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Govt intensifies crackdown on business

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PHILLIMON MHLANGA AND LIVINGSTONE MARUFU

 

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Government has stepped up  its crackdown on private businesses  in order to deal  with those  deviating from the prescribed principle of formal exchange rate plus 10% margin, Business Times can report.

It comes as Zimbabwe is getting ready  for its harmonised elections on August 23, which  will take place in exactly  13 days.

Additionally, it does so against the complicated historical backdrop of skyrocketing prices  of goods and services that in the past few months had reached a point beyond the reach of the majority of people.

Whilst some private businesses  have operated in grey areas, the local business community has been taken aback by how quickly  and forcefully  the government  has acted.

Confirming the development, several business leaders in Harare told Business Times this week that the enforcement agencies — ZIMRA, the Ministry of Industry and Commerce, the Ministry of Women Affairs and Small to Medium Enterprises, the Zimbabwe Republic Police, among many others — have been conducting  compliance checks to laws and regulations across the country.

“The blitz started on August 1,2023 with the officials from several enforcement agencies  that includes  ZIMRA, the Ministry of Industry and Commerce, ZRP, the Ministry of  Women and SMEs enforcing compliance with the formal exchange rate plus 10% margin law and regulations,” a manager at one of the leading retailers in the central business  district of Harare, who requested not to be named  told Business Times this week.

Several other managers at retail outlets  across the city of Harare confirmed the development.

This comes at a time when prices of goods remained high despite the fact the exchange rate has gone down.

The  parallel market exchange rate has fallen to around ZWL$6500:US$1  from around ZWL$10 000: US$1 at  the end of June while the  official exchange rate  has fallen to   ZWL$4547.60: US$1 from ZWL$6920:US$1 towards the end of June.

Numerous analysts have agreed that despite the decline in exchange rates, the manufacturing sector continues to supply goods at a premium price.

Denford Mutashu, president of the Confederation of Zimbabwe Retailers, said  it is the manufacturing sector that  should take responsibility. He said they supply basic commodities at a higher price than expected.

“The price adjustments  must take the value chain approach rather than to  expect retailers and  wholesalers  to adjust on their own.

“The suppliers of those goods that we find in most shops must also take ownership in price reductions and allow consumers to enjoy  the stability that is currently prevailing across the economy,” Mutashu said.

He said there are some players who are still applying an exchange rate of ZWL$7000 per US$1  when using the US$ they use the official  exchange rate which then makes a product very expensive.

“We urge businesses to apply an official exchange rate when selling their goods so that consumers can feel and touch the stability that  the economy is currently prevailing,” he said.

The  industrialists said there’s a need for the businesses to reduce prices in line with the falling exchange rates.

Mike Kamungeremu, president of the Zimbabwe National Chamber of Commerce, advised the business community to take advantage of the current stability to lower goods’ prices so that consumers could benefit.

“To my fellow businesses, I urge you to reduce prices of basic commodities in line with the official rate  as pegging prices in black market rate is no longer applicable given the ZWL appreciation.

“Foreign currency is now available at the interbank, a company can take whatever amounts  it wants and  I urge those who haven’t tried to do it  to go and apply so that they can witness this dispensation,” Kamungeremu said.

Kurai Matsheza, president of the Confederation of Zimbabwe Industries, said the industry had stock that was produced at a higher exchange rate but will go down a little as a result of the blending of the old rate and the new one.

“The rate of coming down  has not been as fast as the rate of ZWL appreciation but there have been some price reductions that I can confirm.

“The good price reduction solely depends on individuals but we noticed a reduction. Bread, sugar, cooking oil and soap have come down,” Matsheza said.

“We have responded accordingly but in the eyes of the consumers we haven’t as he or she wants  a product for free. Even myself, that is what I would want. If I go into a shop I want to pay as little as I can.”

The Consumer Council  of Zimbabwe  executive director Rosemary Mpofu  weighed in saying: “The CCZ has, however,  noted with concern that the price movements in most retail shops have not been proportional to the local appreciation in the Zimbabwe dollar experienced in July 2023.

“It is expected that the suppliers should adjust their  prices according to movement of the exchange rate in a similar fashion. Prices should decrease at a faster rate to match the exchange rate,” Mpofu said.

According to her, consumers continue to struggle with high prices, which has decreased aggregate demand.

 

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