Zimbabwe: Govt Threatens to Tighten Forex Rules

Streets of Harare, Zimbabwe (file image).

GOVERNMENT says it could be forced to limit the number of swipe transactions that a person can conduct in supermarkets per day as part of measures to curb parallel market activities.

The new plan announced by Finance and Economic Development Deputy minister Clemence Chiduwa came two weeks after government moved to stop delinquency through Statutory Instrument (SI) 127 of 2021, which brought heavy penalties for businesses found abating currency volatilities.

After the SI came through, parallel market kingpins moved out of street corners and camped in supermarkets where they request consumers for forex and offer to pay for their goods through the point of sale (POS) system.

MPs last week raised concern in Parliament, saying even retailers had started trading in forex, not goods.

Legislators demanded that government comes up with new measures to punish retailers.

"Is it not possible to come up with a statutory instrument, which must force these supermarket dealers or business people not to trade in cash?" asked Buhera North Member of Parliament William Mutomba.

"Their business is to trade in goods.

"Now, if we are letting these people trade in cash, it means they are now competing with banks or bureau de change.

"Why are we allowing them to trade in cash? What could actually be happening is that they will be selling products, cash is being left at the till and that cash is taken into the supermarket so much that they can buy the entire US dollars (on the black market) which is supposed to be coming (sic)," he said.

Chiduwa said the ministry was aware of that black market kingpins had adopted new ways of manipulating the currency market.

He said engagements with the Confederation of Zimbabwe Retailers (CZR) were underway to "rein in" its members.

"We started off with moral suasion," Chiduwa said.

"From the monetary point of view, it is not difficult. We can wake up tomorrow and limit all swipe transactions per card to one shop.

"This will mean that people may not be able to swipe more than twice in one supermarket.

"These are some of the policy options that are there but at the moment, we have engaged the CZR and they are engaging their members. After that when we do the review, if it continues we will come up with policy interventions.

"However, at the moment, we are at a stage where we are engaging the retailing community to stop the practice," he added.

Last week, the CZR met Reserve Bank of Zimbabwe officials where it expressed concern over the effects of SI 127 of 2021, which banned retailers from selling goods in forex only and directed businesses to stop receipting in Zimbabwe dollars for goods sold in forex.

The SI also punishes banks for overlooking forex manipulation by their clients.

"As business, we need to reciprocate that gesture by self-monitoring and enforcing self-discipline among sector players to price responsibly and act in a manner that protects citizens and consumers.

"CZR assures the public that there will be zero tolerance on arbitrage, profiteering and artificial shortages," the CZR said after the meeting.

"Businesses are reminded that they are in the business of selling products or services, not cash and should not aid or fuel the foreign currency parallel market.

"It is CZR's hope there will be increased banking of foreign currency by business.

"We will work with the government to ensure that the market remains stable.

"It is our collective responsibility to ensure that stability.

'We would like to urge our members to continue to offer good services to consumers who deserve our respect and to improve on self-discipline to ensure that our economy continues to grow as is evidenced by the significant growth in the sale of locally produced goods of around 65%."

CZR encouraged their members to continue to price products and services as was before SI 127 of 2021.

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