THE repeal of a law that penalised the pricing of goods and services above the official exchange rate will allow for an accurate price discovery, experts have said.
Last week, the Treasury, through Statutory Instrument (SI) I34 of 2025, repealed SI81A of 2024, which penalised anyone pricing goods or services above the official exchange rate.
“This is a positive and long overdue move. Policymakers have no business in the pricing matrix of the economy, save for instances where there are market failures,” CEO Africa Roundtable chief executive officer Kipson Gundani told NewsDay Business in an interview.
“This marks the removal of a very big distortion in the marketplace and hopefully, its effect will be felt sooner. We expect to see more trading in the formal shops.”
However, he added that the authorities needed to deepen the reforms.
“More so, the authorities need to spell out a sustainable path on currency reforms. The 2030 de-dollarisation agenda remains a major point of uncertainty,” Gundani said.
He also noted the damage that had already been done to some entities and urged the government to be more transparent and open to these issues.
Zimbabwe’s currency volatility stemmed from an artificially controlled exchange rate as authorities dithered on allowing a market-determined forex market to operate.
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Monetary and fiscal authorities have controlled the exchange rate by limiting the money supply in the economy to such an extent that it has created a serious liquidity crunch, amid fears this could accelerate the re-dollarisation pace.
A controlled exchange rate leads to currency volatility because it creates a disconnect between the official rate and the true market value.
Locally, this distortion has encouraged speculation, arbitrage and the growth of a parallel market where the currency traded at a different rate, usually at a discount that averages between 30% and 50%. The premium on the parallel market has narrowed to 25% as of March 27 this year, from 42% on January 1, according to the Confederation of Zimbabwe Industries.
Despite this, experts have warned about limiting the money supply, as the exchange rate moves and the local currency depreciates every time the market get an injection of liquidity.
Upon its introduction on April 5, 2024, the ZiG traded US$1:ZiG13,55 against the greenback. It was trading at ZiG26,79 per dollar last week.
“Sometimes we are trying to justify our failure, but the reality is that ZiG has failed and the fundamental issue is to address the root causes. We have companies that have failed because of this currency, which has lost value,” economist Gift Mugano said.
“This currency is non-fungible; it becomes a challenge, so that is our central problem. So, for business now, the challenge is that when you don’t have a stable currency, it becomes very difficult to plan. That’s why you have seen some shops like OK running out of stock, but OK was the most visible because it’s retail. But more businesses are also closing down. They have lost value, particularly when the ZiG crashed.”
RBZ Monetary Policy Committee member Persistence Gwanyanya said the move by the government had finally liberalised the market.
“The government has listened to what businesses want and we have now liberalised the market to allow stability in the economy,” he said.
He added that the government had set measures to help bring confidence to the market by ensuring stability.
“Currency is scarce, or its supply is limited. It will be difficult for anyone to just price however they want without due attention to the effect. The effect is you lose business,” Gwanyanya said.
“So, we are saying, because we have allowed you freedom in the pricing space, we have confidence in what are are doing.”
