Business has noted the new foreign currency measures imposed by the government last week with trepidation as they could lead to price increases, lower economic activity and herald a return to the hyperinflation era of 2007/08.
Last week the government gazetted the new rules under Statutory Instrument (SI) 127 of 2021 seen as an attempt to arrest the runaway exchange rate on the parallel market and stabilise the local currency.
However, Denford Mutashu, the president of the Confederation of Zimbabwe Retailers (CZR) said SI 127 of 2021’s impact was akin to price controls and could lead to shortages. Said Mutashu:
The SI, which was released in the market like a bomb recently, is a case of the so-called cat thrown among the pigeons.
It has had the impact of shocking the market and destabilising the market as business woke up to its reality to their day-to-day business.
As business, there is a huge worry that it seems too close uncomfortably to price control.
Mutashu said the government should have consulted widely before announcing the policy as some retailers have hiked prices by 100 per cent in response to the new regulations. He said:
Shops had been full and prices had nearly stabilised and we are currently at a position that could see some price increases and those fears have been confirmed by the current trend of huge price increases in the region of between 50% and 100%.
I received messages from Manicaland (province), for example, and indications are that prices have been increased by shocking levels.
Economist and businessman Prosper Chitambara told NewsDay yesterday that the effects of the new regulations were already being felt by consumers as business was already increasing prices of goods and services. He said:
It means that consumers’ welfare will be eroded and they will be the victims as prices will go up.
There is now a need for government to go back to the drawing board and consult the private sector, and I think that dialogue at this time is very critical.