Zimbabwe: Penalties for Businesses Demanding Forex

10 February 2020

Businesses selling goods and services in foreign currency face stiff penalties for defying the Government, Finance and Economic Development Minister Mthuli Ncube has said.

Statutory Instrument 142 of 2019 prescribes the Zimbabwe dollar as the sole legal tender.

Previously the country used a basket of currencies, including the US dollar, to beat challenges of the hyperinflation era.

Of late, some service stations have been selling fuel in foreign currency, despite having bought the fuel from oil companies using Zimbabwe dollars.

Some grocers have also been insisting on foreign currency, in defiance of the law.

In an interview with Zimpapers Television Network (ZTN) last week, Prof Ncube said the Government will soon come up with penalties to be imposed on businesses that wilfully flout the law.

"Let me be clear. Zimbabwe is in a mono-currency situation. We introduced the Zimbabwean dollar, that is the domestic currency. But we also know that practically, realistically, it is taking long for Zimbabweans to adjust. Why? It is difficult to have that silver bullet where everyone complies," said Prof Ncube.

"Of course, as Government we are forcing compliance. We will be introducing penalties for those who deviate. We recognise that we are in transition. We will get there. Our objective is to achieve mono-currency. We will make sure that the US dollar is pulled back. They are violating the law. We want to enforce the use of the Zimbabwe dollar.

"We also know that one of the reasons why the US dollar continues to be used is that we do not have enough Zimbabwe dollars in circulation. There is a cash deficit of domestic currency. That is why we have said we want to introduce more cash in a very prudent way. We have up to $5 notes now. We will move to $10, $20 and sometime in the future if we need a higher denomination, we will make an analysis and determine. There is no urgency in that."

Prof Ncube said no country could develop without its own currency and Zimbabwe was no exception.

He said the Government will soon improve the interbank market for foreign currency following complaints from businesses.

"I think the best system is an auction system and not a market system. I don't think we will go crudely as far as piling cash in a room but we will take the electronic route," he said.

The interbank market was introduced in February last year and has had teething problems.

Prof Ncube said Government will enhance its funding on education and envisaged a situation where there would be several boarding schools in rural areas.

He said the health sector had surpassed education in terms of funding given that multilateral agencies would mobilise financial resources whenever there was an epidemic.

On the working conditions of civil servants, the minister said Government will continue to improve their salaries, adding that he was pained by the continuous erosion of workers' wages.

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