eBusiness Weekly
Ishemunyoro Chingwere
Some businesses, mostly Small to Medium Enterprise (SMEs) and the informal sector, are refusing to embrace the Zimbabwe dollar as the country’s sole legal tender and continue to demand payment in US dollars, Business Weekly has noted.
Government — in June — through (SI) 142 of 2019 also known as Reserve Bank of Zimbabwe (Legal Tender) Regulations, scrapped the multi-currency system and reintroduced the Zimbabwe dollar as the country’s sole legal tender.
The need to cut cost of doing business and avoid challenges posed by an acute dollar crunch, were part of reasons multi-currency was scrapped to breathe life in local industry and enhance competitiveness of Zimbabwe’s export products.
This saw the introduction of the inter-bank foreign exchange market, helping some exporters get real value for their export earnings as foreign currency is now tradeable on a liberalised market which as of yesterday stood at US$1:Z$12, 4.
Despite a legal framework enacted to support the Zimbabwe dollar as monocurrency, a survey by this publication showed that several SMEs and businesses in the informal sector, were still charging the US dollars for their goods and services. Those accepting local currency, peg the prices to the equivalent of the US dollar value, which they also continue to access on the black market as the formal market does not always have enough of the American dollar to sell to them.
A survey by Business Weekly in Harare’s central business district and Mbare, where there is a thriving small-scale industry, downtown Harare as well as several car sales dotted around town observed that the US dollar is the preferred medium of exchange and in some cases the only one.
Although the traders declined to be named for fear of prosecution, they admitted that their transactions were done mostly in foreign currency and in broad day light.
In separate interviews, most traders said they had resorted to charging in US dollars because of the need to restock as their merchandise was imported and also the need to store value as the greenback was less volatile compared to other currencies.
Confederation of Zimbabwe Industries (CZI) president Henry Ruzvidzo said Government should take the lead in using the Zimbabwe dollar as the sole legal tender.
“Exchange rate stability is crucial for confidence building and to tame inflation. It is also important that Government demonstrates commitment by charging in local currency for all services. The unstable state of affairs since September 2018 requires serious introspection and solutions to bring back stability are urgently required,” he said.
Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu, said the continued trade in US dollars was an indication that it was time for the monetary authorities to amend the SI and allow other sectors of the economy to continue getting foreign currency.
“When the foreign currencies were outlawed it was going to be OK if everyone was barred from using them, but there was selective application of the policy,” said Mutashu.
“On the other instance customers are offering to buy using US dollars, which leaves shop owners or traders with no option but to accept the currency. Some merchants are accepting the foreign currency for the sake of hedging, they want to remain viable,” he said.
Big businesses have also not been left out as they have resorted to charging exorbitantly in local currency, thus leaving consumers with no option but to offer to pay in US dollars, which becomes cheaper if the conversion is done at interbank exchange rate.
Some observers say by allowing people to peg prices at interbank rate means Government has literally allowed the economy to dollarise albeit through the use of the local currency.
Prices continue to follow the US dollar RTGS exchange rate at or above the interbank rate, leaving non-exporting companies and individuals forking out almost 14 fold to secure goods and services.
