Mnangagwa's govt to extend ZiG currency crackdown to shops

The government intends to expand its crackdown on street currency traders to include retailers, ensuring that goods and services are priced using only the official exchange rate of the new ZiG currency.

Finance, Economic Development, and Investment Promotion Minister, Mthuli Ncube, addressing queries from lawmakers during a National Assembly session on Wednesday, cautioned that businesses found pricing their products or services above the official exchange rate risk facing severe penalties.

Ncube emphasized that with the recent removal of the legal provision allowing traders to apply a 10 percent margin above the ruling interbank exchange rate, there is no justification for retailers to use any rate higher than the official one. He stated:

"The preservation of our currency's stability and the discouragement of unwarranted speculation are paramount. Speculation is unwarranted.

The fundamentals driving the value of our currency are evident, and it should be understood by all that our currency should remain stable, with an official exchange rate used for transactions.

In our commitment to uphold this, Mr. Speaker Sir, we are implementing certain measures and penalties for those diverging from this objective.

Primarily, for retail managers or owners, selling goods to the public, the government mandates the use of the willing buyer-willing seller foreign currency rate as the pricing benchmark.

We have eliminated any pretext for deviation from the official exchange rate; the 10 percent limit facilitated overpricing.

Henceforth, we will enforce the willing buyer-willing seller pricing model, with any violation punishable by a fine of no less than ZiG200,000 per offense.

These are the measures in place to address pricing by retailers."

The government recently gazetted Statutory Instrument 81A of 2024, Exchange Control (Amendment of Schedule to Exchange Control Act) Notice, 2024, which abolished the provision for a 10 percent margin above the prevailing exchange rate and outlined new requirements and civil penalties for violators.

Under the revised law, contravening the regulations incurs a penalty of at least ZiG200,000 per offense, with penalties matching the value of any foreign currency involved.

According to Business Weekly, traders and open market foreign currency dealers are currently pricing the local currency between ZiG17.5/US$1 and ZiG20/US$1, while the Reserve Bank of Zimbabwe (RBZ) website lists the average interbank rate as ZiG13.39/US$1 on May 17, 2024.