Business adjusts to official exchange rate…move bolsters ZiG, boosts consumer spending Some of the prices displayed by retailers in Bulawayo showing compliance with the official exchange rate

Chronicle Writers

MOST business operators and key service providers have lowered their exchange rates in compliance with the Reserve Bank of Zimbabwe (RBZ) regulations, which is a significant boost for the new ZiG currency. 

Economic analysts commended these adjustments saying they strengthen the wider adoption of ZiG, promote market stability and enhance consumer buying power. 

The recent Statutory Instrument 81A of 2024, promulgated by the Government after the successful launch of the structured currency, compels businesses to use the official exchange rate when pricing products.

Those who violate the regulations are liable to a fixed penalty of ZiG200 000 or equivalent in forex. The regulations also eliminated the 10 percent mark-up, which was previously accepted to promote smooth business operations while protecting consumers from profiteering tendencies.

Before the new regulations, unscrupulous businesses had pegged their prices way above the official rate, with some shops charging rates as high as US$1  to ZiG22.

However, a snap survey conducted by a news crew from the Chronicle shows that most shops and service providers have complied with the official exchange rate adjustments of about ZiG13,4 to US$1. 

In Bulawayo, most retail shops have adjusted their rates, with major retailers such as Oceans Supermarket and Greens Supermarket adjusting their rates to US$1 to ZiG14 and ZiG13.48 respectively. 

Major retail outlets, TM Pick n Pay and OK have also pegged their rates at US$1: ZiG14, while Farm and City Centre is using US$1: ZiG13,81. Spar and Choppies Supermarkets are using US$1: ZiG13, and clothing chain Edgars Stores is using US$1: ZiG13,8 while wholesale Liquor Hub is using US$1: ZiG13,88.

Service providers such as the Bulawayo City Council and Gweru City Council were using the ZiG13,4 exchange rate, just the same as some private schools and public entities.

However, in Gweru, some retail shops and commuter omnibuses are yet to benchmark ZiG prices with official exchange rates. Pick n Pay is using the ZiG14,6 rate, while OK is using ZiG15 to US$1.

Commuter omnibuses were still charging US$1 for two or ZiG10 per passenger. Shops such as Texas Meats were using a rate of US$1 to ZiG23,3 when swiping or using mobile money.

In Gwanda, major supermarkets pegged their rates at US$1: ZiG14, while local authorities pegged their fees using the official exchange rate of US$1: ZiG13,7. In some smaller retail shops, prices are pegged using the parallel market rate of US$1: ZiG20, while others reject the local currency outright. Other shops limited the number of goods customers could buy using ZiG.

Confederation of Zimbabwe Retailers (CZR) president, Dr Denford Mutashu, said the retail sector has started complying with the regulations and urged those who have not embraced the new norms to adjust accordingly. 

“The exchange rate should remain market-driven and one that allows cost recovery for business, failure of which it pauses challenges for the economy by promoting further informalisation,” he said. 

Economist, Mr George Nhepera, said the directive by the Government to compel businesses to use the stipulated exchange rates will bring stability to prices, restoring value for the transacting public.

“In the short to medium term period, the ultimate beneficiary to this noble directive will be the consumer who for a long time was being negatively affected by multiple prices linked to unofficial exchange rates,” he said. 

“This was ultimately reducing their disposable income and causing unnecessary financial pressure and anxiety.”

He said industry is going to benefit from the policy as it will result in predictability in business making and enable investment promotion.

“This is the environment we need in our country to promote economic growth and prosperity aligned to attainment of Vision 2030 national goals,” said Mr Nhepera.

Association of Business Zimbabwe (Abuz) chief executive officer, Mr Victor Nyoni, said businesses prefer to comply with fair economic laws that promote growth.

“As a private sector business association, we fully believe in the market forces. A proper exchange rate is the one that is largely determined by the market forces,” said Mr Nyoni.

Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, over the weekend, said that the Government will decisively deal with those who are undermining the country’s currency. 

“We are going to be very strict and vigilant as authorities to make sure that we can protect our currency. Over 70 people have been brought before the court so that they can face justice for undermining the currency and that should be a strong message,” he said. 

“We’ve also introduced certain fines that when businesses deviate from using the willing buyer, willing seller rate as published by the Reserve Bank of Zimbabwe, they violate  the law and we will fine them ZiG200 000 for that violation.”

Prof Ncube said ZiG, which was introduced last month, will in future be the sole currency.

“It’s not fair as Zimbabwean citizens that some among us continue to degrade and undermine the currency that everyone has fought hard for, to make sure that we have a currency that is stable and eventually be the sole currency in time, where we would say, we don’t need any other currency except our own. 

“We will have to work hard to make sure it is stable and we call on citizens to protect the currency,” said Prof Ncube.

 

 

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