We have known this for years, but apparently those at the Zimbabwe Broadcasting Corporation (ZBC) are surprised that shops are charging 3 prices depending on whether you have bond notes, Ecocash/Swipe or US dollars. They are so surprised they made a video on the whole issue.

The transacting public complains about triple pricing

You can blame the government for this

The triple pricing is sad and unfair but it is rooted in economic fact. Shops charge less when one pays using cash because there is a premium to having cash. Receiving cash has the following advantages to the business:

  • When the business wants to buy foreign currency on the black market (the formal market is not accessible to most businesses except the politically connected) they are charged less. For example, $10 USD is selling for $144 bond as opposed to $207 Ecocash. That’s a massive difference.
  • Cash is exempt from Mthuli Ncube’s loathed 2% tax which eats into profits. The government says this tax is insignificant but the fact that the government is raising millions means that they are taking these millions from people and businesses.
  • Cash is safe from the whims of the banking authorities. Arbitrary account freezes and forced investments are the order of the day. If you have the cash you are safe from the whims of the RBZ.
  • Those with cash can avoid paying taxes. Like all taxes. It’s illegal we know but most informal businesses don’t care. A lot of people feel the government is just going to squander their taxes on the bigwigs anyway.

Possible solution

Given the levels of corruption, and incentives for such given how much our officers earn, the best solutions involve removing these incentives. That means printing more cash to remove the cash premium.

Those paying using US dollars will always get favourable prices so long as we continue to import more than we make. Local production has to be boosted otherwise all prices will be tied to the ZWL: USD exchange rate.

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