Retailers’ 10pc premium on forex sales abolished
THE 10 percent premium that retailers were allowed on the official exchange rates between foreign currency and the ZiG has now been abolished, with all sellers of goods and services in Zimbabwe now required to use the average interbank selling rate or face heavy penalties.
The penalties start at a minimum of ZiG200 000, but if the foreign currency taken in is higher in value, then the penalty equals that foreign currency. There are extra penalties of five percent a day of the civil penalty on any delayed payments.
A civil penalty can be imposed via a designated officer of the Reserve Bank of Zimbabwe on just the balance of probabilities.
The change came in Statutory Instrument 81A of 2024, Exchange Control (Amendment of Schedule to Exchange Control Act) Notice, 2024, gazetted yesterday, which laid down the new requirement and the civil penalties that can be levied against defaulters.
The amendment was gazetted by Finance, Economic Development and Investment Promotion Minister Mthuli Ncube after consulting President Mnangagwa, as required by the Exchange Control Act.
The interbank selling rate is slightly higher than the interbank mid-rate that is often quoted as the official single rate, being around 2,5 percent higher at the moment.
It is the weighted average of the daily price that the commercial banks charge when they sell US dollars and other foreign currencies. It is about five percent over what the commercial banks offer to buy foreign currency for and thus just over 2,5 percent higher than the midrate between the two.
The Reserve Bank publishes daily on its website the triple interbank rates, which are all weighted averages from the buy and sell rates submitted by the banks.
The three are labelled the bid rate, that is what banks buy foreign currency for, the ask rate, what they charge when they sell foreign currency, and the mid-rate between these two.
SI81A lays down in the operative paragraph: “A natural or legal person shall be guilty of a civil infringement if he or she, being a seller of goods or services, offers such goods or services at an exchange rate above
◆ the prevailing average interbank foreign currency selling rate published by the Reserve Bank of Zimbabwe.”
The term “natural or legal person” will include all individuals, sole traders and companies, so every sale of goods and services is covered.
Shortly after the ZiG was launched five weeks ago, Reserve Bank Governor Dr John Mushayavanhu said the premium allowed to retailers should go, although agreeing it was then still legal.
That has now changed.
The retail premium was also strongly criticised by the International Monetary Fund at the beginning of the year, in their latest report on Zimbabwe.
The IMF considered the premium an unnecessary and unwanted distortion of the market rates set by the banking sector, and the IMF, like the Zimbabwean business sector, wanted auctions to end and exchange rates set purely by the commercial banks. That was formalised at the launch of the ZiG.