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Nqobile Bhebhe and Sikhulekelani Moyo, Chronicle Writers

THE surge in black-market exchange rates, peaking at US$1:25 ZiG last week has led some unscrupulous businesses in Bulawayo to continue defying Government directives by rejecting transactions in the Zimbabwe Gold (ZiG). 

This defiance undermines the Government’s efforts to stabilise the currency and maintain its utility, further diminishing consumer purchasing power and contributing to economic instability. 

The official exchange rate remains at about ZiG14 to the USD.

In Bulawayo, some businesses have resorted to faking network issues with their point of sale (POS) machines, in a bid to justify exclusive trading in foreign currency.

The Reserve Bank of Zimbabwe (RBZ)’s Financial Intelligence Unit (FIU) established a hotline and WhatsApp number to enable members of the public to report businesses rejecting the local currency or using the black-market exchange rates.

In May, Government promulgated Statutory Instrument 81A of 2024 to enable it to punish those found flouting the exchange rate.

Under these regulations, individuals and businesses found charging goods beyond the RBZ gazetted exchange rate are liable to a fine of ZiG200 000.

In a snap survey yesterday, the Chronicle news crew established that some retail outlets including Greens Supermarket and Oceans in Bulawayo were turning away shoppers who intended to transact electronically in ZiG, claiming their POS machines for the ZiG were not functional.

One shopper said: “They refused to accept transactions in ZiG claiming their network was down, but surprisingly when you transact electronically in USD, suddenly the network is up. This is a scam, it seems they don’t want ZiG at all.”

The news crew observed scores of shoppers returning goods to the shelves.

Another woman who was doing her shopping at Oceans said people used to buy using their ZiG through POS until two weeks ago when they claimed that the machines were down.

“If you try to use your bank card, they tell you that their machines are not working so they need cash. It’s all a lie, they just want to make it difficult for us to use the ZiG,” she said.

Consumer Protection Commission (CPC) chairperson Dr Mthokozisi Nkosi said they were aware of the shenanigans by some retailers.

He said such practice was unethical and illegal and likely to attract the full wrath of the law.

“We understand technology fails at times. We equally understand that it is serviceable, hence no reason to continuously claim the system is out of order. Let these businesses be warned that we cannot be bystanders when they flagrantly violate consumer laws,” said Dr Nkosi.

“The law is clear that we are in a multi-currency regime and consumers have a choice on which currency to use as they transact. We are coming after these unscrupulous businesses. Our Bulawayo office is going to be descending on these rogue elements.”

Dr Nkosi said the commission is finalising the logistics with other law enforcement agencies with the blitz imminent.

“We strongly warn them to stop this practice forthwith,” he said.

Confederation of Zimbabwe Retailers president Dr Denford Mutashu said ZiG is legal tender, just like the US dollar hence retailers should comply with the law and accept local currency.

“As CZR, we continue to urge retailers and wholesalers to accept ZiG and not inconvenience customers as we continue to work with the Government in addressing the supply chain challenges impacting sector players negatively,” he said.

Last week, the Ministry of Finance, Economic Development, and Investment Promotion blacklisted more than 50 contractors, after investigations revealed they were supplying the black market after receiving payment for their services or goods.

Presenting the mid-term monetary review in Parliament last week, Finance, Economic Development, and Investment Promotion Minister Professor Mthuli Ncube said there has been significant progress in the phased de-dollarisation programme, aimed at re-establishing a mono-currency regime supported by a domestic currency to enhance local production and competitiveness in exports.

Some of the measures announced include promoting the local currency in domestic transactions, with the recent fiscal policy review mandating presumptive tax payments in local currency, regardless of the currency used for business.

Prof Ncube emphasised that the introduction of the structured domestic currency, ZiG, on April 5, 2024, has substantially stabilised the macroeconomic environment.

He said that maintaining stability will require consistent policy reforms, effective liquidity management, and bolstering foreign currency supply.

Confidence-building measures will also be implemented to increase trust and usage of the domestic currency, recognising the challenges posed by financial sector imperfections and lingering market distrust.

He further said going forward the macro-economic stabilisation policy thrust will focus on maintaining the current tight monetary policy stance, by strengthening the money supply growth management measures in place and increasing the use of Open Market Operations (OMO) of the RBZ among other measures.

National University of Science and Technology (Nust) lecturer in the Department of Banking and Economic Sciences (Nust), Mr Stevenson Dhlamini said the movement of exchange rates is often intricately linked to the growth of money supply within the economy.

Mr Dhlamini said the exchange rate implies a reduction in wages and salaries amid escalating inflation rates. 

“This scenario translates to an increased cost of living, subsequently amplifying poverty levels and economic inequality within the society. Anticipate workers’ unions advocating for wage and salary increments to mitigate the impact of surging living costs on their members,” he said. 

Mr Dhlamini said policymakers should consider enacting monetary policy reforms aimed at managing liquidity and stabilising exchange rates effectively.

Additionally, he said the establishment of robust social safety nets becomes crucial to safeguard vulnerable workers and households from the detrimental effects of exchange rate fluctuations.

Economist Dr Prosper Chitambara said the surge in parallel market rates should be an expression by business owners about the difficulties they encounter in accessing foreign exchange from the interbank market.

He said despite a high demand for USD-denominated transactions, the interbank market is struggling to meet this demand, leading to substantial pressure on the exchange rate.

“From conversations with people in business they are saying that it is difficult to access foreign currency at the inter-bank market, so there is a strong demand for US dollar by businesses that are not satisfied by the interbank market.

“This creates a lot of pressure on the exchange rate. If one fails to access forex for legitimate business on the inter-bank market, one is forced to seek recourse to the black market,” said Dr Chitambara.

The introduction of ZiG as legal tender on April 5, further stabilised the economy and brought about orderly pricing.