Retailers and wholesalers must support the Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction system through compliance and responsible pricing, says the Confederation of Zimbabwe Retailers (CZR).
This follows observations of pricing distortions by retailers and wholesalers, some of whom continue setting prices using exchange rates above the prevailing auction rate.
The latest auction on Tuesday produced a weighted average of $81,3486 against the US dollar, as the local currency strengthened marginally for the sixth consecutive week.
The newly-introduced foreign currency exchange rate system requires that prices be given in both local and foreign currency with boards showing the exchange rate used displayed in each store for the benefit of customers.
“The CZR wishes to remind retail sector players of the existence of legal requirement that compels them to comply with the newly-introduced foreign currency exchange rate system.
“It is CZR’s humble submission that business should support the forex auction system through responsible pricing and compliance. The customer receipt should bear the currency in which the transaction has taken place,” said CZR president, Mr Denford Mutashu, in a statement.
He, however, highlighted the implementation challenges the sector was facing such as unavailability of fiscalised machines and software comparability.
According to Mr Mutashu, there has also been concern that available fiscalised machines were also not compatible.
“There is also a need to increase suppliers of fiscalised machines and the current number remains few while those supplying in some instances have failed to avail spare parts for the machines.
“CZR has collected the majority of sector views on the matter and is currently engaging Government to iron out the challenges. It is critical that sector members continue to comply with regulations while we engage Government on the matter.”
Recently, the RBZ monetary policy committee (MPC) member, Professor Ashok Chakravati, said some retailers failing to display prices under the dual pricing system and using open market exchange rates for pricing, despite getting forex directly or indirectly from the RBZ auctions, risked prosecution.
Prof Chakravati said that in terms of Statutory Instrument 185 of 2020, it was an offence not to display prices in both the Zimbabwe dollar and the US dollar.
President Mnangagwa gazetted this statutory instrument, Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No.3), which amends the original subsidiary legislation that compelled sole use of local currency. Under the amendment no one can provide goods or services in Zimbabwe without displaying, quoting or offering the price of such goods and services in both the Zimbabwe dollar and foreign currency at the ruling exchange rate.
Any entity or person who fails to do so faces civil penalties.
A civil penalty or civil fine is a financial penalty imposed by a government agency as restitution for wrongdoing and does not require a criminal conviction and can be imposed on the civil rules of wrongdoing on the balance of probabilities, rather than proof beyond reasonable doubt.
Zimbabwe has enjoyed notable exchange rate and price stability since the Reserve Bank introduced the auction system on June 23 to replace the fixed rate regime introduced in March for certainty of pricing after the outbreak of Covid-19. That fixing saw importers being forced to move into the black-market which overloaded and sent the de facto rate rocketing, causing high inflation..
Prof Chakravati said there was no justification for the majority of business entities in Zimbabwe to continue to quote prices for goods using black market exchange rates when the auction system is now meeting the overwhelming bulk of the foreign currency needs for importers.
“At the end of the day, all the people should accept the law of the land. There is SI 185. SI 185 which says you can put your prices in US dollars, whatever you like, then you can work that out into Zimbabwe dollar prices, but it must be at the market exchange rate.
“So the penalty is there; that if somebody does not comply with SI 185 they can be prosecuted. This is not the job of the RBZ, but this is the job of the Ministry of Industry and Commerce. They are the ones who are involved with retailers and others,” Prof Chakravati said.