Confidence as currency: The role of governance in financial stability

WHEN confidence wavers, economies stall. When it grows, even limited capital can go far. In addition to policy and regulation, financial stability increasingly depends on something less tangible and yet more powerful: confidence.

It is true that growth, credit expansion and macro-economic resilience are driven by budget lines and reserve balances, yet they depend critically on citizens’, investors’ and firms’ confidence in institutions, policy consistency, and information flows.

Confidence is the invisible currency that sustains economies. It underpins investment, stabilises exchange rates, and strengthens the social contract between citizens, business and government.

It is earned through governance that is credible, communication that is clear, and institutions that are transparent.

The confidence equation

In both marketing and public policy, perception drives behaviour. The same applies in economics: People and investors act on what they believe about a country’s direction. Confidence, therefore, is not a by-product of growth; it is a pre-condition for it.

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When citizens believe that policy decisions are predictable and leaders are accountable, they spend and invest more freely. But when uncertainty clouds decision-making, people hedge, save in hard currency, or move capital off-shore.

In a sense, governance is the brand promise of a nation, and confidence is the trust that brand inspires. As Kenneth Arrow once observed, “Virtually every commercial transaction has within itself an element of trust”. Without that trust, even sound macro-economic plans can falter.

Zim’s challenge, opportunity

Our economy has shown extraordinary resilience, yet public and investor confidence has yet to reach the high levels that can really propel it to its full potential. For a long time, many businesses and households operate in ‘defensive mode’, hedging against currency shifts and inflationary pressures.

These reactions are not irrational; they are signals of a trust gap between economic actors and policymakers. This picture is changing though. It is encouraging to note some positive review from the International Monetary Fund (IMF), which is quoted as saying the economy is “experiencing a degree of macroeconomic stability” attributed to “more disciplined policies”.

The IMF had forecast growth of 6% for 2025. It is encouraging to note that critical forces are working in favour of this growth, notably agricultural output, which is showing positive signs of recovery, and a consistent and persistent northward trajectory of gold prices, which undoubtedly have a tangible impact on foreign currency receipts.

It is critical to note that credibility cannot be legislated into existence; it must be earned through transparent communication and predictable implementation. The launch of the Zimbabwe Gold (ZiG) currency in April 2024 demonstrated this lesson vividly.

While the move aimed to stabilise the monetary system, early communication gaps created uncertainty. Subsequent, clearer engagement by the Ministry of Finance, Economic Development and Investment Promotion and the Reserve Bank of Zimbabwe (RBZ) helped ease some of those fears, illustrating how transparent messaging can make or break reform momentum.

Learning from the region

Across Sadc, several neighbours offer useful lessons on how policy credibility and communication strengthen stability. Zambia has rebuilt significant investor confidence after years of fiscal distress.

The government’s open dialogue with creditors and the IMF, its willingness to publish debt data, and its candid communication about reforms have helped steady the kwacha and restore external support.

Transparency became Zambia’s strongest currency. South Africa, despite political contestation, maintains confidence through institutional strength. Regular briefings by the South African Reserve Bank and transparent monetary-policy communication have anchored expectations even during global volatility.

The clarity of message alongside the size of reserves reassures markets. Namibia has positioned itself as a trusted investment destination by linking governance to its national brand.

The country’s Vision 2030 strategy and consistent messaging around environmental, social and governance (ESG) credentials have attracted green-energy investments despite a small domestic market.

The desire to keep confidence high was recently demonstrated when the country redeemed a US$750 million Eurobond, the largest single-day debt maturity in its history.

In doing so, Namibia was signalling that it remains a “credible and disciplined borrower”. This was a confidence booster. It is that confidence that contributes to financial stability.

These examples remind us that transparency and governance are not abstract virtues; they are economic assets that influence borrowing costs, currency stability and investment inflows.

Policy, communication and brand: Three sides of the same coin. Financial stability is no longer the exclusive domain of central bankers.

It is also shaped by how policymakers communicate and how a country manages its reputation.

In my professional experience across Southern Africa, I have seen that policy without communication breeds speculation and communication without credibility breeds cynicism. Zimbabwe’s economic managers, to their credit, have become more proactive in public communication from pre-budget consultations to monetary-policy briefings.

The next frontier is to make those communications predictable, plain and consistent. Additionally, there is a need to provide more granular information on key metrics and key economic indicators (KEI).

There should not be any gaps in the reportage. Economic players need to know more than what is currently available in the public domain. It should be easy to go to the RBZ or Ministry of Finance’s websites and get as many KEIs as one requires. This dispels suspicion and builds confidence.

Every announcement is part of a wider national brand narrative: are we telling the story of stability, or the story of uncertainty? In brand strategy, authenticity builds loyalty. The same is true in governance. Investors, like consumers, reward honesty, even when the news is difficult.

Clear explanations of trade-offs, timelines and risks strengthen rather than weaken confidence.

The confidence dividend

Countries that invest in governance and transparency enjoy what might be called a confidence dividend — the economic return that comes from trust. It takes the form of lower risk premiums, stronger currencies and deeper credit markets.

This ultimately results in financial stability.

For Zimbabwe, unlocking that dividend will require that all players work in unison for the greater good of the economy. Four critical elements should always be in scope.

Policy consistency: Avoiding abrupt shifts in tax, currency, or investment regimes. Transparent data: Regular publication of reliable fiscal and economic indicators. As alluded to above, data should not be a sacred cow.

Data should be readily available to all economic agents, including scholars. Predictable engagement: Ongoing dialogue between government, business and civil society, rather than reactive communication during crises.

Our policymakers have to be accessible to all; after all, they are there to serve the people of Zimbabwe. Engaging a policymaker should not be a mammoth task. Institutional branding: Showcasing credible reforms and performance metrics as part of a deliberate national rebranding strategy is critical.

Confidence as competitive advantage

As a marketing practitioner, I will always draw on that discipline for emphasis. In marketing, a trusted brand can charge a premium and weather turbulence. In the same way, a trusted economy attracts patient capital, while one perceived as opaque pays a penalty.

For a country undoubtedly rich in resources, talent and entrepreneurial spirit, confidence may be the elusive multiplier that, if nurtured, could allow Zimbabwe to easily leapfrog a number of her peers on the continent.

Confidence turns good policy into growth and capital into opportunity. Confidence-building begins with governance structures that communicate clearly, act consistently and value transparency as a national asset.

As the old African proverb goes, “A good name is better than riches”. In economic terms, that good name is confidence, and it may just be the most valuable currency of all that will drive and help sustain the financial stability Zambia has rebuilt of an economy.

• This article was first published in the Zimbabwe Independent Banks and Banking Survey 2025 Magazine - Capital, Confidence and Credit Market Dynamics. Mambure is a chartered marketer and Fellow of the CIM (UK) and holds an MBA, a Master in public policy and governance, and an MSc in marketing. — dnmambure@gmail.com