The recent introduction of Zimbabwe’s new currency, the Zimbabwe Gold (ZWG), now known as ZWG, has sparked significant economic turbulence, particularly in the realm of basic commodities. Despite the Reserve Bank of Zimbabwe’s (RBZ) initial optimistic outlook, the ZWG’s performance has faltered, leading to a surge in prices and a shift towards foreign currency transactions.
Launched on April 5, the ZWG began trading at a rate of 13.56 to the US dollar. However, by May, it had already depreciated by 0.8%. As shortages of ZWG notes became apparent, retailers began preferring transactions in US dollars, further complicating the local currency’s role in everyday transactions.
A recent survey in Harare highlighted that shops, which initially displayed prices in both ZWG and US dollars, are now predominantly charging in foreign currency. The ZWG’s devaluation has forced consumers to rely on US dollars for their purchases, exacerbating inflation and reducing the currency’s effectiveness as a medium of exchange.
The survey revealed a dramatic rise in prices for basic goods, with the ZWG trading at approximately 14.8 to 1 USD. On the informal market, the rate has surged between 24 and 28 ZWG per US dollar. This instability has contributed to shortages of essential items such as flour and mealie-meal in supermarkets. For instance, a 2-liter bottle of cooking oil is now priced at around USD 5, while a 10kg bag of mealie-meal costs USD 11. Comparatively, tuckshops offer slightly lower prices due to lower overheads and a more flexible pricing structure.
The Consumer Protection Commission (CPC) has expressed concern over the sharp increase in prices, both in ZWG and US dollar terms. CPC spokesperson Kuda Mudereri noted that the cost of goods, such as cooking oil and sugar, has risen significantly. Major retailers, including OK, Pick n Pay, and Spar, have increased prices to cover losses from the widening gap between official and parallel market exchange rates, which has expanded from 30% to 48% in recent weeks.
The CPC has issued compliance notices to businesses to prevent them from charging rates above the official exchange rate. However, challenges persist, particularly in areas like Hwange and Lupane, where the exchange rate has reached as high as 35 ZWG per US dollar, leading to severe price hikes.
The Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu attributed the sector’s difficulties to disruptions in the supply chain and the reluctance of suppliers to accept ZWG. This situation has led to a reliance on informal trade, which, while unregulated, is often better able to adapt to the fluctuating currency conditions. Economist Chenayimoyo Mutambasere criticized the introduction of the ZWG, suggesting that it was a reaction to a liquidity crisis rather than a sustainable solution. She argued that the currency’s instability reflects a broader lack of confidence in Zimbabwe’s economic policies.
Another economist, Stevenson Dhlamini, pointed out that the rising prices are partly due to retailers using outdated exchange rates for pricing. He stressed the need for a more liberalized foreign exchange market to improve price stability and reduce the informal economy’s dominance. Zimbabwe’s economic landscape is currently marked by significant uncertainty due to the challenges facing the ZWG. Rising prices, currency instability, and disruptions in the supply chain have created a complex environment for both consumers and businesses. As the RBZ and other stakeholders work to address these issues, the effectiveness and future stability of the ZWG remain uncertain, highlighting the need for robust economic reforms and improved market confidence.
In other news – Woman discovers rat in her bread
In a recent incident that has drawn significant attention, a South African woman named Mkumla shared a disturbing experience involving a loaf of bread she purchased from a local shop. In a detailed Facebook post, Mkumla described the events that led to her discovering what appeared to be rodent contamination in her bread.
On August 27, Mkumla bought a loaf of SASKO Low GI Seeded Whole Wheat brown bread from a local store. Over the following days, she used slices from the loaf to make toast without any issue. However, on the morning of August 31, while preparing toast, she noticed something unsettling. Read More
