Retailers who are using a multi-tier pricing system for different payment systems are violating the Bank Use Promotion Act and risk the full wrath of the law, a senior Reserve Bank official has said.
RBZ deputy governor Dr Kupukile Mlambo told breakfast meeting held in Harare yesterday to discuss the implications and effect of the bond notes on the economy that multi-tier pricing was unlawful.
He said the practice, which has become rampant following an increase in the amount of bond notes in circulation amid growing shortage of US dollar notes, had spawned three pricing models for US dollar notes, bond notes and use of electronic platforms.
The illegal practice by some of the retailers comes against the backdrop of acute shortage of the US dollar notes, the most dominant transaction currency in the country’s multi-currency system.
Zimbabwe uses a basket of foreign currencies after it scrapped its inflation ravaged domestic currency in 2009 following a decade of economic instability, which decimated 50 percent of the economy.
Under a US dollar dominated multi-currency system, inflation hit record lows, dropping well below zero and continuing like for 29 months before creeping out the negative territory only last February.
“I am aware of (illegal) activities that are happening. Some of the retailers have a three-tier pricing system; for bond notes, swiping and US dollar. I want to be very clear about this, (it) is illegal.
“We have not taken any action on anybody, but we have the Bank Use Promotion Act that we can invoke. I really want to encourage retailers doing so to relook into that. The last thing we want is to start arresting people. We want a friendly (environment) because this is a contested environment,” he said.
“If we start arresting people, (investors) will say we cannot do business in Zimbabwe, because they are arresting (business) people, yet we cannot watch while the public is cheated. I want to encourage all to avoid this three-tier pricing system. Let us follow the law because that is also counter-productive.”
In fact, retailers have increased prices of goods and services following introduction of the bond notes last year, as part of measures to incentivise exporters and improving liquidity in the economy.
This has started reflecting through increase in inflation rate.
Dr Mlambo said while businesses in Zimbabwe should look for alternative ways to find their way past the myriad of challenges facing the economy that should be done within the confines of the law.
While the central bank has recorded tremendous success in making bond notes, backed by a $200 million facility from Afreximbank, a medium of exchange ranking one for one with the greenback, its value has been partly discounted on the parallel market.
Many unscrupulous retailers peg higher prices for other media of exchange such as bond notes, mobile money and electronic systems despite the fact that cash now makes a fraction of total transactions.
The domestic economy continues to battle the downside of the predominant use of the US dollar, which briefly brought back stability in the economy, but has weighed down prospects for growth due to its shortage and impact on competitiveness of industry.
Out of a total of $6,6 billion bank deposits, cash in circulation at just about $202 million, makes up less than 5 percent of the total bank deposits in the economy.
The ratio of cash to bank deposits was 35 percent in 2009.
Dr Mlambo said that while bond notes have been a huge success, they were not the panacea to the country’s liquidity and cash crisis, which demands significant growth in foreign exchange inflows.The Herald
