Zimbabwe is grappling with a severe currency crisis as the black-market exchange rate for the Zimbabwe Gold (ZiG) currency has soared to a staggering US$1:25 ZiG. This surge has led several businesses in Bulawayo to reject transactions in ZiG, defying government regulations and exacerbating economic instability. The official exchange rate is significantly lower, at approximately ZiG14 to the USD.
The sharp discrepancy between official and black-market exchange rates has prompted some businesses to prioritize foreign currency transactions. In Bulawayo, a number of retail outlets, including prominent establishments like Greens Supermarket and Oceans, have been accused of rejecting ZiG payments. These businesses are reportedly citing issues with their point-of-sale (POS) machines as a pretext for refusing local currency.
This practice undermines government efforts to stabilize the currency and diminishes consumer purchasing power. The Reserve Bank of Zimbabwe (RBZ) has responded by setting up a hotline and WhatsApp number through its Financial Intelligence Unit (FIU) for the public to report businesses rejecting the local currency or employing black-market rates.
In May, the Zimbabwean government enacted Statutory Instrument 81A of 2024, imposing fines of ZiG200,000 for violations of exchange rate regulations. Despite this, enforcement challenges persist as some retailers continue to defy the law. The Consumer Protection Commission (CPC) chairperson, Dr. Mthokozisi Nkosi, and the Confederation of Zimbabwe Retailers (CZR) president, Dr. Denford Mutashu, have condemned these practices and are calling for strict adherence to the regulations.
A crackdown on non-compliant businesses is on the horizon as authorities aim to restore order in the currency market. Additionally, the Ministry of Finance, Economic Development, and Investment Promotion has recently blacklisted over 50 contractors involved in black-market transactions, a move underscoring the government’s commitment to addressing the currency crisis. Economists and academics have weighed in on the implications of the currency fluctuations. National University of Science and Technology (Nust) lecturer Mr. Stevenson Dhlamini and economist Dr. Prosper Chitambara have highlighted the broader economic challenges posed by the exchange rate volatility. They point out that the difficulties businesses face in accessing foreign currency through official channels contribute to a heightened reliance on the black market.
Finance Minister Professor Mthuli Ncube has emphasized the progress of the phased de-dollarisation programme, which aims to establish a mono-currency regime supported by the ZiG. This initiative is intended to enhance local production and boost export competitiveness. However, the ongoing currency instability and black-market activities continue to pose significant obstacles to achieving these goals.
As Zimbabwe navigates this complex economic landscape, the clash between black-market practices and government regulations remains a central issue. The government’s efforts to stabilize the currency and enforce compliance are critical to restoring economic stability and consumer confidence. Continued vigilance and effective enforcement will be essential in addressing the currency crisis and supporting the nation’s broader economic recovery efforts.
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