Foreign currency illegal market fuels price hikes

THE Confederation of Zimbabwe Retailers has blamed the growth of the black market for foreign currency for fuelling the current wave of increases in prices of basic commodities.

Over the past few days, prices of most consumables have been sky-rocketing, leaving consumers in a lurch.

Confederation of Zimbabwe Retailers president Denford Mutashu said the shortage of foreign currencies in the formal banking channels was forcing most retailers and manufacturers to source from the black market at a premium in order to continue importing goods.

“If manufactures and retailers are to remain in business and avoid shortages, they have no choice but to seek money on the parallel market and this comes at a premium and with it, inflationary pressure,” he said.

“While prices of local goods have gone up on average 15 percent, imports have sky-rocketed due to the exchange rate pressures as the rand keeps sliding against the green-back. Remember South Africa is our major trading partner and has become a bigger source market for raw materials and finished goods.

“The rand moved from an average $1,00 to R8,6 to the current R13,3. The fact that the bulk of the foreign currency is sourced from the black market adds more confusion to the pricing situation in the country.”

Mutashu said the Government should promote use domesticate raw materials building the capacity of local source suppliers like agriculture as over reliance on imports was dangerous to an economy.

“The import component in production has pushed prices to the north.

“The parallel market has breached the 90 percent mark and manufacturers are struggling to cope with the black market rate which has become the major source of foreign currency since it is a scarce commodity within the formal system. Government should compel all businesses and the public to bank their cash,” he said.

He said there was need to curb corruption within and outside the financial sector so as to restore confidence among the public to bank their cash again. — New Ziana.