Zimbabwe central bank widens blitz on defiant business

The Reserve Bank of Zimbabwe (RBZ) has announced an expanded blitz targeting businesses across the country that are refusing to comply with government directives on the use of the multicurrency system, including acceptance of the Zimbabwean Gold currency (ZiG) as legal tender at the official exchange rate.

Previously focused on Harare and surrounding areas, the operation will now extend to other provinces during the first quarter of 2025. The move aims to enforce financial regulations and curb widespread non-compliance, especially in cities like Bulawayo, where some businesses and informal traders continue to reject the local currency under the guise of challenges such as network issues with point-of-sale (POS) machines. This forces consumers to use foreign currency, often at inflated rates.

Under Statutory Instrument (SI) 81A of 2024, enacted following the launch of the ZiG in April last year, businesses are required to price goods and services using the official exchange rate. Additionally, SI 218 of 2023 extended the use of the multicurrency system until December 2030. Despite these measures, many businesses are reportedly violating the regulations by accepting the local currency only at black market rates, eroding consumer purchasing power.

RBZ Governor Dr. John Mushayavanhu emphasized the importance of adherence to government policies, noting that compliance is enforced by the Financial Intelligence Unit (FIU) and other government agencies equipped to address violations.

"FIU monitoring and compliance operations have so far been concentrated in Harare and its environs, but beginning in the first quarter of 2025, these enforcement efforts will expand to Bulawayo and other provincial capitals," said Dr. Mushayavanhu.

He warned that businesses found violating exchange control regulations would face heavy penalties, a measure aimed at promoting compliance nationwide. Dr. Mushayavanhu urged the public to report non-compliance cases, assuring that the FIU would respond swiftly.

The governor highlighted progress in smaller shops, where compliance levels are improving, adding that compliance builds public confidence in the currency.

"Confidence is key, and the RBZ continues to refine monetary policy to maintain price and exchange rate stability. This will help restore public trust in the local currency," he said.

Dr. Mushayavanhu acknowledged that the informal sector remains less compliant than the formal sector but expressed optimism about a positive trend. He noted that the government is working to increase local currency usage for tax payments, goods, and services across the country.

He also pointed out the growing reliance on digital payment methods, which has reduced demand for physical cash.

On the foreign exchange market, Dr. Mushayavanhu said that liberalization efforts to align with market forces have minimized incentives for parallel market trading. He noted a significant decline in exchange control violations over the last quarter of 2024, thanks to improved exchange rate stability.

"RBZ will continue implementing measures to sustain this stability while balancing currency and price stability with economic growth," he added.

The crackdown is expected to reinforce compliance and strengthen the government's broader push for economic stabilization and growth through the multicurrency system.