The Government has assured policyholders that their financial and investment interests will be protected when the country switches to a domestic monocurrency system from 2030.
Zimbabwe currently uses a multicurrency monetary regime dominated by the US dollar and Zimbabwe Gold (ZiG), but plans to switch to a domestic mono-currency in five years to regain control of all monetary policy levers crucial to influence desired growth.
The ZiG has already proved its mettle, remaining largely stable since its introduction in April last year, while it has seen a drastic fall in inflation and has stabilised the exchange rate.
This comes as the insurance industry has been pondering over the implications of the proposed currency change on existing contracts and policies.
Finance, Economic Development and Investment Promotion Deputy Minister Kudakwashe David Mnangagwa, officially opening the Southern Africa Insurance Indaba in Victoria Falls, said the government is committed to ensuring that policyholders are protected and that the transition to a mono-currency system is smooth and seamless.
“If you have a life policy, for example, that is denominated in US dollars as a centennial, it would need to be grandfathered. Contracts, or whatever it is, would need to be grandfathered as well through the transition.
“What the industry needs to do is come up with a position on what a grandfathering plan would look like for insurance products.
“That way, you would have already formed a policy position for your industry, and you can accomplish it,” he said.
He added that the industry should make sure that whatever conditions are set for the “grandfathering plans” are very clear and understood by both the insurance companies and the clients as well to preserve value.
The Government has an approved roadmap to guide the transition from the multi-currency system to a domestic mono-currency system using the new Zimbabwe Gold by 2030, and the ultimate goal is to dedollarise the economy and regain full monetary policy control.
Statutory Instrument 218 of 2023 extended the life of the multi-currency regime until December 31, 2030.
Deputy Minister Mnangagwa said the 2030 deadline came about because industry called for a deadline on when the domestic mono-currency would come in.
“If you remember, there was sort of an open-ended situation on when money currency would be kicking in. It was uncertain. Through engagements with industry players, they said at least if you tell us for how long we have, we will be comfortable.
“This was in 2023 when I had just entered into public office, and the industry came up with a consensus that, look, if we have a 2030 deadline, we will be comfortable as a business,” he said.
He added that naturally, with the passage of time, as 2030 draws closer, and let’s not look at issues of mono currency as a dead stop, but rather as a cocktail of conditions present that need to happen before we go mono currency.
“The Government has been quite clear that we need to have sufficient reserves that allow for three to six months in the cover.
“We need to have a long enough stint of macroeconomic stability and a few other conditions that should entail the introduction of full monocurrency.
“So the ideal situation is that you actually choose to use ZiG, and it makes no difference whether you use ZiG or you use US dollars, and it becomes a matter of choice rather than coercion,” said Deputy Minister Mnangagwa.
He highlighted that what it should mean is that citizens may continue to hold US dollars, but can not use them for domestic transactions in line with the planned legal provisions supporting the monetary regime.
“Again, the Governor and the Minister of Finance have been very clear that there will be no loss of value in terms of insurance products, which means that you’re going to have a grandfathered plan,” said the deputy minister.
Deputy Minister Mnangagwa said that reimagining insurance for Africa required thinking beyond traditional boundaries and conventional models.
“We must leverage AI, blockchain, mobile platforms, and data analytics but always with the customer’s needs, dignity, and inclusion at the center,” he said.
He noted that trust is the currency of insurance, and the industry must move from transactional relationships to trusted partnerships through transparent communication, fair claims settlement, and consistent ethical conduct.
He also highlighted that climate change risk is not a future threat, but a present reality; hence, every underwriting decision, investment choice, and product design must integrate climate considerations.
“Insurance must serve not only the wealthy and connected but also the farmers in rural areas and the vendors and young entrepreneurs in urban areas, and financial inclusion is not charity; it is smart business and a national imperative,” said Deputy Minister Mnangagwa.
