Zimbabwe was recently ranked as the most expensive country in Africa according to a comprehensive study by the African Development Bank (AfDB). The study evaluated purchasing power parities (PPPs) and exchange rates across African countries.
Zimbabwe, which until recently had been suffering from hyperinflation, turned deflationary after currency adjustments in April. The reintroduction of the Zimbabwean dollar (ZWL) in 2019 replaced a decade-long period of dollarization, but its value quickly depreciated due to excessive money supply. This decline has greatly affected the country’s purchasing power parity.
According to the African Development Bank, Zimbabwe topped the continent’s price levels, followed by Cabo Verde, Djibouti, Seychelles, and South Africa. On the other hand, Sudan, Egypt, Angola and Ethiopia recorded the lowest levels of prices. The African Development Bank’s Price Level Index compares each country’s overall price levels compared to the Africa average, where a price level index greater than one indicates higher prices compared to the region’s average.
Official statistics reveal that it takes around 624.44 zigzag per month to survive in Zimbabwe, equivalent to US$46.39, a figure widely disputed in the market. Concerns raised by the IMF and World Bank about data collection practices at the Zimbabwe National Statistics Agency have underscored the need for transparency.
Speaking at the Zimbabwe Investment and Capital Markets Conference in the UK, Finance Minister Mthuli Ncube assured investors of efforts to stabilize the exchange rate. He stressed the government’s commitment to maintaining macroeconomic stability through prudent monetary and fiscal policies. Ncube highlighted the extension of the multi-currency system until 2030 to facilitate the process of phasing out the dollar.
In April, Zimbabwe introduced the Zimbabwe Gold (ZiG), a new regulated currency backed by a composite basket of foreign currencies and precious metals. This initiative aims to enhance stability, which is evident from the monthly inflation rate of -2.4% in May 2024 and the stability of exchange rates in official and parallel markets.
Ncube stressed the government’s goal of transitioning to a private sector-led economy while ensuring a favorable macroeconomic environment, and investing in infrastructure, education and healthcare. He emphasized the role of foreign direct investment in promoting technology transfer, strengthening value chains, and enhancing overall competitiveness in Zimbabwe’s economy.