The Sunday Mail
Bulawayo Bureau
GOVERNMENT will soon engage industry to discuss the rationale behind the recent spate of price increases which followed the promulgation of Statutory Instrument 127 of 2021.
The SI was introduced to address rampant abuse of foreign currency accessed through the Reserve Bank of Zimbabwe (RBZ)’s foreign currency auction.
It also compels businesses to price their goods and services in Zimbabwe dollars at the prevailing auction rate.
Most businesses reacted to the new regulations by effecting price increases.
Finance and Economic Development Minister Professor Mthuli Ncube told our Bulawayo Bureau yesterday that authorities do not rule out profiteering by business as the reason behind the price increases.
“We will engage the private sector players to try to understand what the issues are that would have caused them to behave in this manner,” he said.
“We thought we had reached some kind of equilibrium in terms of where the economy is, stabilising the exchange rate, and inflation heading downwards.
“We will engage them to find out how we can work better together and also that they respond better to policy-making.”
Government has threatened to blacklist businesses that breach the new regulations.
Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said price increases were mainly prevalent in the informal sector.
“The increase in prices is predominant in the informal retail and wholesale sector, while the major players have not increased prices; they have continued to sell at prices they had before the introduction of SI 127.
“What I have observed is that while they have not increased prices, some have stopped accepting USD. I have seen furniture, hardware, clothing retailers and wholesalers having a huge spike in pricing of between 50 to 100 percent.
“I take that to be defensive pricing that always comes through on the market as players will be trying to adjust and interpret the policy accordingly.”
He said some suppliers and manufactures had also started limiting goods available for purchase to customers.
“It’s a bit worrying because they are also trying to interpret and adjust to the policy and during that transition, no one wants to lose out on the exchange rate losses that may be experienced.” In terms of the regulations, authorities can penalise businesses that issue local currency denominated receipts for a transaction made in foreign currency purchase.
Businesses will also be fined for pricing goods and services above the ruling exchange rate, while using forex obtained from the auctions for other purposes than what the supporting invoices on the bid stated will also be penalised.
