The Zimbabwe government has vowed to crack down on businesses demanding payment in foreign currency and using black market exchange rates, but experts say their efforts are unlikely to succeed as the authorities lack the capacity to enforce their policies.
Finance Minister Mthuli Ncube insists that the Zimbabwean dollar will remain the country’s primary currency and additional measures are being taken to strengthen its value. However, on the ground, the situation continues to deteriorate as shops disconnect electronic payment systems and demand US dollars while some now openly peg their exchange rates at over 1:5,500 against official rates of 1:1,888.
Illegal forex dealers using mobile POS machines have been contributing to the higher exchange rates and say they are capitalizing on the growing demand for hard currency. According to one dealer, “there is huge appetite for forex, so we make a killing. The police can’t do anything.”
The government claims to be blacklisting major distributors and freezing the bank accounts of those caught manipulating exchange rates and refusing local currency. However, some question whether these measures will have any meaningful impact.
Economist John Robertson says “the government lacks the capacity to enforce its policies across the entire economy, so most of these announcements are just for show.” He points out that similar threats in the past have failed to stop the black market operations.
The situation is leaving ordinary Zimbabweans hopeless as prices continue to soar with their salaries retaining little value. Some experts forecast that inflation could spike to over 1,000% this year if drastic steps are not taken.
For now, it appears rogue businesses continue to operate with near impunity while the government fights a losing battle to assert its authority and restore any credibility to the embattled Zimbabwean dollar. Unless more radical economic reforms are implemented, citizens face continued hardship as the east/west divide grows between a small elite profiting on hard currency and the majority struggling to afford basic needs.
