Zimbabwe’s banking services disrupted on eve of brand new currency launch

The ZiG, short for Zimbabwe gold, will be launched tomorrow  Monday, 8 April and is backed by a basket of foreign currency and gold – the latest attempt to staunch a slide in the nation’s currency. 

ZimSwitch, the national payments platform provider, said processing of local dollar transactions across financial institutions is currently unavailable. 

“Normal services will be restored once financial institutions have configured the new currency,” the company said. 

The local unit of South Africa’s Nedbank is among the lenders which said late on Friday that its clients will experience “system downtime”. 

“Our system is undergoing changes to accommodate the new ZiG currency over the weekend,” it said in a notice. 

Ecocash Holdings, the African nation’s largest mobile money operator, said all its Zimbabwean dollar services were unavailable, while the biggest telecommunications operator, Econet Wireless Holding, has suspended trade in the old currency. 

The central bank said late on Saturday that “satisfactory progress” has been made by the banking sector in converting balances in line with the monetary policy statement measures. “The conversion process will continue for other economic sectors until Friday April 12,” Mushayavanhu said. “Thereafter, the Reserve Bank expects that all the online payment platforms will be operating smoothly for all transactions in the economy.”

Although commanding a smaller share of commerce against the US dollar – which accounts for as much as 80% of all transactions – Zimbabwe’s old currency is still used to make electronic payments for basic goods in supermarkets and to pay for utility bills. Public servants also earn part of their pay in Zimbabwean dollars. 

At least 27 financial institutions, including banks, mobile money operators and micro-finance lenders, are reconfiguring their systems, said Zabron Chilakalaka, chief executive at ZimSwitch. 

Read more in Daily Maverick: Zimbabwe Announces New Currency Called the ZiG, Backed by Gold

“It’s basically a rebasing,” he said on Saturday. “Banks have to rebase the current balances. Some are able to do automatic conversions and others have to engage their vendors to assist.” US dollar-based transactions were still being processed. 

Zimbabwe’s previous currency reforms have seen lenders regularly reconfigure their systems. The most notable was during hyperinflation in 2008, when the country was forced to dump its local unit in favour of the US dollar the following year.  

The ZiG banknotes and coins will start circulating in the economy from 30 April, according to Mushayavanhu. This was to allow the central bank to “undertake an intensive educational and awareness campaign” on the new currency. Bloomberg/DM

(Updates with central bank governor’s statement in the eighth and final paragraphs)