THE National Economic Consultative Forum (NECF) has said the recent “dollarisation” by the Reserve Bank of Zimbabwe would create more price distortion due to poor implementation.
The NECF, which said it proposed the idea, said the Reserve Bank should have introduced foreign currency denominated zones instead of licencing 1 000 retail shops.
Last week, Reserve Bank governor Gideon Gono, announced that 1 000 retailers and 250 wholesalers would be allowed to sell goods in foreign currency, in a bid to improve availability of goods on the shelves.
“Our vision was to create (foreign currency denominated) zones not 1 000 shops for ease of monitoring,” NECF spokesman Nhlanhla Masuku told journalists on Tuesday.
NECF said the Reserve Bank “misrepresented their ideas” in the foreign currency reforms introduced last week.
“In Harare we had proposed Westgate shopping mall, High Glen and Chitungwiza as the foreign currency shopping zones while in Bulawayo we had suggested Nkulumane Shopping Complex and the Bulawayo Centre to be ring-fenced as the foreign currency shopping zones,” he said.
The NECF said the project which they presented to the president on June 11 this year would not create the desired business as it will create many price distortions and fall away from regional benchmarks.
“What has been done destroys the whole objective of what the NECF had in mind, we are lobbying again,” said Masuku.
NECF said it was prepared to send out groups to Mozambique, where the concept has been adopted and was working, on a fact-finding mission on how to correctly implement the programme.
Another senior official with the organisation said the move by the Reserve Bank was aimed at making money through licensing retailers.
“This was merely a creation of inflation pressure and if we have a credible cabinet with sound policies we will not need all these organisations and temporary measures,” the official said.
The National Incomes and Pricing Commission (NIPC) chairman, Goodwills Masimirembwa this week told businessdigest that the intentions of the governor were noble although there were some loose ends that needed to be dealt with before the policy could be fully implemented.
“The economy has been dollarised and the difficulty we have is the policy’s impact on pricing,” said Masimirembwa.
“They will be a negative impact on pricing and there is going to be increased demand for foreign currency by the ordinary man on the street and where will people get the foreign currency from,” he said.
Masimirembwa said the situation was likely to exert pressure on the parallel market resulting in the price of foreign currency going up.
He said the NIPC will continue to be relevant as it will continue to set prices and make sure that regional benchmarks are observed.
Economic analyst Daniel Ndhlela, said although the governor denied that he had dollarised the economy, what he did amounted to unofficial dollarisation.
“There is going to be further distortions as no one, even those without licences will be willing to charge in foreign currency,” Ndhlela said.
Ndhlela also said the move does not in any way address the problems that the economy, is facing such as inflation. John Robertson another economic analyst said though the governor was trying to control the informal sector and control transactions that were being done in foreign currency, there were not many advantages to it.
“Ideas are not compatible; they don’t do anything to overcome problems associated with foreign currency scarcities. This is just another government interference in what was becoming an official and efficient market,” said Robertson.
Tony Hawkins, an analyst and lecturer at the University of Zimbabwe said Gono did not have much of a choice but to dollarise since the economy had already been dollarised.
Hawkins said, “They just wanted to make money by selling licences but SMEs don’t have the foreign currency to purchase the licences and that is not going to solve anything.”
By Jeslyn Dendere