Pricing freedom—A long overdue correction to economic policy

The repeal of Statutory Instrument 81A of 2024 is a corrective policy measure that was long overdue.

In freeing the market from a rigid and artificial pricing framework, the government has finally acknowledged what businesses and economists have known for years: economic stability and recovery in Zimbabwe will not be engineered through force, but through trust in market fundamentals, transparency, and policy coherence.

For nearly a year, SI 81A stifled commerce and bred distortion across Zimbabwe’s formal economy. It was a policy born not of market wisdom but of administrative anxiety—an attempt to paint over deeper fiscal cracks by insisting that the official interbank rate should govern prices in the formal sector. Yet, all the while, informal traders operated freely in the parallel market, setting prices that reflected true exchange realities. This discrepancy not only undermined the competitiveness of formal businesses, but also penalized compliance and rewarded opacity.

The scrapping of SI 81A is not simply a reversal—it is a recognition of reality. Market participants had already priced in their doubts about the official exchange rate. Formal retailers struggled to restock, vendors priced using street rates, and consumers bore the brunt of the confusion and inconsistency. The repeal, therefore, is more than symbolic. It reintroduces a much-needed alignment between market activity and policy framework.

From a financial and economic standpoint, the decision aligns with several critical objectives. First, it supports the principle of price discovery—a cornerstone of functioning markets. As noted by economist Malone Gwadu, the move reinforces a market-based mechanism where prices and exchange rates are derived from demand-supply dynamics and supported by central bank reserves. In this sense, the government is returning to orthodox economic management, a shift that sends a powerful signal to investors, lenders, and development partners.

Second, this repeal helps restore a level playing field in the retail landscape. For months, formal sector operators—those who pay taxes, observe labour laws, and comply with financial regulations—have operated at a disadvantage compared to informal traders who face little to no enforcement. As Victor Bhoroma aptly put it, formal businesses were “at the mercy” of informal competitors. Allowing market-based pricing means that formal operators can now price competitively, manage stock more effectively, and protect their liquidity positions. This, in turn, supports employment and tax compliance—two pillars of sustainable public finance.

Third, and perhaps most critically, the move rekindles confidence in the local currency. While fears of ZWG-denominated inflation are valid—especially in the short term—pricing flexibility is a fundamental precondition for currency credibility. Businesses are more likely to accept and trade in ZWG when they are assured they can recoup value in real terms. Without that assurance, demand for the US dollar will continue to outstrip supply, eroding the credibility of Zimbabwe’s de-dollarisation agenda. As investment banker Misheck Ugaro points out, the repeal aligns policy with the Monetary Policy Statement of February 2025, offering coherence and clarity where before there was contradiction.

However, it is important to temper this optimism with a dose of realism. The policy shift is necessary, but it is not sufficient. Zimbabwe still faces steep structural impediments: high formal sector regulatory costs, policy unpredictability, weak consumer purchasing power, and a shallow capital market. The removal of SI 81A must be accompanied by a broader package of reforms aimed at improving the ease of doing business, reducing compliance costs, and reinforcing monetary discipline.

Indeed, the success of this liberalisation effort depends squarely on what comes next. The Reserve Bank of Zimbabwe must maintain a tight grip on money supply, continue to build reserves, and resist the temptation of quasi-fiscal operations that have historically undermined currency reforms. The fiscal authorities must also avoid populist price controls or subsidies that undo the gains of liberalisation under the guise of consumer protection. Inflationary pressures, as FBC Securities noted, are a real and immediate risk. But they are manageable if policy remains disciplined and if the public sector demonstrates commitment to structural adjustment.

Moreover, enforcement should not vanish with the repeal of SI 81A. Rather, it should pivot—from enforcing an artificial exchange rate to enforcing transparency in pricing, fair trade practices, and tax compliance. If businesses are to benefit from a liberal pricing regime, they must also play their part in building a formal economy grounded in trust, not arbitrage.

In a volatile economic environment, trust is currency. By repealing SI 81A, Zimbabwe has taken a step toward restoring that trust—not just among businesses, but also among consumers, investors, and the broader international community. It is a move that reflects maturity in policymaking, albeit delayed. Going forward, government must build on this momentum with a broader reform agenda anchored in consistency, accountability, and market discipline.

The market has spoken—and this time, the government listened. It must continue to do so. Because when policy is guided by evidence and experience—not control and coercion—markets respond with stability, businesses respond with investment, and the economy responds with growth. That is how confidence is built, and that is how nations rebuild.