News / National
Mnangagwa law blamed for high US$ pricing
25 Oct 2023 at 01:51hrs | Views
Industry and Commerce Minister, Sithembiso Nyoni, attributed the current high pricing in US dollars to Statutory Instrument (SI) 118A of 2022.
SI 118A, enacted under the Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations, 2022, permits businesses to include a 10% mark-up on the official foreign currency rates when setting prices for their products and services.
For instance, despite the prevailing official forex rate being US$1 to ZWL$5,674.36, SI 118A enables businesses to apply an exchange rate of US$1 to ZWL$6,241.79.
Minister Nyoni expressed concern about this regulation during a tour of tuckshops on Monday. She pointed out that SI 118A had inadvertently inflated the US-dollar prices of goods from formal retailers.
In response, Denford Mutashu, the president of the Confederation of Zimbabwe Retailers, argued that SI 118A had served its purpose and now needed to be repealed. He explained that the regulation had created confusion in pricing and negatively impacted formal businesses, as it was seen as a form of price control. Furthermore, it had led to declining US-dollar revenue for formal businesses.
The United States Agency for International Development reported an increase in Zimdollar prices of basic food items last month compared to August. However, the informal markets had more stable pricing in both US dollars and South African rand.
Due to the significant depreciation of the local currency this year, many businesses have started exclusively pricing their products and services in US dollars, despite still accepting payments in the local currency.
Last month, the Zimbabwe National Statistics Agency reported that 80% of transactions in the country were conducted in US dollars.
SI 118A, enacted under the Presidential Powers (Temporary Measures) (Amendment of Exchange Control Act) Regulations, 2022, permits businesses to include a 10% mark-up on the official foreign currency rates when setting prices for their products and services.
For instance, despite the prevailing official forex rate being US$1 to ZWL$5,674.36, SI 118A enables businesses to apply an exchange rate of US$1 to ZWL$6,241.79.
Minister Nyoni expressed concern about this regulation during a tour of tuckshops on Monday. She pointed out that SI 118A had inadvertently inflated the US-dollar prices of goods from formal retailers.
In response, Denford Mutashu, the president of the Confederation of Zimbabwe Retailers, argued that SI 118A had served its purpose and now needed to be repealed. He explained that the regulation had created confusion in pricing and negatively impacted formal businesses, as it was seen as a form of price control. Furthermore, it had led to declining US-dollar revenue for formal businesses.
The United States Agency for International Development reported an increase in Zimdollar prices of basic food items last month compared to August. However, the informal markets had more stable pricing in both US dollars and South African rand.
Due to the significant depreciation of the local currency this year, many businesses have started exclusively pricing their products and services in US dollars, despite still accepting payments in the local currency.
Last month, the Zimbabwe National Statistics Agency reported that 80% of transactions in the country were conducted in US dollars.
Source - newsday
