Industry has flatly rejected the policy measures, under SI 127 of 2021, introduced by President Emmerson Mnangagwa, through the Presidential Powers (Temporary Measures) (Financial Laws Amendment) Regulations, 2021 last week.
The Standard reports that SI 127 of 2021 that forced businesses to use the US$1: ZWL$84 exchange rate, is being rejected because of its adverse impact on business.
The Statutory Instrument also made it illegal to give customers a discount for paying for goods or services in foreign currency, refuse to take local currency payments at the official exchange rate and issue Zimbabwe dollar receipts for goods paid for in foreign currency.
Industry sources, who spoke to The Standard on condition of anonymity said business was in trouble in the wake of SI 127 of 2021. Said the source:
_Some companies had borrowed heavily in Zimbabwe dollars despite arguably high-interest rates banking on the parallel market rates, but this has been scrapped now and we are in trouble._
They said imports would be the only option as US dollar and Zimbabwe dollar prices will go up by at least 40%.
_What is happening is that there is a huge delay on the auction, your Zimbabwe dollars are deducted to pay for forex and sometimes it takes a long to come._
_What has been helping us is that we had free funds because of the good rates and people were paying in foreign currencies, but after this all that will go away and we will surely sink._
Confederation of Zimbabwe Industries CEO Sekai Kuvarika said industry had rejected Mnangagwa’s move adding that a response to the statutory instrument will be out on Monday.
Zimbabwe National Chamber of Commerce (ZNCC) CEO Chris Mugaga also echoed Kuvarika’s remarks saying industry was planning to oppose SI 127 of 2021. He added:
_People are focusing on the SI, on its impact on business and they are forgetting that the SI is just the government somehow confirming to you that the auction exchange rate is not the exchange rate, otherwise there is no need to deviate._
_I think you know our position is that the auction system needs a revamp so that it is market reflective, so those marketeers, auctioneers who have been preaching the language of a perfect auction system should not cry because surely if everything was perfect then it would reflect reality._
He also said it was time to interrogate the auction and see if the auction is the best way for price discovery given the realities surrounding it right now.
Economist Chenaimoyo Mutambasere said it was impossible to control the exchange rate through legislation.