Thursday, 21 October 2021

BLACK MARKET RATES : FIRMS IGNORE RBZ

WARNINGS by the Reserve Bank of Zimbabwe’s (RBZ) Financial Intelligence Unit and the recent arrest of directors of some top companies over foreign currency manipulation seem to have fallen on deaf ears as many businesses continue pegging Zimbabwe dollar prices for their goods and services to black market exchange rates.

Retailers and wholesalers have not been moved an inch by the Government’s call for sanity in the pricing of goods and services as they continue using the black-market rates in flagrant violation of the foreign exchange laws.

The RBZ is particularly keen on taking action against businesses which source goods with foreign currency bought on the auctions but then sell at the black market rate.

One major problem for consumers is the huge disparity between the black market rate for those selling foreign currency, between $120 to $160 depending on method, and the price the same buyer would need to pay to buy a US$1 on the street.

Some companies have been smarter and staying legal while actually using black-market rates in costing. They hike their Zimbabwe dollar prices and display local currency prices only while indirectly, they will still be benchmarking their prices using the illegal rates ranging from US$1:$130 to US$1:$200 when the auction rate is US$1:93.

On face value, their prices show the Zimbabwe dollar figures but converting the price using the black market rates, the foreign currency price will match that of shops that are openly using illegal rates.

A visit to shops in central Harare revealed that many big and small retailers are still violating the Government foreign exchange rates and their prices are still influenced by black-market rates.

Those following the law are hit in turn by suppliers who do not, and so have to put up their Zimbabwe dollar prices for items from those suppliers.

Bestzone Pharmacy, which is in Julius Nyerere Way, is selling Nan Optipro starter infant formula for US$7 and $1 260 in local currency, meaning they are using the rate of US$1:$180.

Choppies was using the rate of US$1:$150. The writer bought a Colcom 100g chicken pie costing $69,99: she paid US$1 but got change amounting to $80, translating to the illegal rate of US$1: $150.

Baker’s Inn is still selling Russian sausage and chips for US$1,25 or $200, meaning they are using the rate of US$1:$160. Chicken Inn, in the same stable, is still selling a two-piecer (two pieces of chicken and a portion of chips) at US$3,50 or $560, also using the rate of US$1:$160.

National police spokesperson Assistant Commissioner Paul Nyathi refused to comment on the issue of enforcement, referring all questions to the RBZ.

However, Confederation of Zimbabwe Retailers Association president Mr Denford Mutashu confirmed the practice but called for dialogue between Government and the traders.

“The continued foreign currency exchange rate challenges emanate from rising demand for foreign currency by both businesses that access foreign currency from the auction and those that source from the parallel market.

“There is need for a balanced approach as the recent extreme measures are currently leading to shortages of selected products as some manufacturers and suppliers slow down supply,’’ he said.

“Applying the law on the pricing of goods and services in respect of businesses that are not sourcing foreign currency from the auction system like us, is tantamount to price control,’’ Mr Matashu said.

Recently, RBZ warned business against currency manipulation saying the FIU was investigating allegations that had been raised against Chicken Inn and Bakers’ Inn on social media.

Last week, Best Zone Pharmacy and Farm and City were in court accused of violating the Exchange Control Act.

Farm and City was represented by its director Tanaka Hofisi who was also appearing in his personal capacity as director.

Hofisi was not asked to plead when he appeared before Harare magistrate Stanford Mambanje.

The court heard that Hofisi, acting in common purpose with Chester-Noel Mutevhe and Shingirai Norman Chibhanguza who are also directors of Consolidate Farming Investments trading as Farm and City, set the price of a 5-litre bottle of multi-clean liquid for $613 and US$3,33 which is a rate of $184 per US dollar.

It is alleged that on October 7, John Marshall Chinembiri and Tanaka Samanyahwe from the Reserve Bank of Zimbabwe Financial Intelligence Unit went to Farm and City and bought the multi-clean liquid for $613 and were also offered to buy the same product for US$3.33.

The two bought the product separately and both receipts showed that they were using a rate of $184 per dollar against the then stipulated rate of $88 per dollar.

Best Zone Pharmacy also appeared before the same court represented by its director Isaac Chipako.

The court heard that Best Zone Pharmacy offered Benylin cough syrup for $1 260 or US$7 which was at a rate of $180 per dollar in contrary to the then $88.52 per dollar leading to Chipako’s arrest. Herald

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