RBZ summons businesses over price madness

RESERVE Bank of Zimbabwe (RBZ) Governor Dr John Mangudya yesterday said his meeting with business this morning is not a witchhunt, but an effort by authorities to grasp the root cause of the prevailing pricing madness.

The all-stakeholder forum to be attended by representatives of retailers, producers, wholesalers and everyone involved in the value chain, he said, would explore sustainable solutions to the widespread parallel market pricing that is eroding economic stability.

In the past few weeks, the formal market has been gripped by the benchmarking of prices of goods and services using the black market rate, resulting in prices skyrocketing.

Last week, the exchange rate in the parallel market was pegged at US$1: ZWL$180 compared to margins between ZWL$150 and ZWL$160 three weeks ago.

As a result, some retailers and businesses in the formal market were pegging their prices above the official rate of US$1: ZWL$88,55 as of last week.

A snap survey in Bulawayo last Friday, showed that some retailers in the formal market were selling their products at an exchange rate of around ZWL$200 against US$1.

Speaking by telephone yesterday, Dr Mangudya said:

"We are going to meet all the business community, the producers, retailers, and wholesalers so that we find a sustainable solution.

"It has come to our attention that everyone in this country has become a price taker, so we want to find out who is causing it. It's not about arresting people; it's about understanding the real cause of what's happening.

"The most sustainable way of running a business or running a country is not arresting, but it's about understanding the behaviour and behaviour dynamic is not a fundamental," he said, adding that the behavioural dynamics was due to arbitrage tendencies.

Dr Mangudya said for any business to operate viably it requires a stable environment adding that the obtaining volatility caused by parallel market activities was threatening the macro-economic gains the country has so far achieved.

Confederation of Zimbabwe Retailers (CZR) president Mr Denford Mutashu said they have noted with concern the prevailing pricing dilemma for most retailers and wholesalers.

He said it has come to their attention that there were four exchange rates one has to contend with when paying for goods and services.

"CZR has noted with concern the prevailing pricing dilemma for most retailers and wholesalers and is warning of tough times ahead. We implore the Government to set up an inter-ministerial committee to interrogate the foreign currency exchange rate challenges, abuses, manipulation and arbitrage and map the way towards stability as the parallel market exchange rate poses a great risk of declining company projections and bottom lines," said Mr Mutashu.

"There is the auction exchange rate (ZW$89-US$1) ZW swipe to US$(ZW$180 to US$1), ZW mobile money to US$ (ZW$200 US$1 and ZW cash to US$ (ZW$165-US$$1).

"We have also discovered that there is also a rate for nostro US$."

The black market rates, he said, change more than three times per week.

"We are meeting the Reserve Bank of Zimbabwe tomorrow morning and this meeting which is an all-stakeholder forum comprises retailers, producers, wholesalers and everyone involved in the value chain," said Mr Mutashu.

He said the obtaining situation has created confusion on the market with extreme cases being when the supplier or manufacturer or tuck shop wholesale flatly refuses any other payment for goods and services except US$ cash which comes with discounts to entice the retailer or wholesaler.