Defiant Zimbabwe businesses put on notice

RBZ monetary policy committee Professor Chakravati

Retailers failing to display prices under the dual pricing system and using open market exchange rates for pricing, despite getting forex from the Reserve Bank of Zimbabwe (RBZ)’s auction system, risk prosecution.

Professor Ashok Chakravati, who is a member of the RBZ Monetary Policy Committee (MPC), told The Sunday Mail Business that failure to display prices in the stipulated currencies — the US dollar and the Zimbabwe dollar — was an offence in terms of Statutory Instrument (SI) 185 of 2020.

In essence, the regulation mandates individuals and businesses that provide goods or services in Zimbabwe to display, quote or offer 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.

The wrongdoing is typically defined by a codification of legislation, regulations and decrees.

Prof Chakravati said there was no justification for the majority of business entities in Zimbabwe to continue to quote prices for goods using parallel market exchange rates when the auction system is now meeting the bulk of 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, 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,” he said.

RBZ, Prof Chakravati added, was working tirelessly to maintain the stability in the foreign exchange market.

“We are going to use additional measures of moral suasion so that everybody, if they are successful in the bidding for forex, they must use the auction rate for pricing of goods and services that they buy using foreign exchange they get from the auction.”

The Ministry of Industry and Commerce could not be reached for comment by the time of going to print.

Zimbabwe has enjoyed exchange rate and price stability since the central bank introduced the foreign auction system on June 23, 2020. In the absence of a market or systematically determined exchange rate, market players were speculating on rates, which resulted in volatile prices.

The Zimbabwe dollar strengthened marginally during last week’s auction, rising only 0,06 percent to $81,44 from $81,49 a week earlier.

A handful of defiant retailers, both large and small, are still not displaying prices using the dual system as prescribed by the law.

They are using contrived rates rather than the auction or ruling rate for their Zimbabwe dollar pricing.

Mr Eddie Cross, an economist and member of the central bank’s MPC, said the stability of the exchange rate provides a conducive environment for investment.

“We have considerable potential for investment in the domestic economy. A lot of that potential is unutilised at this moment in time,” he said.

Banks, he added, had the latitude to provide financing to support the economy.

“I do not think that there is any justification for maintaining a parallel market rate for domestic pricing because the bulk of the (forex) requirements for productive sectors are now being met by the auction. I think (errant large) and small retailers (still using open market rates) are just manipulating the situation,” he said. – Sunday Mail