Zimbabweans who buy local products using foreign currency will pay more following the gazetting of the controversial Statutory Instrument (SI) 127 of 2021 last week which now makes it mandatory for businesses to use the Reserve Bank of Zimbabwe (RBZ)’ s auction exchange rate.
According to last week’s foreign currency auction, the United States dollar is trading at US$1: ZWL$84.72
On the other hand, the parallel market exchange rate used by a number of traders including those who do not have access to the auction system pegs the local currency at ZWL$100 or more against the greenback.
According to the SI, businesses that refuse payment at the ruling exchange rate will be fined a fixed penalty of the amount of ZWL$50, 000 or an amount equivalent to the value of the foreign currency charged for the goods or services in question (whichever is the greater amount).
In order for businesses to comply, they have no choice but to increase their prices in the US dollar, some of which have already done so.
The new regulations stipulate that traders should issue receipts in the currency of trade, a development which forced retail giant OK Zimbabwe to stop accepting foreign currency citing its receipts which are not yet compliant with the SI.
RBZ governor, John Mangudya, has said businesses have up to two weeks grace period to regularise their operations.
“Maybe the SI 127 came in a bit too late though the motivation to have it was necessitated from a good place, and that is to stem out rogue elements accessing funds from auction but pricing at the alternative market rates,” said Morris Mpala of MoB Capital, a microfinance institution.
The Zimbabwe Coalition on Debt and Development (ZIMCODD) said the new measures would perpetuate inequalities as it does not take into cognisance the economic realities experienced by ordinary Zimbabweans.
“The new regulations will further disadvantage the vulnerable and marginalised informal players who do not have access to cheap foreign currency, yet they need to restock their shops or purchase raw materials,” said ZIMCODD.
Opposition ZAPU spokesperson, Iphithule Maphosa described the SI as another of the many instances when the economically bankrupt government self-trips and reverses the little that was beginning to be gained especially over the period going back to just under a year where they had gained momentum in controlling inflation.
“We also had noticed a stabilisation in foreign exchange rates on the parallel market in the past half year,” said Maphosa.
“All this will be lost because of SI 127 and the foreign exchange market will go back to its chaotic and biting state.”