The Zimbabwean government is facing a growing crisis as the new Zimbabwe Gold (ZiG) currency struggles to gain traction, with the black market exchange rate continuing to soar and businesses showing a strong preference for US dollar transactions.
In a bid to stem the tide and force the adoption of the ZiG, the government has introduced a series of strict measures, including mandatory licensing requirements for all businesses to have functioning POS machines.
The new regulations, announced after a Cabinet meeting, aim to increase the use of electronic transactions and reduce reliance on cash, a key component of the government’s de-dollarisation strategy. However, the move has been met with resistance from businesses, many of whom are already struggling to access foreign currency from the interbank market.
The government has responded with a series of measures aimed at promoting the use of the ZiG and cracking down on those who are undermining the de-dollarisation process. These measures include:
- Strengthening licensing requirements: The Reserve Bank of Zimbabwe (RBZ) will enforce mandatory licensing requirements for all business operators to have a bank account and Point of Sale (POS) machine. This move aims to increase the use of electronic transactions and reduce reliance on cash.
- Deployment of inspectors: The RBZ will deploy inspectors to monitor compliance with the new licensing requirements and curb any misdemeanors that could undermine the de-dollarisation process. These inspectors will also be tasked with curbing activities that undermine price stability and the availability of basic commodities.
- Increased border patrols: The government will increase border patrols and the number of inspectors to combat smuggling and counterfeit goods.
- Penalties for unfair trade practices: Penalties for unjust price hikes, currency manipulation, and unfair trade practices will be reviewed, with fines ranging from US$200 to US$5,000 or the ZiG equivalent.
- Blacklisting of contractors: Last month, the Ministry of Finance, Economic Development, and Investment Promotion blacklisted over 50 contractors for supplying the black market after receiving payments.
These measures are part of a broader de-dollarisation roadmap that the government has put in place. However, the success of this roadmap hinges on the willingness of businesses to comply with the government’s directives.
The surge in black-market exchange rates, which peaked at US$1:23 ZiG last week, reflects the difficulties that businesses are facing in accessing foreign exchange from the interbank market. This lack of access is driving many businesses to prefer US dollar transactions, even if it means breaking the law.
Various businesses across the country are reportedly falsifying network issues with their POS machines to justify exclusive trading in foreign currency. Those who do comply with the government’s directives are often met with opportunistic traders who purchase products in bulk using the ZiG before reselling them in US dollars at informal markets, offering discounts in US$.
The government’s efforts to promote the use of the ZiG are facing significant challenges. The black market exchange rate is a major obstacle, and businesses are finding creative ways to circumvent government regulations. Unless the government can address these challenges, its de-dollarisation push is likely to face continued resistance.
Meanwhile, the government is also focusing on addressing the issue of idle industrial space. Cabinet has approved the establishment of an Inter-Ministerial Task Force to identify and utilize idle and abandoned industrial spaces, including empty shells, rail infrastructure, and other properties that have been abandoned by their owners.
The government hopes that by utilizing these spaces, it can stimulate economic growth and create new employment opportunities. However, the success of this initiative will depend on the government’s ability to attract investors and provide the necessary support for businesses to operate in these spaces.
