This archive report was first published on 13 October 2021.
October 13, 2021
Businesses in Zimbabwe are increasingly resorting to United States dollar transactions as the country's currency teeters on the brink of collapse.
The Confederation of Zimbabwe Industries (CZI), the largest representative body for local business, has cautioned the government against clamping down on firms and traders.
According to the CZI, the greatest risk facing the economy is an inappropriate policy response to the rising parallel market premium.
“The greatest risk facing the economy right now is an inappropriate policy response to the rising parallel market premium,” the CZI said in a letter to its members.
Clamping down on informal exchange trading in the absence of a viable formal market will have catastrophic consequences for the economy, the lobby group warned.
“Clamping down on informal exchange trading in the absence of a viable formal market will have catastrophic consequences for the economy,” the CZI added.
The Zimbabwe dollar was re-introduced in 2019 at parity with the US dollar, but it has plummeted in recent months due to a runaway parallel currency market and a shortage of locally made goods.
Finance minister Mthuli Ncube has announced plans to penalise companies and businesses that factor in parallel market rates when pricing goods and services.
“Businesses who disregard the law and continue to price their goods on the parallel market rates will have their licenses suspended,” Professor Ncube said in an advisory issued on Thursday.
