- The Zimbabwean government will cancel operating licences of businesses that price their goods using unofficial exchange rates.
- The gaps between the official and unofficial exchange rates are growing larger.
- In an attempt to get hard currency, the operator of Steers and Nando's is giving discounts if you pay in US dollar.
Desperate to contain daily plunges in its currency, the Zimbabwean government says it will cancel the operating licences of businesses that price their goods using unofficial exchange rates. Gaps between the official and unofficial exchange rates are growing ever larger.
Zimbabwe’s official exchange rate is pegged at 87 Zimbabwean dollar (ZW$) to the US dollar, while the street rate has widened to around 1:175 against the greenback.
The government argues that unofficial currency exchange activities on the streets of Harare are driving inflation and contributing to a sustained plunge in the value of the Zimbabwean dollar.
To crack down on this, on Thursday, the government decided to penalise companies and businesses that factor in parallel market exchange rates when pricing goods.
"Businesses who disregard the law and continue to price their goods on the parallel market rates will have their licences suspended," Zimbabwe's Finance Minister Mthuli Ncube said Thursday.
Starved of foreign currency, which has slowed to a trickle in the official foreign currency auction market, Zimbabwean businesses have resorted to discounting prices for those who can pay in US dollar prices to encourage purchases in that currency. Legally, Zimbabwe uses a dual pricing system, where goods and services can be sold in US dollar (using the official rate) and in local currency.
Simbisa Brands, which holds the operating licences for Nando’s and Steers in Zimbabwe, is now under investigation by the Financial Intelligence Unit for offering a promotion that has been deemed as offering an unofficial exchange rate of 1:200 for the local currency.
"The Financial Intelligence Unit is investigating allegations of currency manipulation and pegging of the ZW$ at 200 to 1 USD circulating on social media," the Reserve Bank of Zimbabwe said in a statement on Thursday morning. "Perpetrators [will] be brought to book."
Industry executives told Fin24 that they are struggling to get foreign currency from the official auction market - hence, they were using various strategies to raise forex.
"Each company strategises depending on the nature of its sale. There are companies whose forex requirements are once-off or periodic, and then there are those whose forex requirements are almost on a daily basis. That’s why you see various strategies being implemented ... it is simply because the auction market has failed," said one chief executive officer of a consumer goods company in Zimbabwe.
Ncube has mandated the Zimbabwe Revenue Authority to carry out "impromptu audits of corporate activities with a view of quantifying potential tax liabilities arising out of illegal foreign currency" trading. He also said that financial regulatory bodies such as the Public Accountants and Auditors Board "will be working on a framework to impose appropriate financial and professional sanctions on members of the accounting, auditing professions who may be complicit in superintending over illicit affairs" by corporate entities.
Recently, the central bank blacklisted 77 individuals for engaging in alleged money laundering through "illegal" foreign currency dealings via mobile money and electronic banking platforms.