Follow the Change Radio News Online channel on WhatsApp: https://whatsapp.com/channel/0029Va5kPp2KGGGQkePy4t1q The Zim for All Foundation wrote a letter to the International Monetary Fund(IMF), regarding the IMF's recent Article IV Consultation to Zimbabwe. We interviewed the Executive Director of the Zim for All Foundation, Chenayi Mutambasere, last week on our Weekly program, Current Affairs, right here on the Change Radio WhatsApp channel. We are publishing the letter to the IMF below👇. It is a lovely read📚. Please read and share. Remember to leave a like. Caring is sharing. Thank you greatly!(The letter has been formatted for WhatsApp) Zimbabwe: Deteriorating Economic Situation – Advocacy Brief for IMF Article IV Consultation Prepared by: Chenayi Mutambasere – Executive Director, Zim for All FoundationAddressed To : Article 1V Consultation Team; CC : All Media Date: 10 June 2025 Introduction Zimbabwe’s economy is in a perilous state, characterised by currency instability, rampant arbitrage in foreign exchange markets, and systemic corruption undermining public finances. Despite repeated reform attempts, the situation has deteriorated, eroding public trust and exacerbating economic hardship. This brief highlight key problem areas – including the failed introduction of a new gold-backed currency, abuse of the foreign currency auction system by politically connected elites, egregious corruption in public tenders, and the lack of accountability for public finance mismanagement – and offers recommendations. The aim is to inform the IMF’s Article IV consultation with an unvarnished account of these issues and advocate for decisive reforms and oversight to restore stability and credibility. 1. Collapse of the Gold-Backed “ZiG” Currency In April 2024, the Reserve Bank of Zimbabwe (RBZ) introduced a new gold-backed currency, the Zimbabwe Gold (ZiG) dollar, to replace the unstable Zimdollar The ZiG was intended to provide a stable, inflation-anchor by tying the currency’s value to gold and foreign reserves, and its rollout was accompanied by measures like requiring businesses to pay taxes half in ZiG to spur demand. This innovation was a response to surging inflation – monthly inflation had spiked above 50% in early 2024, threatening a return to hyperinflation. However, the ZiG currency’s performance has been markedly poor. Confidence in the ZiG eroded quickly as inflation remained high and the currency lost value. Even with gold backing, Zimbabwe’s inflation continued to accelerate, indicating that ZiG failed to serve as a stable store of value. Notably, year-on-year inflation jumped from 2.5% in December 2024 to 14.6% in January 2025, shortly after ZiG’s introduction, undermining claims that it would tame price growth . The ZiG also depreciated sharply. Launched at an official rate of 13.56 ZiG per US$1, it required a massive devaluation by late September 2024 – the RBZ slashed ZiG’s official value by 43% (from 13.56 to 24.4 per USD) to try to catch up with reality . Within six months, ZiG had lost nearly half its value, and by October 2024, the black-market rate reached 40–50 ZiG per USD, double the official rate . Table 1 below illustrates the currency’s steep decline and widening parallel market premium.Table 1: ZiG Exchange Rate Trends and Parallel Market Premium (2024–25)Date Official Rate (ZiG per USD Parallel Market RateNotes Apr 2024 (Launch) 13.56 ~15 (initial) Zig Introduced; goldbackedSep 27 2024 24.4 ~50 Official devaluation of 43% Oct 23 2024 ~27 40-50 Black Market ~2x official Feb 2025 26.4 ~40(est.) Persistent Parallel Premium The Zimbabwean public’s trust in the ZiG is extremely low. Having endured past currency collapses, most people are reluctant to treat ZiG as real money. The informal sector (80% of the economy) largely rejects ZiG, preferring the US dollar for its stability . Even in the formal sector, many businesses either refuse ZiG or impose steep pricing penalties for its use, reflecting expectations of further depreciation. As one street trader told Reuters, “The ZiG has been getting weaker, so it does not make business sense to transact with it… We have been here before with the Zimdollar” . Indeed, many Zimbabweans do not trust the new currency at all . Government officials have pointed to a slight uptake in ZiG usage (claiming the proportion of USD transactions fell from 85% to ~70% towards late 2024) , but this remains driven by forced measures (such as tax obligations in ZiG) rather than genuine confidence. In practice, as the ZiG’s value slides and inflationary pressures persist, citizens increasingly convert their ZiG holdings to USD at the first opportunity – fueling further depreciation in a self-perpetuating cycle.Summary: The ZiG currency has failed to anchor inflation or gain public trust. It rapidly devalued by over 50% in its first half-year, necessitating emergency adjustment by the RBZ , and a thriving parallel market indicates that Zimbabweans reject the fiction of its official value. Without fundamental changes, this “gold-backed” currency risks the same fate as prior currencies – collapse under hyperinflation – as people and businesses continue to dollarize informally. The lack of credibility in ZiG underscores deeper governance problems that monetary fixes alone cannot solve.2. Forex Auction System – Leakages and Elite ArbitrageZimbabwe’s foreign currency auction system, introduced in 2020, was ostensibly meant to improve access to hard currency and stabilize the exchange rate. In practice, it has created opportunities for arbitrage and leakages that benefit a connected few. Under the RBZ-run auction, approved importers bid for limited U.S. dollars at an official exchange rate, which is typically below the true market-clearing rate. The authorities have not fully liberalized the exchange rate, and they maintain a significant gap between the auction rate and the parallel market rate . Over time, this gap has invited rent-seeking behavior: those with insider access to cheap USD at the auction can resell or deploy it at the much higher black-market rate for a hefty profit.Indeed, Zimbabwe’s “managed” exchange rate regime has largely failed – the Zimbabwe dollar (now ZiG) has lost 98% of its value relative to USD since the auction began in 2020, a stark indicator that the auction system did not halt depreciation. Instead, multiple exchange rates emerged, and the parallel market remains active and better supplied than official channels. Crucially, evidence suggests this market is indirectly fed by those who game the auction. Authorities have been accused of turning a blind eye to powerful actors who obtain bulk forex at the official rate and then leak it into the street market. As one press report noted, despite promises to crack down on street money-changers, it is “alleged some bigwigs and the politically-connected provide [the foreign] money that circulates on the streets.” In other words, politically connected elites and firms have been accessing dollars at the subsidized auction rate and funneling them to the parallel market, pocketing the arbitrage gains. This not only undermines the local currency, by fueling the very black market the policy aimed to eliminate, but also means access to foreign exchange is inequitably skewed toward those with political clout. Small and medium-sized businesses, lacking connections, are largely shut out of the auction and forced to scrounge for forex at punitive parallel rates . Meanwhile, large corporates and cronies benefit disproportionately. For example, minimum bid requirements (e.g., USD 50,000 in one tranche) effectively exclude smaller players , concentrating access in big firms often linked to the political elite. The result is an unfair system that rewards rent-seeking: the government itself has admitted there was a time when the parallel exchange rate ran 300% above the official rate, creating enormous arbitrage margins (even after some measures, the gap has only narrowed to ~30–40%). Top officials publicly deny the severity of the problem – former Finance Minister Mthuli Ncube even claimed “90% of forex trading” happens at official rates – but this flies in the face of on-the-ground reality and independent analysis. In truth, so long as the official rate is held artificially low, someone will profit from the “easy” dollars, and evidence indicates those ‘someones’ are often politically favored entities.Summary: The foreign exchange auction system, rather than transparently allocating scarce forex, has spawned distortions and corruption. Multiple exchange rates and a persistent parallel premium have enabled arbitrage by well-connected elites at the expense of the broader economy. The local currency’s collapse (98% loss in value since 2020) attests to this failure. Eliminating these leakages requires both policy corrections (toward a single, marketdriven exchange rate) and governance measures to ensure elite interests can no longer capture public resources via preferential forex access.3. Case Study – Inflated ZEC Tender and Money Laundering SchemeZimbabwe’s systemic corruption is perhaps best illustrated by a recent shocking procurement scandal involving the Zimbabwe Electoral Commission (ZEC). In the run-up to the 2023 general elections, ZEC sought to procure election materials – such as ballot paper and indelible ink – through a South African company, Ren-Form, in partnership with a locally-connected firm, Better Brands Security. What transpired was a brazen scheme to inflate contract prices and launder the proceeds to political cronies, all with government funds. According to documents and correspondence now in the public domain, Ren-Form initially provided ZEC with a quotation on 20 February 2023 for approximately US$2.67 million worth of election materials. However, after behind-closed-doors dealings, a “revised” quote was submitted for an exorbitant US$8.96 million, a 235% increase over the initial price. This inflation had no legitimate justification – it was purely designed to pad the contract. ZEC, under the leadership of its chairperson Justice Priscilla Chigumba (who met with the suppliers and intermediaries), approved the inflated tender. The Zimbabwean government –via the Treasury/Ministry of Finance – then dutifully paid out the US$8.96 million to RenForm’s bank account in South Africa, effectively footing the bill for more than triple the reasonable cost.Where did the extra money go? Evidence shows that as soon as the payment landed in RenForm’s account, the majority of it was immediately kicked back to a politically connected individual’s company. Over 66% of the funds (roughly US$5.9 million) were transferred to bank accounts belonging to Intratek, a firm owned by Mr. Wicknell Chivayo. Chivayo is a well-known figure associated with high-level corruption; he has close ties to powerful politicians and is under the U.S. sanctions (OFAC) for past illicit activities. In this scheme, RenForm essentially acted as a pass-through vehicle: after delivering the election materials (likely worth only a fraction of what taxpayers paid), the bulk of the inflated payment was laundered to Chivayo’s pocket. A letter from Better Brands (the jilted local partner) to RenForm later blew the whistle on this arrangement, accusing Ren-Form and Chivayo of conspiring to overcharge the government and split the proceeds – “clear evidence of… money laundering, where you are overcharging the Government of Zimbabwe and sending the overcharged money to individual accounts”. Table 2 summarizes the financial flows in this corrupt tender:Table 2: Overpriced ZEC Election Materials Tender – Inflated Quotes and Fund Flows Stage Date Amount Details Initial Quote 20 Feb 2023 $2,673,360 Ren-Form’s original quotation to ZECFinal Invoice (Inflated)Mar 2023 $8,964,604 Ren-Form’s revised quote (235% higher)Treasury Payment to Ren-Form2023 $8,964,604 Ministry of Finance disbursed fullamount to RenForm’s SA Bank (signed evidence available) Transfer to Intratek (Chivayo)Immediately postpayment ~$5.9million ~~66% of contract value siphoned to Chivayo’s Intratek accountsThis case reveals a multi-layered failure of governance: ➢ ZEC officials approved a clearly inflated contract;➢ The Ministry of Finance released payments without due diligence, even for a 235%-escalated invoice; and politically connected actors orchestrated the deal to enrich themselves at the public’s expense. The presence of a money laundering element across borders (with South African accounts involved) also indicates how corruption is entwined with international networks. Notably, the President’s Office was the ultimate client for some of these election procurements (one proforma invoice was even addressed to the Office of the President and Cabinet) –suggesting high-level awareness, if not involvement, in these transactionFar from an isolated incident, this ZEC tender scandal is emblematic of systemic corruption in Zimbabwe’s public sector. Inflated contracts – especially for high-value or sensitive procurements – have become a common vehicle for siphoning funds. The perpetrators, in this case, felt confident enough to move millions of dollars in a manner blatant enough to be traced. It underscores how entrenched patronage networks are siphoning scarce public resources, even as Zimbabwe’s citizens suffer shortages and economic instability. When election administration itself is tainted by such graft, it not only wastes public funds but also undermines democratic governance.4. Compromised Ministry of Finance and Governance FailuresOversight and stewardship of public finances in Zimbabwe have been severely compromised by political interference and patronage – right at the very top of the Ministry of Finance (MoF). Rather than serving as a technocratic custodian of fiscal integrity, the MoF has effectively been captured by ruling elites. A stark illustration is the appointment of President Mnangagwa’s own son, David Kudakwashe Mnangagwa, as Deputy Minister of Finance in September 2023 . This 34-year-old, who had no prior government experience (aside from a brief stint on a bank board), was suddenly made “second-in-charge” of the Treasury . The appointment – widely decried as brazen nepotism – signaled that political loyalty and family ties supersede merit in key economic management roles. Observers noted that President Mnangagwa appeared to be “creating a family dynasty” with such moves , and even ruling party insiders privately acknowledge the chilling effect on professional civil servants. With the President’s son now helping call the shots at MoF, the independence of the Treasury is fundamentally in doubt.This politicization has real consequences. It means decisions about things like forex allocations, contract approvals, and financial regulations may be influenced by personal or political interests rather than the national interest. In the aforementioned ZEC tender case, for instance, Treasury officials approved the disbursement of nearly US$9 million for a highly questionable contract – an action that suggests either negligence or complicity on the part of MoF’s leadership. It is telling that such a large payment sailed through despite the glaring red flags; one wonders if any whistleblowers or honest officials in the system were overruled by those with a vested interest in facilitating the payout. The presence of the President’s son in the Ministry raises further alarms: it creates a clear conflict of interest where those implicated in illicit transfers or off-budget expenditures might be shielded by political protection. In other words, the MoF is no longer a neutral gatekeeper of public funds – it is subject to capture by the very actors who benefit from looting those funds. Moreover, the Ministry of Finance itself has a documented pattern of mismanagement and lawlessness in handling public resources. The Auditor-General’s reports have singled out the Treasury as “one of the worst offenders” in failing to uphold financial controls . For example, the MoF was found to have purchased a property for US$150,000 without proper valuation or transfer of ownership – a basic lapse in procedure that points to gross negligence within the Ministry . Such behavior at the heart of government finances exemplifies a culture where rules are bent or ignored to benefit insiders. The custodian of the nation’s purse is, by multiple accounts, heavily compromised. When the Ministry charged with preventing misuse of funds is itself engaged in shady practices, it becomes nearly impossible to enforce accountability across the rest of government. Summary: The governance of Zimbabwe’s economy is severely undermined by a compromised Ministry of Finance. The installation of politically connected individuals (not least the President’s own son) in key positions has blurred the line between state finance and personal fiefdom. This has enabled illicit financial transfers and tolerated malpractices that would, in a functional system, trigger immediate investigation. Restoring confidence in economic management will require depoliticizing and professionalizing the MoF, alongside robust external oversight to counteract entrenched interests. 5. Accountability Deficit: Auditor-General’s Warnings UnheededZimbabwe’s Office of the Auditor-General (OAG) has, for years, provided detailed annual reports uncovering extensive corruption, waste, and mismanagement in public entities. These reports paint a sobering picture: procurement fraud, unauthorized expenditures, missing funds, and assets paid for but never delivered are recurrent themes. Yet the most disturbing aspect is what happens after these findings come out – virtually nothing. There is a chronic lack of accountability for the abuses documented by the Auditor-General. Few, if any, officials are ever punished or held responsible, resulting in the same violations recurring year after year. The latest Auditor-General reports (for the year ending Dec 31, 2023) continue this trend. They revealed, for instance, that government ministries and agencies paid millions of dollars for goods that were never delivered, including vehicles and equipment . In a well-publicized example, the government paid for a fleet of vehicles that never arrived – essentially paying for nothing, a scenario indicating collusion between suppliers and officials. Instead of addressing this outrageous finding with urgency, top Treasury officials downplayed it. Finance Secretary George Guvamatanga dismissed the Auditor-General’s report on undelivered goods, claiming the authorities “knew about this before and were acting,” and that there was “no need for… excitement about the undelivered cars.” . Such a response epitomizes the dismissive attitude toward oversight – rather than prompt accountability, the instinct was to cover up or rationalize the malpractice.The Auditor-General’s annual audits have highlighted similar systemic issues for decades, from 1987 through 2004 under previous auditors and continuously in recent years . These include rampant inside dealing, where officials enrich themselves “at the expense of public welfare” , and situations where in the absence of direct looting, public assets are simply neglected into disrepair . Despite these findings, impunity prevails. “Few officials face consequences” for even egregious corruption, creating a cycle where there is little fear of retribution among the ruling elite . Each year’s report “highlights similar issues” as previous years, a telling sign that recommendations are not being implemented . Even Parliament’s Public Accounts Committee, which reviews the audit reports, lacks teeth when the political will to act is absent.This failure to act on audit findings has bred public frustration and cynicism. Taxpayers see rising burdens on one hand and revelations of looting with impunity on the other . The credibility of public institutions erodes when glaring abuse – documented officially – is met with inaction. A culture of impunity has taken root, signaling to corrupt officials that they can continue unabated. The acting Auditor-General, Rheah Kujinga, notes that many agencies simply ignore OAG inquiries and recommendations, showing “little respect” for the Auditor-General’s authority Furthermore, the post of Auditor General remains nonsubstantive, which also compromises the integrity of this office. This scenario speaks to an institutional malaise wherein oversight bodies do their job, but the executive machinery refuses to respond appropriately. Summary: Zimbabwe’s public finance mismanagement is not due to lack of knowledge or system. Thee problems are well known and well documented by the Auditor-General. The crux of the issue is the absence of enforcement and political will to correct these problems. Until there are real consequences for those who abuse public funds, the diligent work of the Auditor-General will not translate into improved governance. Strengthening accountability –by empowering the OAG, protecting whistleblowers, and insisting on follow-through – is essential for any sustainable economic reform.Recommendations for Reform and OversightAddressing Zimbabwe’s economic crisis requires tackling its governance and transparency deficits head-on. We respectfully urge the IMF, as part of its Article IV consultation and any program discussions, to press for the following key reforms and oversight mechanisms:➢ Independent Forensic Audits: Commission independent audits (with international reputable firms) of suspect transactions and entities – starting with the Zimbabwe Electoral Commission procurement deals and the Reserve Bank’s foreign currency auctions. A forensic audit of the ZEC tender outlined above should trace the full money trail and identify all officials involved in approving and facilitating that overpayment. Similarly, an audit of the RBZ forex auction system (including a beneficiary analysis of who received how much USD at what rate) can reveal patterns of favoritism and illegitimate allocations. These audits must be public and followed by referrals for prosecution where crimes are uncovered.➢ Strengthen IMF and External Oversight: We recommend that any IMF reengagement (Staff Monitored Program or funded program) include stringent oversight provisions. For example, the IMF could insist on the appointment of external monitors/advisors embedded in the Ministry of Finance and RBZ to supervise high-risk transactions. International best practice in post-crisis environments (e.g., in certain EU programs or African post-conflict financial management regimes) has included foreign or independent experts co-signing on large expenditures to ensure compliance. A similar external supervision mechanism for Zimbabwe’s Treasury – perhaps under an IMF-monitored reform plan – could help bypass the roadblocks posed by political interference. The IMF should also tie any financial support to concrete milestones in improving transparency (such as publishing detailed auction results, procurement contract databases, and regular implementation reports on audit recommendations).Zimbabwe currently lacks a sufficient line of defense to prevent and respond to corrupt practices. The Ministry of Finance has consistently demonstrated a lack of will or capacity to effectively safeguard the public purse; often acting in ways that disadvantage the public, who are left to rely on underfunded services while resources are misused. The IMF must use its leverage to put forward specific , enforceable recommendations that will decisively address these governance failures. ➢ Exchange Rate and Forex Reforms: To close arbitrage loopholes, Zimbabwe must unify its exchange rates and allow a market-clearing rate. The IMF should advise eliminating the current auction system’s distortions – possibly moving to a transparent interbank market where all players (big or small) have equal access to forex at the true market price. This would reduce the rent-seeking value of political connections in forex access. In parallel, tighten controls on illicit forex dealings: e.g., implement robust monitoring to ensure that if subsidized forex is provided (for critical imports), it is used for stated purposes and not diverted. Technical assistance from the IMF in building a credible forex allocation framework (with less discretion and more automation/rules) would be valuable.➢ Combat Corruption in Procurement: The government should be urged to review and renegotiate inflated contracts and to bar companies and individuals implicated in corruption from future tenders. In the ZEC case, for instance, the overpricing should be investigated, and any ongoing payments frozen. More broadly, Zimbabwe could benefit from adopting open contracting practices – publishing all tenders and awards online for public scrutiny - and allowing independent observers (including civil society) in tender processes, especially for large-value contracts. The IMF and World Bank can support procurement reform training and systems to increase competitiveness and reduce sole-sourcing to cronies.➢ Implement and Enforce Auditor-General Recommendations: It is imperative to break the cycle of ignored Auditor-General reports. There should be a time-bound action plan to address each major finding in the latest OAG reports, with quarterly progress reports to Parliament – and this should be made a structural benchmark in any IMF program. The government must also empower the OAG: ensure the AuditorGeneral’s office has full independence, adequate funding, and legal authority to follow up on whether its recommendations are implemented by each ministry. Critically, there must be real consequences for non-compliance. For instance, officials in ministries that persistently fail to account for funds or to act on audit findings should be suspended or removed. The IMF could support the OAG through capacity-building and by insisting on accountability as part of improving public financial management.➢ Depoliticize Key Economic Institutions: The role of the President’s family members and other unelected power brokers in economic governance is a red flag. While hiring/firing is the prerogative of Zimbabwe’s leadership, the IMF should raise concerns about nepotistic appointments and their impact on reform credibility. At minimum, there should be clear conflict-of-interest rules and transparency around the roles such individuals play. If the President’s son is to remain Deputy Finance Minister, he must formally recuse himself from oversight of any deals or entities where he or family members have a stake. It may be advisable to create an independent Public Finance Management Board, comprising respected economists, business leaders, and perhaps regional experts, to advise on and observe MoF operations – adding a layer of accountability above political appointees.➢ Restore Public Trust via Communication and Inclusion: The government, with IMF support, should embark on a communication campaign to rebuild confidence in economic management. This includes honestly acknowledging past mistakes, publicizing the reform steps being taken (as above), and inviting input from stakeholders (business community, civil society, labor) on further measures. For example, authorities could hold public forums on currency reforms or set up citizen monitoring committees for local government expenditures. While largely cosmetic on its own, such transparency can complement the harder actions outlined and signal a break from past secrecy.It is my organisation’s firm belief that the situation in Zimbabwe has been orchestrated to manufacture poverty which inturn becomes an enabler for corrupt practices that extend even to election rigging. Conclusion: Zimbabwe’s economic woes are not merely a product of abstract numbers or bad luck –they are the direct outcome of policy choices and governance failures. A currency can only hold its value if backed by sound institutions; Zimbabwe’s new ZiG dollar, lacking that foundation, has unsurprisingly faltered. Exchange rate stability can not be legislated into existence in an environment rife with arbitrage and favoritism. And no amount of IMF technical advice on budgets or inflation will succeed if corruption continues to siphon off resources and undermine public trust. This Article IV consultation arrives at a critical juncture. Zimbabwe is in desperate need of stabilization, yet past reforms have been derailed by lack of political will and accountability. The IMF and international community must, therefore, broaden the agenda to emphasize governance reforms as integral to economic recovery. By insisting on transparency, justice, and inclusion as conditions for assistance or re-engagement, the IMF can help empower reformers within Zimbabwe and protect the interests of the Zimbabwean people, who ultimately bear the cost of malfeasance. In sum, Zimbabwe’s deteriorating economic situation will only be reversed through a combination of sound economic policies and robust governance oversight. We urge the IMF to use its voice and leverage to champion the above recommendations. Doing so not only addresses the immediate issues – a collapsing currency, forex chaos, graft draining public coffers – but also lays the groundwork for a more accountable and resilient economic system. Zimbabwe’s citizens deserve nothing less than a government that manages their resources with integrity and prudence. The time to demand and support those changes is now. Signed, CMutambasere Chenayi Mutambasere Executive Director, Zim for All Foundation