A recent survey we conducted has shown that Zimbabwean businesses have largely moved on from the provisions of Statutory Instrument 127 of 2021. All the businesses we visited ranging from small LP gas sites to large wholesalers were offering USD discounts. Some were like Trade Center and Gain Cash and Carry openly admitted that they were not using the official rate as it made little sense when they were not getting foreign currency from the auction.
Most big businesses we talked to said they had tried to follow the provisions of the new law during the weeks it was gazetted. However, they noticed that informal businesses were not doing the same. This meant that they were receiving very little foot traffic compared to tuckshops where people flocked. As we predicted here at Zimpricecheck, the tuckshop operators in Mbare and Downtown Harare never stopped offering discounts, using black market rates or rejecting RTGS. We opined that these people have had so many aspects of their operations outlawed for example most of these shops are deemed illegal by the government they probably wouldn’t be bothered by the latest law.
The bomb that did the opposite.
In case you are wondering what SI 127 is, some weeks ago the government lobbied a grenade into the Zimbabwean business community when they introduced Statutory Instrument 127 of 2021. The law was made ostensibly to prevent businesses from abusing funds obtained from the official forex auction. The accusation by government officials was that several businesses were obtaining funds at the cheap rate of 85 ZWL and then turning around and using a rate of 130 ZWL per 1 USD when selling goods therefore profiting unfairly.
This law was supposed to result in prices going down but it was so poorly crafted and based on so many false premises it actually ended up doing the opposite. Most shops simply hiked their USD prices instead of lowering their ZWL prices to match their low USD prices. The result was a lot of chaos in the market as prices went up and some shops like OK stopped accepting USD altogether as their systems had to be reconfigured to comply with the law.
Some shops are still complying
Not all shops are in defiance, however. Supermarkets like Pick N Pay and OK are still in compliance. To be fair though, they have always been technically in compliance. The reality is these shops still calculate prices based on market rates and only sell principally in ZWL/RTGS. When you want to pay in USD they use the official rate. This means they get very few USD customers in their shops but they don’t mind. Their goods are already priced in such a way that even when they do end up buying their foreign currency from the black market they will still make a profit.