The plan by government to suspend or withdraw trading licences for 17 pharmaceutical companies who are accused by the central bank’s Financial Intelligence Unit (FIU) of pegging prices using black market foreign currency rates has been described by observers as a terrible move that is likely cripple the delivery of medication in the country.
The FIU on Tuesday threatened to withdraw or suspend licences for 17 pharmacies mainly outside Harare that are using the parallel market (Black Market) exchange rate.
Observers, however, argue that retail pharmacies buy drugs from wholesalers in US dollars only and to expect them to sell at auction rate that only 13% of importers access would destroy medication delivery systems in Zimbabwe.
Top Harare based economist Tinashe Murapata questioned why the economy should price goods at government controlled rate.
He asked: “Suppose none of these businesses ever got currency from the Auction as is true of 87% of importers that find currency elsewhere, what is the precedence that GOZ is setting?
“Should the economy price its goods at the government controlled rate?
He further pointed out that the latest actions by the “RBZ and treasury in fines and cancelling licenses based on an auction rate that only 13% of importers access is a cause for concern. But we are in the silly season.”
Economic observer group ZimBollar said the government move is tantamount to instructing pharmacies to sell their goods at a loss.
“This directive from the Ministry of Finance is informed by ignorance, arrogance or both. Pharmacies are in retail and in the retail business the most important statistic is the stock turnover ratio [the number of days it takes to convert stock into cash/ a sale],” read the statement.
“Pharmacies in Zimbabwe take anything between 6-9 weeks on average to turnover their stock into cash, meaning the rates of 8,500-11,000 is a legacy rate which they incurred when they purchased stock sometime in Mid June when the rate spiked
“It doesn’t make sense for the government to insist on these businesses to readjust their price in line with the exchange rate because doing so is tantamount to instructing them to sell their goods at a loss. If you sell medicine you bought at ZWL 8,5k for ZWL 5k you are losing money!
“Government should allow businesses a reasonable time to clear their stocks in line with industry trends before they can adjust to the new exchange rates. In any event now that the rate is appreciating, there is no chance businesses will increase prices and remain in business.”
Meanwhile, the Ministry is contemplating suspending business for Booties Pharmacy of Gweru and Greenwood Pharmacy of Kwekwe who are accused of accepting US dollars only.
The following pharmacies were accused of charging at the rate of US$1 to ZWL10 000; Blessed Pharmacy in Chegutu, Pineal Pharmacy and Leecare Pharmacy in Kadoma, Siegmed Pharmacy in Gweru, Mediplus Pharmacy and Kaizen Pharmacy in Rusape, Grey Pharmacy and Manica Pharmacy in Mutare.
Those charging at a rate of ZWL9 000 are Global Pharmacy of Kadoma, and Lancaster Pharmacy and Murapi Pharmacy, both of Mutare.
Necta Care Pharmacy of Mutare was accused of charging at the rate of ZWL8 500 while Apex Pharmacist in Gweru is charging at ZWL9 500.
Misplaced priorities !!!