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Businesses warned for flouting forex auction rate

by Staff reporter
26 Aug 2020 at 07:07hrs | Views
GOVERNMENT has condemned the practice by some businesses to charge people paying in local currency using rates that are above the foreign currency auction rate.

Most shops are not adhering to the official foreign currency rate and some are using a three-tier pricing system for those buying in forex, cash in Zimbabwe dollar and electronic transactions.

In a survey in Bulawayo's city centre, Chronicle observed that shops continue to demand more money for those paying in local currency as opposed to those paying in forex. While the official rate stands at US$1:$83,40 some supermarkets are using US$1:$98.

Government introduced the forex auction system to ensure stability in the market. Under the auction system, successful bidders pay what they bid, regardless of whether that is higher or lower than the average, with the highest bidder getting the first allocation. Last week, the forex rate was US$1:$82.91.

In an interview, Finance and Economic Development permanent secretary Mr George Guvamatanga said shops should display both United States dollar and Zimbabwe dollar prices and those who fail to do so will be penalised.

"Government is warning them against not displaying both the US dollar and Zimbabwe dollar prices given that we now have a dual pricing system. They should display both prices at the official auction rate. So, an item costing US$1 should be $82 at the current auction rate not $100," he said.

"We are unhappy that the CZI (Confederation of Zimbabwe Industries) asked for dual pricing and we agreed but now they are all pegging prices in US dollar via the ZWL at exorbitant margins. They are getting money from the auction at 82 but proving their goods at rates ranging from 100 to 120."

The permanent secretary said an extensive audit is looming and there will be penalties for those breaking the law.

"Those breaking the law are in serious trouble as an extensive audit is currently underway. Those caught will face the full wrath of the law. I would encourage all those who have not been complying to regularise their tax positions voluntarily," said Mr Guvamatanga.

CZI deputy president Mr Joseph Gunda said he was not aware that some players in the manufacturing sector were using parallel market rate prices despite receiving forex at the Central Bank.

"We might need to find out who are the people doing it and what are the reasons for them to do so, otherwise, it won't be fair to give a response. We will investigate, send your questions in writing," said Mr Gunda.

Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said failure by some companies to access foreign currency through the RBZ auction system was causing some players to use black markets rates, which is illegal. He said some traders still buy foreign currency on the black market.

"But what we have fact checked is that not all producers are getting foreign currency from the auction system and most of the retailers indicate that there are quite a number that are not participating in the foreign currency trading system. Even if you look at the contribution of the SMEs system, it is still insignificant considering the volume of goods that are being pushed across the economy both within the local production or imports. We may have this challenge for a month or so to come. It may not go away until the market reaches convergence levels where the parallel market rates and the foreign currency auction system converges," he said.

Mr Mutashu said despite some players using the black-market foreign rates, it was worth noting that prices of basic commodities were stabilising in the market while there is steady supply of goods.

Civil servants said they are being short-changed.

Zimbabwe Teachers Association president Mr Richard Gundani said Government must consider paying the teachers US$75 in cash so that they are able to access goods and service of their choice without being prejudiced. He said as it stands, teachers are forced to liquidate the allowance at interbank rates and after that they are welcomed by businesses who are charging them black market rates.

"It's a tight situation which our members are facing because of these businesses who are preferring foreign currency and when they agree to bill in the local currency, the price of the commodity becomes unrealistic only because they want to force people to look for foreign currency. If only our employer could consider paying us in hard currency, we may be able to buy what we want," he said.

Motorists also said Government should come up with legislation that makes it mandatory for service stations to sell fuel in both foreign and local currency in line with the prevailing exchange rate.

The dual pricing system, motorists say, will make it easy for people without access to foreign currency, especially the US dollar, to also purchase fuel from any service station based on the prevailing rate.

Source - chronicle

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