Why Zimbabwe is cracking down on black market pricing

HON. T. MOYO:  Thank you Madam Speaker Ma’am.  My question is directed to the Hon. Minister of Finance and Economic Development.  I want to know Government policy regarding Statutory Instrument 127, which I understand was passed to bring about sanity and discipline on the market.  What is Government going to do to enforce the provisions of that Statutory Instrument so that there is compliance?  What I am afraid of is that economic saboteurs, some of them might respond otherwise and prices would increase.  To ensure that there is discipline, what enforcement measures are there in place? Thank you.

THE DEPUTY MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT (HON. CHIDUWA):  Thank you so much Madam Speaker Ma’am.  I would want to thank the Hon. Member for the question.  I will respond to the question by probably giving a background to why we had the financial laws amendment regulations, which is the Statutory Instrument 127.  SI 127 was gazetted under Presidential powers.  What the Statutory Instrument is seeking to do is to address the inherent gaps that we had with the Exchange Control Act, 22:05 and the Bank Use Act, 24:24.  So, what we were basically saying there is, there is nothing new with regards to SI 127 but the issues that the Statutory Instrument is trying to address is the issue that you raised, the issue of compliance.

Under the Exchange Control Act, we were basically looking at illicit trade in foreign currency and the banking promotion where we are saying businesses, corporates and individuals should make use of the banking system.  What we are imposing now because if you check the system that was there, we were dealing with moral suasion but what is there now is; we are imposing civil and administrative penalties.  In terms of enforcement, if you have gone through the S.I, there are what are referred to as designated authorities.

It is the duty of the RBZ Governor to designate authorities that shall do the compliance enforcement.  Here, we are looking at RBZ, Financial Intelligence Unit and ZIMRA but in terms of any such designated authority, the power lies with the RBZ Governor.  What we have done for compliance purpose, I would give you an example of what we have done since yesterday.  Yesterday, we moved around town, checking shops to see which are compliant.  I can tell you that we came up with a long list of corporates that were not compliant.  Starting today, we actually issued a lot of tickets and penalties. In terms of compliance, do not worry about that one. We are handling the issue so well. The other issue which is being raised to say the S.I. 127 is going to result in rampant increases in prices both in ZD and foreign currency, I think this is just a transitory issue. If you check in terms of the proportion of formal business to informal businesses, 60% of our businesses are informal, which means that our people have got choices to make.

We have seen that the black market prices – the pricing regime models have gone to offices. They are no more on the shelves. It is the corporates that are making the pricing models in their offices using black market prices and transferring them to the shelves, but this again we are managing it. I am sure because of competition, a lot of them are going to comply.

We have seen a lot of compliance but what I can assure you is there is nothing new with regards to S.I. 127. It used to be there and what is only new is compliance mechanisms and the call that is coming in to say there be a suspension of S.I. 127, there is no policy reversal that is going to be done, because what is on the ground is what has been existing except that we are now giving administrative and civil penalties. Thank you.

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