The government published a new Statutory Instrument (SI 185 of 2020) today that spells out punishment for service providers who are not using the official exchange rates (the rates determined by the interbank) to conduct business.
The SI ammendment Reads;
(1) Any person who provides goods or services in Zimbabwe shall display, quote or offer the price for such goods or services in both Zimbabwe dollar and foreign currency at the ruling exchange rate.
Any person who contravenes subsection (1) shall be liable to –
(a) a category 1 civil penalty if the contravention is completed but irremediable; or
(b) a category 4 civil penalty if the contravention is a continuing one
What are the penalties?
- Category 1: Fixed Penalty Level 10 Fine ($24,000) + Cumulative daily penalty of Level 3 Fine ($500) until paid.
- Category 4: Level 6 Fine ($4,800) per day of non-compliance.
Will it work?
It might work but ultimately, it shows that the government isn’t entirely ready to stop intervening when it comes to markets. The interbank market has been hailed as a step in the right direction but a truly free market would allow businesses and consumers to decide how valuable their money is (be it US$ or ZW$) – something which the Zimbabwean government will never allow it seems.
The government seems hell-bent on determining that whatever they decide to be the value of the ZW$ shouldn’t be challenged. As we’ve seen in the past (remember 1:1, 1:3 and 1:25??) it’s not so simple…