Zimbabwe’s Currency Depreciation: Ncube Defends Economic Strategy as Growth Tool

Zimbabwe’s Finance Minister, Mthuli Ncube, has highlighted advantages stemming from the country’s weakened currency, asserting that it has boosted economic growth over recent years.

Addressing a gathering in Harare, Ncube spoke of how Zimbabwe’s volatile Zimbabwe Gold (ZiG) currency has shaped the nation’s financial landscape since its introduction. His remarks came during a signing ceremony for financing agreements with the European Union.

According to Ncube, a weaker domestic currency has contributed positively to Zimbabwe’s economy by enhancing export competitiveness, effectively doubling inflows for exporters in ZiG terms after its devaluation.

The Reserve Bank of Zimbabwe (RBZ) recently devalued the ZiG by 43% as the gap between the official exchange rate and the parallel market rate widened. The central bank’s move aligns with efforts to control currency volatility and support export growth.

Ncube argued that economic growth isn’t solely tied to currency strength. Zimbabwe has seen a steady average growth rate of 6.8% over the last three years, despite the volatility of the local currency.

He attributed this year’s economic stagnation not to currency challenges but to climate change impacts on agriculture and productivity. According to Ncube, climate factors have disrupted growth more than the currency fluctuations.

Reflecting on Zimbabwe’s economic structure, Ncube emphasized that a weaker currency offers specific advantages for exporters, who have benefited from increased inflows. This depreciation, he argued, enhances Zimbabwe’s export competitiveness in the international market.

Zimbabwe’s financial journey has seen six different currency introductions within the last 15 years, each an attempt to achieve stability. The ZiG, which was launched in April 2024, continues this struggle for consistency against the dominant US dollar.

Amid Zimbabwe’s economic trials, Ncube’s assertions highlight an unconventional approach. He noted that while a weakening currency may disadvantage some, it presents opportunities for others, illustrating the complex impact of currency devaluation on various economic players.

Ncube’s remarks suggest that, for Zimbabwe, currency depreciation may not be purely detrimental, a point he hopes will resonate as the government works towards fostering sustainable growth.

The Zim Bulletin