experiment collapsed within a year. By 2020, Zimbabwe had re-entered a hyperinflationary cycle, forcing the government to re-legalise the US dollar and restore currency pluralism.

It is against this backdrop,  four failed local currencies in less than two decades  that the RBZ’s mono-currency ambition must be assessed. Conscious of the confidence erosion and fiscal excesses that undermined previous attempts, the central bank has outlined a set of conditions precedent that must be met before dollarisation can be unwound.

According to the strategy document, “the main CPs include sustained and low inflation, adequate reserve buffers, safe and sound financial and payment systems, an efficient exchange rate system and congruence between monetary and fiscal policies,” RBZ Governor John Mushayavanhu said.

The first and most visible pillar is the continued disinflation programme following the introduction of the Zimbabwe Gold (ZiG) currency in April 2024. Headline ZiG inflation has slowed markedly, falling from 85.7% in April 2025 to about 15.5% by year-end, supported by tight monetary conditions, exchange-rate management and gold-linked backing.

However, this improvement is largely nominal. Zimbabwe remains a highly dollarized economy, with over 80% of deposits and transactions conducted in US dollars, meaning domestic inflation metrics capture only a fraction of real pricing dynamics.

US dollar inflation within Zimbabwe remains elevated, estimated at around 12.3%, far above inflation levels in the United States itself, which hovered near 2,7% in 2025. This divergence reflects structural supply constraints, import dependence and pricing inefficiencies, suggesting that headline ZiG disinflation does not necessarily translate into broader price stability across the economy.

Monetary tightening has played a decisive role. The RBZ has held the policy rate at 35%, a level designed to anchor inflation expectations and discourage speculative borrowing. While effective in suppressing currency pressure, the cost has been acute liquidity stress.

Corporates across manufacturing, agriculture and retail  including large, established firms like OK Zimbabwe and Khaya Cement (Formely Lafarge cement) among others  face constrained access to credit, rising working capital gaps and delayed expansion plans. In an economy where only about 20% of transactions are conducted in local currency, tightening domestic liquidity risks becoming a blunt instrument with limited reach.

Inflation moderation under such conditions becomes a partial exercise. With the bulk of economic activity denominated in US dollars, monetary restraint in ZiG suppresses demand without materially reshaping pricing behaviour. The result is stability without depth  control without confidence.

Fiscal dynamics further complicate the picture. While the RBZ points to a cleaner balance sheet following the transfer of quasi-fiscal activities to Treasury, persistent delays in government payments to contractors and suppliers tell a different story.

Arrears accumulation has become an implicit fiscal adjustment tool, improving headline discipline while shifting liquidity stress onto the private sector. Contractors unable to receive ZiG payments have little incentive to accept or demand the currency, weakening transactional demand and reinforcing dollar preference.

At the same time, the premium between the parallel and formal exchange rates has widened , reflecting tight liquidity conditions rather than organic confidence in the ZiG. Stability achieved through constrained money supply, suppressed demand and delayed fiscal settlement is inherently fragile. It limits volatility, but it also builds latent pressure beneath the surface.

Trust remains the central challenge , Zimbabweans have lived through repeated episodes of overnight devaluation, forced currency conversions and banking losses. On 27 September 2024, the RBZ devalued the ZiG currency by 43%.

 Restoring confidence in the local unit and the financial system will require not months, but years of consistency. The RBZ’s strategy acknowledges this implicitly by framing the transition as market-driven, yet market behaviour continues to favour the US dollar as a store of value.

External vulnerabilities add another layer of risk. The economy remains highly reliant on commodity exports, particularly gold. Any downturn in global prices  potentially triggered by easing geopolitical tensions in the middle east and in the Eastern Europe or slowing global demand  would weaken foreign currency inflows, reduce reserve buffers and strain the very foundations of the mono-currency plan.

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