EDITORIAL COMMENT:Multiple prices factor of economy

THE Reserve Bank of Zimbabwe has threatened to punish retailers selling their goods using a multiple pricing system that discounts cash sales made in foreign currency.

Sales done using banking platforms such as real time gross settlement (RTGS) and card transactions are attracting a premium, together with those done using bond notes.

Apparently, recent amendments to the Reserve Bank of Zimbabwe Act penalise such behaviour under the bank use provision. This provision also makes it criminal to refuse to accept the bond notes for transaction.

The amendments were largely meant to give legitimacy to bond notes, introduced in November last year to deal with a cash crisis in the economy. The bond notes have essentially replaced the greenback, which had become the dominant currency in the crisis-torn economy. The United States dollar is also the currency for the national budget since 2009 when the country ditched the Zimbabwe dollar for a multiple currency regime to escape a hyperinflationary crisis.

Indeed the central bank and government had anticipated resistance to the bond notes, and this was apparent in the manner in which they were introduced: Swiftly and against public sentiment.

The reception, however, confounded government; depositors, who had always failed to withdraw their money from banks due to a shortage of bank notes embraced the bond notes, and soon the supply failed to meet demand.

But it was very clear that retailers, who buy their merchandise from outside the country were likely going to feel the pinch — bond notes could not be used to buy goods across neighbouring countries and from abroad.

Therefore, the retailers, the bulk of whom are in the informal sector, had to resort to the black market to get foreign currency to replace stocks. This, naturally, meant that their prices had to factor in the new exchange rate involving bond notes.

The RTGS and card transactions had the inconvenience that they could not get out the cash when one wanted it. Again, banks were failing to pay out depositors in hard currency and were using bond notes to honour their obligations to depositors.

These bond notes could only be exchanged for hard currency on the black market. Officially, bond notes rank pari pasu with the greenback, but this is merely a technical exchange rate because no one is getting any foreign currency from the official market.

The situation had remained this way up to now, and retailers and other entrepreneurs now have to use multiple pricing to account for the risks associated with the different payment platforms. This is simple and straight forward.

At a convention organised by the Confederation of Zimbabwe Retailers about a fortnight ago, a senior central bank officials said the “three-tier pricing system for bond notes, for swiping and US dollars…is illegal” and warned that they could start “arresting people”.

We know that during the hyperinflationary crisis, business executives were arrested for charging viable prices for their products. The next thing is that we had market-wide commodity shortages.

It would be sad if history were to repeat itself in a manner that would once again ruin our economy.