Some months ago the Zimbabwean government unleashed SI 127 of 2021 which regulates the exchange rate that businesses are supposed to use when converting between ZWL and USD prices. According to the law, businesses are only allowed to use the official weighted auction average when converting prices. It’s a law most businesses form and informal have simply ignored according to our recent survey.
While the government has sort of allowed the law to gather dust, they have recently started to enforce it again. Simbisa Brands who own popular food franchises such as Chicken Inn were one of the most prominent businesses to be caught in the net. But as we said a few weeks ago, they are far from being the only ones.
In our recent survey, we found out that most retailers are simply using the black market rate when it comes to setting prices. Most informal businesses will either use a steep rate of between 175 ZWL and 180 ZWL when accepting RTGS/ZWL or they will simply refuse to accept local currency. Most downtown and Mbare tuckshops will not even entertain the offer to pay in local currency. They are favourite with shops though as they sell goods at very low USD prices.
If one didn’t know better you would think all pharmacies were in some secret league where they tell each other what rate to use. All the pharmacies we visited be they in town or in suburbs were using a rate of $200 ZWL. They didn’t seem bothered by the fact that we could be undercover police officers or working for the FIU. When we mentioned this to one pharmacist they just shrugged and said they didn’t care.
An uneforceable law
Laws that have teeth are often observed as people fear the consequences of violating the law but Zimbabweans are slowly turning into habitual criminals thanks to harsh laws passed by the government. The thing is when everyone is breaking a law it is kind of hard to enforce that law. this leads to the police being overwhelmed by so many cases they just end up enforcing only the most egregious violations. When the Herald recently tried to get a comment on this issue from National police spokesperson Assistant Commissioner Paul Nyathi he refused to comment.
Meanwhile, the Confederation of Zimbabwean Retailers conceded that businesses use black market rates which is a practice that is now widespread as businesses had no choice. For their part, the RBZ and the Financial Intelligence Unit have warned businesses against currency manipulation.