Forex pricing SI haunts govt
ZIMBABWE’S Senate yesterday said the controversial statutory instrument (SI) promulgated in May spelling out restrictions on trade in foreign currency had turned businesses into “saboteurs” after the currency black market spiralled.
Prices rocketed by 40% in United States dollars soon after SI 127 of 2021 was introduced, banning computation of prices using parallel market rates.
The SI introduced steep penalties of up to $50 million against transgressors.
The SI also introduced fines for businesses that access foreign currency on the Reserve Bank of Zimbabwe (RBZ)’s forex auction flow, and yet dabble in parallel market activities, while banks could be
punished for failing to disclose delinquency among their customers.
Moving a motion on adherence to official exchange rate by the business community in the Upper House yesterday, Mashonaland Central Senator Kumbirai Tongogara (Zanu PF) said although government introduced measures to curb the black market, the behaviour of business had slid the country into a hyperinflationary environment, threatening the attainment of key economic recovery policies.
“While the country has enjoyed notable price stability since the introduction of the auction system in June last year, there has recently been price increases across products,”Tongogara said.
“It is sad that under Statutory Instrument 127, businesses are required to align their prices to the official exchange rate, but prices have shot up by about 40% both in local and United States dollar terms.”
She said during the dollarisation era, a 2-litre bottle of cooking oil was priced at around US$3, but on the advent of SI 127 of 2021, the price has significantly risen to $450 in supermarkets which translates to US$5,29 using the RBZ auction system exchange rate of US$1:$85.
“Supermarkets, pharmacies and small-to-medium scale enterprises are levying premiums beyond the official and parallel market exchange rates for Zimbabwe dollar electronic purchases, thereby pushing prices of basic commodities beyond the reach of ordinary citizens (and) this is contrary to the government policy, which is the RBZ mandate of targeting price stability to stimulate demand and achieve economic growth,” Tongogara said.
“The general increase in price levels is also negatively affecting the attainment of the national objective of the National Development Strategy 1 (NDS1) of becoming an empowered and prosperous upper middle-income society by 2030. This market distortion is driving masses into poverty as well as weighing down on economic development thereby opposing the vision of the nation.”
Policy inconsistency by the Zanu PF government has been cited as one of the major reason why the country’s economy continues to be turbulent.
Masvingo Senator Tichinani Mavetera (MDC-T) said Zimbabwe was not speaking with one voice in dealing with the economic crisis and without unity, even God would give up running the country.
“I know what I will say will not go down well with some quotas, but I think I will say it from my point of view. Allow me just to say one thing which I always tell people that nyika ino yeZimbabwe, nyangwe ukaipa Mwari kuti aitonge, anoneta akadzimara aitadza (even God will not be able to run the country),” he said.
“I am saying for any country to progress, it is the people who have one voice, one vision and one objective. Unfortunately, that is not what we have as a people. However, allow me to say the greatest or the worst saboteurs of this economy is our business community. What is more disheartening is that these businesspeople or the so-called captains of industry put so many recommendations.”
Mavetera added: “Zimbabwe is not short of laws. We have so many laws, but we are short of people who respect the law. I am not a prophet of doom, but if the status quo is allowed to continue, our aspirations as a people will not be realised. We need to have everyone coming on board to ensure that we do good.”
Mashonaland Central Senator Eleven Kambizi (Zanu PF) said: “It is now the duty for everybody, including the members of the House, both the Lower and the Upper, to put our heads together and ensure that our people in the rural areas are not short-changed by these businesspeople. We must always find a way of reporting them and ensure licences are cancelled.”
Renowned businessman and war veteran Frederick Mutanda is challenging the SI, arguing that President Emmerson Mnangagwa has no powers to make laws, which he said was the prerogative of Parliament.