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Nqobile Bhebhe-Bulawayo Bureau
THE Government has accused some businesses of irresponsible pricing and called for urgent dialogue with retailers and manufacturers to find a lasting solution amid concerns that consumers can no longer afford most basic commodities now being sold in foreign currency only.
Most consumers are earning local currency hence they are being short-changed by retailers demanding forex for basic commodities such as cooking oil, sugar, mealie-meal, orange juice and other such products.
“We regret that our suppliers are only accepting US dollar payment for this product, so we are only able to sell it in forex,” read one of the notices at one of the supermarkets in Bulawayo.
Businesses seem to be defying the Government directive that goods and services should continue to be charged in both local and forex for the convenience of consumers.
Thw Government has said businesses should use the interbank rate and allowed a 10 percent addition to the rate to cover any changes of the rate between the period the customer is paying and the period the seller buys new stock. Businesses that violent this law face a minimum civil penalty of $20 million and it seems many are unfortunately violating it with impunity.
Many consumers have been left with no option but to buy forex at a premium on the speculative parallel market, which erodes their earnings and perpetuates exchange rate-distortions and price volatility.
This is happening at a time when most producers are benefiting from the Reserve Bank of Zimbabwe’s official forex auction system, which has dished out more than US$3 billion to businesses since its commencement in June 2020.
Industry and Commerce Minister, Dr Sekai Nzenza said that the development “puts the consumer in a very difficult situation.”
To address the situation, Minister Nzenza said, a dialogue meeting will be convened soon with key actors in the food chain.
“My Ministry has called for a dialogue with the retailers and also the manufacturers to find a way forward so the consumer gets relief,” said Dr Nzenza who could not be drawn to elaborate on when exactly the meeting will be held.
While acknowledging the lobbying for a return to full dollarisation, Reserve Bank of Zimbabwe (RBZ) governor Dr John Mangudya, with concurrence of the Treasury, has said the country has no capacity to sustain such a model, pointing out that most development progress being registered in the economy is a result of using the local currency.
According to official statistics, the local currency accounts for 70 percent of domestic transactions with forex only accounting for the remaining 30 percent.
“The unilateral action towards forex only pricing is not only against the country’s laws but deliberately frustrates promotion of the local currency, which is irresponsible pricing by businesses that benefit more from Government policy,” Secretary for Finance and Economic Development, Mr George Guvamatanga said.
The development has prompted Government to revoke an import duty waiver for raw materials for Beitbridge Juicing Private Limited, a subsidiary of Schweppes Limited.
This follows reports that the company is now selling its products exclusively in forex against the dictates of the initial agreement with the Government.
On 1 July, Treasury provided a once off suspension of duty facility for the company to import 10 000 tonnes of oranges and 5 000 tonnes of grape fruits.
The provision was expected to augment local supplies thereby minimising supply disruptions as well as guaranteeing affordable prices to the general public, said Mr George Guvamatanga in a letter to the company’s managing director, Mr Charles Msipa.
“Treasury, however, notes that the pricing of your products is now exclusively in foreign currency, notwithstanding the Government’s initiatives to promote the use of local currency,” said Mr Guvamatanga.
“You will be aware that beneficiaries of tax incentives are expected to complement the Government interventions with responsible pricing models with a view to ensuring affordability of goods, which is key in achieving Government development objectives.”
Mr Guvamatanga said pending investigation on the pricing model, Government had revoked the suspension of duty facility and as such all new imported consignments will immediately attract duty at prescribed rates.
Contacted for comment, Confederation of Zimbabwe Retailers Association president, Mr Denford Mutashu, absolved his members of wrong-doing citing supply pressures exerted by manufacturers.
“The decision to sell selected goods exclusively in USD is derived from supply chain pressures where 90 percent of suppliers and manufacturers are demanding payment in USD and rejecting the local currency,” he said.
Mr Mutashu said where one provided an option to pay in local currency, the exchange rate applied was even way above the parallel market rate.
“One is indirectly disincentivised. The situation is further exacerbated by the fact that 95 percent of daily sales through formal shops is in local currency.
“It’s a dilemma as the law stipulates that goods must be offered for sale in all currencies that are legal tender,” said Mr Mutashu.
He said the interbank rate must be applied along the whole value chain and not only at retail level.
Recently, the Government put up measures to enhance macro-economic stability and halt the spiralling of prices. This includes curbing money supply growth by taming speculative borrowing, entrenching use of the US-dollar alongside the local currency, speeding up release of grain for millers at the Grain Marketing Board as well as liberalising importation of key basic goods duty-free for six months for those with free funds to ensure reasonable pricing.
The products are rice, flour, cooking oil, margarine, maize-meal, sugar, petroleum jelly and salt, milk powder, infant milk formula, tea, toothpaste, bath soap, laundry soap and washing powder.
Online Reporter