LOCAL retailers and manufacturers were this week pressured to stop pricing commodities in parallel market rates since they are accessing hard currency at the official auction rate, The NewsHawks can report.
NYASHA CHINGONO
Retailers and manufacturers were on Tuesday summoned by the central bank’s Financial Intelligence Unit (FIU) to explain why some businesses were drawing funds from the foreign currency auction and then pegging prices based on the parallel market rates.
Sources say that during the meeting manufacturers and retailers were also quizzed by FIU officials, including director-general Oliver Chiperesa, on why they were displaying “US dollar only” price tags at a time the country is promoting the use of the tumbling Zimdollar.
Although the fiery meeting ended in a stalemate, the FIU unilaterally decided that business return to the multicurrency system, which was recently promulgated at law for the next five years.
However, business and FIU will reconvene in three weeks’ time to discuss further issues bedevilling the economy. The meeting was also attended by suppliers, wholesalers and millers.
In candid talk, the Confederation of Zimbabwe Industries (CZI) told the FIU that the economy may fail to recover until certain fundamentals are addressed. “Our input was that all these issues are a manifestation of underlying current pricing. So, until that is addressed, we will be going back and forth,” CZI president Kurai Matsheza told The NewsHawks.
Despite considerably losing value on the market, the government insists on the use of the Zimdollar for local transactions.
A week before retailers and manufactures started pricing commodities in US dollars, the CZI had warned of the rejection of the Zimdollar.
The CZI says it has no jurisdiction to prescribe pricing to members.
“So, business must comply. That was his (Chiperesa’s) conclusion. We left it to individuals. As a body, CZI is not empowered to direct anyone or do anything that will destroy value to their shareholders,” Matsheza said.
Although business was told to revert to a multi-currency system, engagement on problems facing the economy will continue.
“They said let us engage. So, there was no conclusion per se, but they say let us engage and agree to meet at a later stage. We said in three weeks’ time we will be able to meet, but later reiterated that until that meeting, the FIU has the power to enforce it,” Matsheza added.
Before the meeting, it was reported that an “intensive blitz” was in the works to identify and take legal measures against the culprits.
The Zimdollar is the worst-performing currency in Africa and has weakened 72% against the greenback in 2022, according to Bloomberg. It officially trades at ZW$400:US$1, but is weaker on the parallel market, where it is quoted at between ZW$700:US1$ and ZW$900:US$1.
Measures to protect the currency have included lifting interest rates to 200% — the world’s highest. Annual inflation in the country surged to 192% in June, a 13-month high.
Finance minister Mthuli Ncube warned last week that retailers risk losing their operating licences should they refuse to accept local currency for purchases.
The Zimbabwe dollar has plunged more than 70% against the US currency this year, helping drive inflation to 192% in June. Its official rate is ZW$403.40 per dollar, but the greenback changes hands on the parallel market for as much as ZW$900 and its volatility is increasing reluctance to accept it as a method of payment.
The government had threatened to withdraw the operating licences of retailers that charge solely in US dollars, after accusing some of rejecting payments in local currency.
The government and policymakers have tried a series of measures to arrest the decline, including a temporary ban on bank lending, and hiking the central bank interest rate to 200% — the highest in the world. The finance ministry also legalised the use of the US dollar in the economy for the next five years.
