daniel chigunwe
Business Writer
Zimbabwe has been experiencing a modicum of economic stability since the beginning of April 2024.
This is significantly attributable to the introduction of Zimbabwe Gold currency (ZiG), which replaced the down and battered Zimbabwe Dollar “ZWL”.
Major economic players have embraced the new currency and it is now beginning to circulate extensively in diverse sectors of the economy.
The formal sector players have accepted the novel currency and they have done so at the prevailing official rate and recent financial reports show that the major retail stores OK and TM Pick n Pay have been making much of their earnings in ZiG.
This is a downright contrast to how the informal sector in Zimbabwe is conducting business.
Tuck-shop owners and other informal traders often prefer to trade in US dollars or other foreign currencies rather than the local currency, the ZiG.
Players in the informal sector comfortably evade constrained regulatory and bureaucratic hurdles and they behave willy-nilly.
The informal sector comprises street vendors and small-scale manufacturing to service provision and agriculture.
A snap survey of downtown Harare stretching into Mbare is a testament to how the ZiG is yet to be accepted as a legal tender for everything.
This is not limited to the above but many clothing boutiques and electronic accessory dealerships dotted around the CBD.
Traders of different merchandise ranging from basic food items to hardware, do not want the new currency.
Informal businesses’ rejection of the ZiG threatens economic growth.
It is inhibiting the Reserve Bank Zimbabwe (RBZ) and treasury’s overall goal to establish ZiG as an acceptable legal tender for buying anything in the economy.
Put briefly the informal traders’ resistance is counterpower and the practice is threatening the growth of the economy.
This, however, cannot solely be blamed on actors of the informal sector. Zimbabwe has gone through several intervals of currency volatility and this has undoubtedly affected Zimbabwe’s perception of local currency.
With many instances of a volatile currency most goods are priced in United States dollar amounts with customers receiving their small change in local currency.
The rejection is hard-hitting to the significant section of the formally employed workforce whose part of the remuneration is earned in the local currency.
However, the informal players particularly those trading in groceries are stuck to their guns, the greenback is the only currency that allows them to restock as required by wholesalers and manufacturers.
Consumer Protection Commission, Research and Public Affairs manager, Kudakwashe Mudereri, said the situation was quite unfortunate as this sector was depriving those earning in local currency, citing that measures were being taken to end this misdemeanour.
“As a commission, we are worried about this kind of situation and we are going to take the most appropriate action so that those people they are prosecuted. We have a team of inspectors currently working with the Financial Intelligence Unit (FIU) because they are the ones with the necessary powers.
“We have an exercise that we are doing already and we need to intensify our surveillance targeting these informal traders so that we deal with them, bringing perpetrators to the book.
“The introduction of ZiG currency has brought stability in the market and you will see that both the formal and the informal exchange rates have sort of stabilised and we are worried about why they won’t the informal sector not accept ZiG.
Analyst, Shephard Majengeta, said the informal sector was giving consumers a raw deal by refusing to accept the ZiG or manipulating the exchange rate.
“One of the contentious issues surrounding the informal sector in Zimbabwe is its reliance on foreign currency transactions. I want to remind informal sector players that they are important component of the economy, crucial to sustainable growth, they do not need the whip, but must just do the right thing,” said Majengeta.
Bongani Ndlovu