Unpacking Zimbabwe’s pricing policy | Business Times

PERSISTENCE GWANYANYA

In line with the market-determined exchange rate management system being implemented by the Reserve Bank of Zimbabwe (RBZ), and in response to calls from stakeholders to further liberalise the economy, the Government of Zimbabwe on April 15, 2025, repealed Statutory Instrument (SI) 81A of 2024—previously mandating that goods and services be priced at the prevailing average interbank rate. This move was effected through the enactment of SI 34 of 2025.

Although some analysts described the move as necessary but long overdue, it is important to appreciate the significance of timing in the broader policy narrative.

The deregulation of the pricing framework is taking place at a time when the economy is demonstrating signs of stability, largely attributable to the alignment of fiscal and monetary policies under the “new normal” anchored by Zimbabwe’s structured currency—the Zimgold (ZiG)—which was introduced on April 5, 2024. Notably, ZiG marked its first anniversary on April 5, 2025, with commendable stability, evidenced by a sustained disinflation trajectory and relatively stable exchange rate dynamics.

The pricing competitiveness brought about by low and stable inflation reduces the risk of exploitation by arbitrageurs, speculators, and currency entrepreneurs—concerns that have been raised by some market watchers.

In such a stable environment, businesses that attempt to unjustifiably hike prices in ZiG risk alienating consumers and pricing themselves out of the market.

Therefore, the government’s decision to deregulate prices should be viewed as a bold commitment to maintaining long-term macroeconomic stability.

This policy shift is supported by a tight monetary stance, which has been instrumental in achieving current stability. Moreover, this stance is underpinned by robust and growing demand for the ZiG, which is essential to sustain its value.

In October 2024, the government passed legislation requiring that 50% of corporate taxes be paid in ZiG. Further measures to stimulate demand for the currency were announced in the 2025 National Budget.

A strong demand for ZiG is critical to overcoming the so-called “rejection effect”—where businesses apply inflated exchange rates to ZiG-denominated prices in a bid to attract foreign currency, effectively sidelining the local unit.

Such pricing distortions are increasingly unsustainable in the evolving economic environment.

The new pricing regime demands a shift towards genuine competitiveness and value creation, underpinned by operational efficiency, product innovation, high quality standards, and superior customer experience.

This marks a clear break from the past, where speculative behaviour, arbitrage, and currency manipulation often overshadowed productive economic activity.

Importantly, the repeal of SI 81A/2024 comes amid growing concern over its unintended consequences, particularly within the formal economy.

There has been mounting anxiety over rising corporate stress levels, partially attributed to an uneven and often distorted business environment.

Encouragingly, the interbank foreign exchange market is now reliably meeting the forex needs of businesses, contributing to the prevailing sense of macroeconomic calm.

Improved access to foreign currency via formal channels is expected to draw more economic activity into the formal sector.

The increase in international reserves since the introduction of ZiG is another positive development, enhancing the currency’s credibility and convertibility. As of March 31, 2025, Zimbabwe’s reserves stood at approximately US$600 million—providing more than three times import cover.

This level of durability in macroeconomic stability is essential for preserving value in society and reducing demand for foreign currency as a store of value.

Reflecting this, the RBZ has begun injecting gold coins into the financial system to further support demand for ZiG and promote value preservation following the recent deregulation of pricing.

As part of broader efforts to improve the business climate, the Treasury has indicated that further deregulation measures will be announced in the course of the year. These will include a review of the licensing regime, aimed at reducing both the number and cost of licences required to operate a business in Zimbabwe.

Stability benefits everyone.

No economy can achieve sustainable growth in an unstable environment. A US$100 billion economy, for instance, has the capacity to generate significantly more billion-dollar enterprises than a US$10 billion economy.

Similarly, no business or individual can thrive beyond the prosperity of their nation.

To currency speculators and arbitrageurs, the belief that one can build sustainable wealth purely through exploiting currency inefficiencies is both flawed and unsustainable.

As we commemorate our independence, we must honour the sacrifices made by our gallant heroes and safeguard the legacy they died for.

As policymakers extend economic freedoms across foreign exchange, goods, and services markets, we must remember our shared responsibility toward each other.

With collective accountability and prudent decision-making, we can secure a more prosperous and resilient economy for future generations.

Persistence Gwanyanya is an economist and member of the RBZ Monetary Policy Committee. He is also the founder and CEO of Bullion Group International. Feedback: [email protected]

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