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…As they assure investors of capital repatriation and forex availability
The Reserve Bank of Zimbabwe (RBZ) has moved to adopt a conditions-based transition to a mono-currency, abandoning the 2030 fixed-date target, as authorities simultaneously build sufficient foreign currency to allow investors to repatriate their capital and earnings, Mining Zimbabwe can report.
By Ryan Chigoche
For years, Zimbabwe has signalled a long-term intention to return to a single currency as part of efforts to restore full monetary sovereignty after more than a decade of multi-currency use dominated by the U.S. dollar.
However, repeated policy shifts, currency volatility, and past episodes of rapid local currency depreciation have left investors wary, reinforcing Zimbabwe’s reputation as a high-risk environment for fiscal stability.
The previously muted 2030 timeline for a mono-currency transition did little to ease these concerns.
Investors and lenders are primarily focused on two issues: fiscal stability, ensuring that the “goalposts don’t move” and project returns are protected, and currency risk. While lenders may extend loans in U.S. dollars, repayment offshore can be complicated, and they often require security over the asset and all associated financial accounts, including local and foreign currency holdings.
Recognising these concerns, the RBZ has moved to a more flexible, market-driven approach.
Farai Masendu, RBZ Director of Financial Surveillance, told delegates at the Zimbabwe Mining Forum during the ongoing Investing in Africa Mining Indaba that the transition to a single domestic currency will be guided by conditions on the ground, while guaranteeing investors the ability to repatriate their capital and profits.
“When we talk about a mono-currency, it is not about a specific date such as 2030, but about meeting certain conditions. The process must be market-driven and not imposed. Once we achieve durable single-digit inflation, exchange rate stability, adequate foreign currency reserves, fiscal discipline, and a stable financial system, the transition will occur naturally,” Masendu said.
He added: “Let me also assure investors that Zimbabwe continues to uphold the principle of ‘capital in, capital out’. Investors are free to repatriate dividends, profits, and invested capital. The willing-buyer willing-seller foreign exchange market is functioning efficiently, with sufficient liquidity to meet external obligations, and foreign currency is no longer a constraint.”
The RBZ underscored that the transition will depend on meeting key macroeconomic benchmarks, including durable single-digit inflation, exchange rate stability, adequate foreign currency reserves, fiscal discipline, and a stable financial system, showing that the move will be gradual and carefully managed.
The Conditions Precedent for Zimbabwe to Move to a Mono-Currency
To provide more clarity, the Reserve Bank of Zimbabwe has outlined a conditions-based pathway to a single domestic currency, anchored on achieving sustained macroeconomic stability before any transition is undertaken. Central to this framework is the need to maintain durable single-digit inflation.
While inflation has eased to around 4.1%, the RBZ stresses that stability must be sustained over time before it can be considered firmly contained. Closely linked to this is the requirement for exchange rate stability, which is essential to build market confidence and preserve the value of investments.
“We believe we are on the right trajectory in terms of price and exchange rate stability. As we continue along this path, preservation of value becomes critical. Let me now address the issue of the roadmap to a mono-currency,” Masendu said.
Another critical pillar is the accumulation of adequate foreign exchange reserves to support external obligations and investor confidence.
As the economy gradually moves toward greater use of the local currency for domestic transactions, exporters are expected to convert part of their proceeds to meet local obligations through market mechanisms.
The willing-buyer, willing-seller foreign exchange market continues to play a central role, with the RBZ indicating it is functioning efficiently and currently showing stronger supply relative to demand.
At the same time, reserve accumulation remains a priority, with the apex bank targeting six months of import cover to provide a buffer for dividend repatriation, external payments, and imports of goods and services. Current import cover levels remain below this benchmark, estimated at between 1.2 and 1.5 months.
The RBZ also expects growing demand for the local currency as more domestic transactions shift toward it.
However, the transition to a mono-currency is not expected to eliminate Foreign Currency Accounts, with exporters continuing to retain them for external obligations while accessing local currency through market conversion when required.
Progress on Inflation, Exchange Rate, and Financial Stability
Since the introduction of a new monetary framework in April 2024, the Reserve Bank of Zimbabwe has pursued a structured approach built on three pillars: price stability, exchange rate stability, and financial system stability.
The framework was designed as a return to basics, enabling the central bank to focus on its core mandate.
According to the RBZ, significant progress has been made on all three fronts. Inflation has eased to 4.1% year-on-year as of January, providing a more stable environment for business planning and investment.
On the exchange rate, the introduction of a gold-backed currency has helped maintain stability, with the rate holding at around 26 to 1 against the US dollar.
This stability is particularly important for exporters, ensuring the value of the 30% of proceeds surrendered from export earnings is preserved.
“We are clear, as monetary authorities, about the conditions precedent that must be in place before we can move to a mono-currency. From a policy perspective, like other countries, we require our own domestic currency. We have made false starts in the past, but this time we are guided by past experience and international benchmarks,” Masendu concluded.
