admin
Business Reporters—
CONSUMERS and commuters in Bulawayo are in fix over the use of the South African rand. Faced with uncertainty over the fluctuating exchange rate, local commuter omnibus operators and some businesses have devalued the rand further to $1:R20, above the official exchange rate of $1:R14,3, as at yesterday. Starting Friday last week, desperate commuters were being forced to pay R10 for a fare to and from their homes, if they do not have bond coins.
Street vendors have also joined the band wagon while some businesses no longer want any transaction in rands. While South Africa is Zimbabwe’s major trading partner, a snap survey conducted by Business Chronicle yesterday revealed growing resentment for the weakening rand.
“What’s happening is shocking and authorities should intervene. Kombis in Mahatshula are now refusing fare payment in rands. Even if it’s R10, they no longer accept it,” said a resident of Mahatshula. Kombi crews said the rand fare increase was triggered by the rejection of the currency by some retailers.
Some had notices pasted on windows indicating the new fares, which, however, remain unchanged when using US$-indexed bond coins. “We’ve increased our fares when paying in rand. We realise some retail outlets are no longer accepting the rand because of its continued loss of value against the dollar,” said one of the operators plying the Luveve route.
“For us to charge low fares on commuters who pay using a currency whose value continues to fall against the dollar doesn’t make sense.” Big shops such as OK are also no longer accepting rands. However, illegal foreign currency dealers, popularly known as Osiphatheleni, said they were trading $1 for R14.
Economic analyst, Reginald Shoko, said confusion over the rand issue symptomatic of the disadvantage of using the multiple-currency system. “This is the biggest disadvantage of using the multiple currency system. People are shunning the rand because it’s losing value despite being in the basket of currencies,” said Shoko.
“It shows the rand is no longer working in favour of the consumer and unfortunately there’s nothing that the government can do about it because this is a matter of market forces.” To Shoko, phasing out the use of rand coins on the market in favour of bond coins would restore sanity and curb manipulation of the ordinary consumer.
“The market at the moment doesn’t want the rand, so let’s phase out rand coin transactions and increase bond coin circulation,” he said.
Shoko said the biggest challenge for the economy at the moment was liquidity, which he said should be addressed in a holistic manner. This might entail considering the re-introduction of the local Zimbabwe dollar currency, which was dumped in February 2009.
He, however, warned that bringing back the local currency will require certain economic fundamentals to be in place to facilitate stability. Reserve Bank of Zimbabwe Governor John Mangudya is on record as saying there was nothing wrong with the market rejection of the weakening rand.
He said consumers and businesses could, however, use the central bank offices and banks to exchange their rands for bond coins at official rates. Comment could not be obtained from the Consumer Council of Zimbabwe.
The rand has been on a steady fall since the beginning of the year in the context of economic challenges facing the neighbouring country. Economic experts have blamed growing unemployment levels amid job action, power cuts and falling global commodity prices as major factors affecting South African economy.
Online Reporter