Wholesalers reject inflation-ravaged Zim dollar
Some wholesalers in the country are no longer accepting the inflation-ravaged Zimbabwe dollar at a time when the government is still digging in on redollarising the economy.
The local currency which loses value on a weekly basis is officially trading at ZWL$350 against the US Dollar while on the parallel market the exchange rate is between ZWL$650 and ZWL$700.
“We have wholesales like National Foods, Gains and others; we have noted that these companies are receiving money from the RBZ (Reserve Bank of Zimbabwe) so that they assist people but I have noted that they are not taking RTGs and local currency but they only want US dollars,” said Rushinga legislator, Tendai Nyabani in the National Assembly Wednesday.
“We have noted that people have to go to the black market to procure US dollars so that they go and buy from these wholesalers.”
In his response Finance and Economic Development deputy minister, Clemence Chiduwa said the development was unfortunate.
“Indeed, it is very true that we are receiving reports regarding wholesalers and such business entities which come to the auction,” he said.
“They get money to buy their goods. Such business entities, upon receiving money from the RBZ, then sell their goods in US dollars and do not take local currency. Working together with the Financial Intelligence Unit, our Ministry has been seized with the issue.”
He said they had penalised 163 entities for violating auction protocols with 284 under investigation by the FIU.
“I would like to inform the House that we also do an environmental scanning,” said Chiduwa.
“As of Friday last week, we investigated big shops, pharmacies, and some retailers. Out of the 28, those who were complying with the exchange rate were only 11, which means that we have a lot of violations. The FIU on its own does not have the capacity to cover Zimbabwe as a whole. At the moment, we want to work with the
National Economic Inspectorate and different law enforcement agents so that we cover the whole country.”
He added: “In the past, we were getting reports that the auction rate is not doing the price recovery as it is but now that there is the willing buyer, and willing seller basis, there is no reason for us to go around taking note of what is happening in the market. What is left is that we start enforcing laws through the different arms. We are penalising offenders and the law is very clear that anyone who gets money from the auction should charge in local currency. If they want to use the USD, they need to use the auction exchange rate.”
However, former Finance Minister, Tendai Biti said it was high time the government ditched the flawed auction system.
“The auction is still a source of arbitrage,” said Biti.
“The black market rate is now between ZWL$650 andZWL$700 but the auction is around ZWL$350. Why not just remove the auction so that we do not have arbitrage and the ZWD will find its own resting place without the arbitrage of the auction.”