RBZ engages retailers on multi-tier pricing
THE Reserve Bank of Zimbabwe (RBZ) has engaged retailers under the ambit of the Confederation of Zimbabwe Retailers (CZR) in order to rein in on the multi-tier pricing system that is now pervasive in the market.
Consumers suspect that retailers, most of whom are scouring the market in search of US dollars to finance imports, are conveniently using cash shortages to impose an additional tax on them, particularly for non-US dollar transactions.
The practice contravenes the Bank Use Promotion Act.
By virtue of being an international reserve currency, the US dollar is not only targeted by retailers, but it is also mopped up by speculators.
RBZ deputy governor Dr Khupukile Mlambo engaged CZR on May 31, 2017 in order to re-emphasise the need to create discipline in the market.
The central bank bets that the engagements will naturally help the situation improve.
“We have been engaging the Confederation of Zimbabwe Retailers and other affiliates about the multi-tier pricing system in a bid to try and deal with those involved and they are cooperating.
“Really, the cooperation has been really good. We also engage them if we have some issues like (what we did) when we introduced the bond notes.
“There has been a notable improvement in trying to implement uniform pricing across all payment platforms, though there is need to encourage those who are yet to implement the system,” said Dr Mlambo.
Though the RBZ can easily invoke the law, it is opting for moral suasion (a tactic used as an alternative to force to influence an outcome).
There is however concerns that while CZR might represent some of the key constituencies in the retail sector, it doesn’t cover most downtown retailers who handle a sizeable portion of the cash in circulation.
Most retailers currently levy a 15 percent premium for non-US dollar payments in order to compensate for the inconvenience of accessing cash from the grey market.
Essentially, unscrupulous retailers peg higher prices for other media of exchange such as bond notes, mobile money and electronic systems despite the fact that cash - accounting for less than 30 percent of retail sales - now constitute a fraction of total transactions.
The central bank opines that money is not finding itself into the formal banking system because of the lingering mistrust inherited during the hyper-inflationary era.
Added Dr Mlambo: “We are trying to establish the source of the unbanked money (which we see money traders exchanging in streets) that’s what we are working on.
“We can arrest those people but it doesn’t solve the fundamental problems like what sort of incentives do we need to change to encourage people to bank.
“The solution is not only to arrest the retailers but to encourage them to bank . . .we need to deal with the problem at the source.”
Monetary authorities continue to implore banks to revise their service charges. There has been proposals to switch from the use of the greenback as a unit of account to the South African rand to promote the uptake of the increasingly volatile currency.
But the apex bank is insistent the current multi-currency system will work. So far, a total of $143 million worth of bond notes and coins have been injected into the economy.