Black market rates tumble as economic measures bear fruit
A RAFT of robust economic measures put forward by President Mnangagwa and his administration have proved to have a stabilising effect on the national economy as they managed to arrest the parallel market rate from whose premise prices were being hiked.
The measures forced down the parallel market rate to around US$1:ZW$700 from a mad high of around US$1:ZW$850 last week with prospects that it could continue going down. The measures put in place by the Government coupled with a reduction in the prices of fuel have made calls for a downward review of prices of basic goods and services justifiable.
President Mnangagwa last week also warned some public entities, Government departments and public sector suppliers who were complicit in driving inflation through illicit activities. He said they were inflating invoices and using local currency payments to mop up the US dollar on the black market thereby causing volatility on the exchange rate.
He said it was unfortunate and regrettable that the public sector had become an unwitting player in stocking the parallel exchange rate thereby bleeding the national economy, creating a burden on the ordinary and honest person on the ground.
President Mnangagwa described those that were doing so as economic hitmen and warned that their time was nigh, adding that those who generate invoices based on the black market exchange rate would be blacklisted and banned from participating in public procurement processes.
He directed Treasury to send back all invoices to ministries for re-validation before payments were effected to suppliers of goods and services to curb malpractices that have been driving inflation. Following on the President’s measures and warnings, Finance and Economic Development Minister Professor Mthuli Ncube said the downward trend is expected to continue as speculative market forces are being contained by the Government, giving people flexible purchasing power which is not subdued by price increases.
Business has, however, remained stubborn and deliberately blind to the market forces prompting Prof Ncube to threaten punitive measures with Confederation of Zimbabwe Retailers (CZR) president, Mr Denford Mutashu acknowledging that prices have generally remained high despite reduced business burden on producers, leaving consumers to bear the brunt. Some commodities are responding to the constant fuel drop in the maker, but others are not, he said.
“For instance, we are noticing that every week sugar pricing is increasing at a time when consumers are expecting a reduction,” said Mr Mutashu.
He said there has been significant Government intervention in the market recently and noted the introduction of gold coins saying most business entities have found a safe haven for the restoration of value of the local currency.
“That has significantly reduced pressure on the American dollar, so we expect prices of basic commodities to drop soon. Another key issue is that of stability in the parallel market in the past three weeks, which speaks into a convergence with the official exchange rate and this should have a significant bearing on the market. Those businesses who were banking on speculative and forward pricing of goods and services are fast pricing themselves out of business as they are facing intense competition from small to medium enterprises.”
Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland Chapter chairman Mr Mackenzie Dongo said prices of goods and services which were going up because of fuel price increases should now start to go down because of the fuel price decreases. He urged business people to have a semblance of ethical business practices where prices should respond to fundamental market forces such as fuel prices.