Despite threats by the Reserve Bank of Zimbabwe (RBZ) to clamp down on people charging different prices on the same goods depending on the currency tendered, the practice appears to be continuing unchecked.
By Fidelity Mhlanga
Shop owners, especially those selling clothes, electrical gadgets and building material, are charging consumers three different prices for bond notes, United States Dollar (USD) and plastic money.
For instance, a suit which costs $150 using USD is sold at $155 using bond notes and $157 using plastic money.
The situation has been worsened by the scarcity of hard cash in the economy, which has led to cash barons selling cash at not less than 10% at the black market.
“What is happening my brother is impoverishing us. The little that we get is being chewed up through the premiums by shop owners. This is another form of tax. I don’t know when authorities will intervene to stop this situation,” Tapera Murambi, a Harare resident told The Standard.
Consumer Council of Zimbabwe executive director Rosemary Siyachitema said the RBZ was sending inspectors to engage with shop owners so as to restore confidence in the market.
“When we saw something like that on the market at the end of last year, it was taking place in garages and some retail shops. It is their responsibility [RBZ] and we don’t rush them. They said they have sent inspectors and that they have engaged retailers on this issue but there are still shop owners who are doing this,” she said.
Earlier this year, RBZ deputy governor Kupukile Mlambo took a swipe on the multi-price phenomenon, saying it was robbing the ordinary Zimbabwean.
“There are retailers who are practising this three tier pricing system; one for bond notes, swiping and USD. We want to be very clear that this is illegal. We have an Act that we can revoke. I really want to discourage retailers who are doing so,” he said.
Mlambo added, “The last thing you would want is to arrest people because if we arrest people, they will say we don’t want them to invest in Zimbabwe. Yet, we can’t also watch the public being cheated. It’s also counterproductive in the economy. Let’s avoid multiple pricing systems.”
Economist, Clemence Machadu said the existence of the multi-pricing system was indicative of the prevailing cash shortages in the country.
“But this new form of tiered pricing is really not price discrimination because everyone is charged different prices not because of different market locations but depending on the method of payment they use. This is just reflecting the cash shortages prevailing in the economy and the ease of payment that each method of payment presents,” he said.
He added: “Some banks require clients to bring hard currency when they want to make foreign payments. That already signals that the greenback has better value than the bond note, and a premium is created by the black market. Given how the greenback is elusive in the formal banking channels, some retailers are sometimes forced to go to the black market to get the hard currency fast, but at a premium.”
Machadu said this was done in a bid to cover high electronic payment charges.
“Retailers are offering discounts to clients who pay with paper cash because they want to reward customers for taking the black market risk out of their system. It is also a market response by retailers who are trying to recover high electronic payment charges they will face on the black market, by incentivising customers to use cash,” he said.
Nonetheless, the premiums charged on electronic and bond notes are depleting consumer spending power.
“The obvious consequence is the increase in the price of goods and services, which fuels inflation. The majority of consumers do not have access to cash and can only pay with plastic or mobile money, which is now charging a heavy premium. This leaves them below their real spending levels,” Machadu said.
Economist Eddie Cross said government needed to deal with economic fundamentals such as budget deficit and put strict monetary policies.
“In fact, there are many different prices in the market and the US dollar is selling openly at a premium and the bond notes are even being used in markets outside the country. You cannot stop this – unless you can guarantee the real value in hard currency of local bank balances. In my view, the currency being used here is now predominately called USD but it is not and we are now facing a serious devaluation of this electronic currency by the market. The key is to get back to the economic fundamentals – no budget deficit and strict monetary policies,” he said.
Machadu said authorities must take action against culprits who were devaluing bond notes.
“Authorities should know that this is a market issue that might not necessarily be solved through legislation. I understand there is a law that says those who devalue bond notes can face jail time of up to seven years. But why are economic agents still not whipped into line by fear of jail time? It’s because the law itself is not adequate to deal with this problem. Authorities should be careful of just taking comfort in regulation without meeting the fundamental challenges as this might cause shortages. Remember back in the 2006 era when we had price controls that resulted in shortages of goods from the shelves,” he said.