GOVERNMENT’s Monday move to dump its basket of foreign
currencies, opting to use its own currency in local transactions, triggered
chaos on the market yesterday, with some retailers closing shop for the better
part of the day, while some financial experts described the legal instrument
used to effect the changes as illegal.
Several shop owners in downtown Harare, Bulawayo, Gweru,
Chinhoyi and other towns remained closed for business in the morning while
closely monitoring the market’s reaction to the new currency regime brought
about by Statutory Instrument (SI) 142 of 2019.
Some retail shops, however, were open for business although
they had marked up prices of certain goods in anticipation of a further fall in
the value of the local Real Time Gross Settlement (RTGS) dollar.
This came as the country’s main labour body, the Zimbabwe
Congress of Trade Unions (ZCTU) threatened to mobilise for mass protests
against the ban on the use of the multi-currency system for local transactions.
“As you can see, some shops are still closed. Most of us
opened very late to allow ourselves time to monitor the market response to the
new measures,” a shop owner in downtown Harare said.
Government on Monday abolished the use of foreign currency
in local transactions in a bid to curb black market demand, making the local
dollar the only legal tender, nearly a decade after it was made redundant by
hyperinflation.
The move caused panic in the market despite government’s
assurance that it would stabilise prices in a market that had been rocked by a
three-tier pricing system for years.
Addressing wildlife stakeholders in Victoria Falls
yesterday, President Emmerson Mnangagwa admitted that the move would cause some
confusion on the market in the first few days as business and the public adjust
to the new system.
“The question should be: Are we doing the right thing or
not? I think we are on the right path. If you see us doing what we’re doing, it
means that fundamentals are already in place, or we are working towards that.
We have not outlawed any currency. We have said if you want to trade in this
country, use our local currency,” he said.
But some shop owners said they were forced to close because
they were not sure if they would be able to restock after buying their current
stock using US dollars.
Some shops, especially those run by Chinese operators,
were, however, rejecting electronic payments, while others still accepted US
dollar payments despite the ban.
“Some have slightly hiked their prices in anticipation to
buy the US dollar at the black market at inflated prices since demand for it on
the parallel market will surely increase. All companies will not go after it
after being ordered to stop selling in US$,” another shop owner added.
In Harare, the US dollar parallel market plunged in the
morning, trading at 1:11, but later picked up by midday to trade at about 1:13.
Pharmacies that have been demanding US$ for drugs had
shifted to RTGS/ZWL$ while others remained closed for business, the same with
some shops selling imported vehicle spares.
In Chinhoyi, the transacting public woke up to closed
shops, while the few that were open defied SI 142 of 2019 and continued to sell
groceries in foreign currencies.
Most Chinese shops, which had adopted the greenback as the
only mode of payment, also shut their doors.
Business operators interviewed predicted a rise in prices
of basic consumer goods, while others said the new currency reform would
trigger shortages of products.
Mashonaland West Show Society chairman Godfrey Mavankeni
said companies that import goods for resale locally would be hardest-hit by the
knee-jerk government pronouncement.
“Some of our businesses depend on imports and, therefore,
we are not sure how we are going to source the foreign currency to import goods
for sale,” said
Mavankeni, who runs a computer hardware shop in Chinhoyi.
“At the moment, it’s a wait-and-see game. We are unsure how
the market is going to respond as there are many fundamentals to be
considered.”
He opined there would be shortages of basic goods, while
prices would tumble due to depressed demand aggregate.
Former Finance minister Tendai Biti said SI 142 was illegal
and a disaster for the country.
Biti made the remarks in Parliament after a Zanu PF
legislator commended Finance minister Mthuli Ncube for bringing back the
Zimdollar.
The opposition MDC vice-president said SI 142 was ultra
vires the Constitution and should be repealed immediately.
“The SI 142 (2019) touches on our political economy, the
economy of our country and the laws of our country. Section 44(2) of the
Reserve Bank of Zimbabwe Act, which introduced the multi-currency regime in
2009, makes it clear that the British pound, euro, South African rand and Botswana
pula shall be legal tender, and section 44(a)(2) — it being an Act of
Parliament means that the Finance minister cannot repeal that provision,” Biti
said.
“Quite clearly, SI 142 (2019) is ultra vires the provisions
of section 44(a)(2) of the RBZ Act and it is wrong at law and on the economy.”
He said there was a relationship between a currency to
exports and imports.
“As long as there is a deficit in your current account, I
submit that we do not have a current account and reserves necessary to support
our own currency. A currency is a subject of political confidence and in this
country, as far as I am concerned, there is a kwashiorkor of political
confidence and, therefore, I submit that SI 142 is a disaster,” Biti said.
Justice minister Ziyambi Ziyambi dismissed Biti’s concerns
as premature.
“I would like to make a correction that all statutory
instruments stand deferred to Parliament, which will scrutinise them through
the Parliamentary Legal Committee (PLC). If the PLC feels there is something
wrong with the SI, they will issue an adverse report and then Parliament will
debate it,” Ziyambi said.
“I am surprised because MPs are very much aware of the
process and they want to debate it. An SI takes effect the moment it is
published and I submit that it is very premature to start attacking it before
it is scrutinised by the PLC.”
Meanwhile, ZCTU president Peter Mutasa said the
re-introduction of the local currency was hurriedly done without consulting
other stakeholders such as business and labour, as provided for under the
Tripartite Negotiating Forum (TNF).
“If the government does not reverse this ruinous policy
immediately and announce US dollar salary payments, we will immediately
mobilise workers for mass action,” Mutasa said.
He said workers are demanding that government allows the
use of multi-currency, with the US dollar being used as the base currency until
economic fundamentals are put in place to ensure the introduction of a local
currency.
Mutasa said the workers were going to use today’s TNF
meeting to demand for the reversal of the law, failing which they would be
forced to call for mass action.
“This announcement came a day after the Minister of Finance
had assured the nation that the Zimbabwean dollar will only be introduced when
macro-economic fundamentals are in place,” Mutasa said.
“Such a critical issue should have been subjected to
intense dialogue, and it smacks of hypocrisy and is patronising for government
to unilaterally make such a huge policy announcement at a time social partners
were supposed to meet on Wednesday, June 26, 2019 under the auspices of the
recently enacted TNF,” Mutasa said. Newsday
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