Zimbabwe licenses shops to accept foreign currency
Zimbabwe’s central bank licensed 600 shops on Thursday to sell goods in foreign currency as it battles a flourishing black market trade and scarce supplies of basic commodities.
This is the latest in a series of central bank policies meant to ease the effects of a devastating economic crisis but analysts say will do little to alleviate the plight of millions of Zimbabweans in the absence of radical political and economic reforms.
The Southern African country is struggling with the world’s highest rate of inflation, at above 11-million percent, as well as shortages of food, fuel and foreign currency.
Reserve Bank Governor Gideon Gono said allowing motorists to buy fuel and some shops to charge in foreign currency would stop thousands of Zimbabweans from going shopping in neighbouring countries and revive struggling manufacturers.
“A total of 600 applications have been successfully vetted,” said Gono during a ceremony to hand over the licences.
Gono said the Zimbabwe dollar remained the official currency and that basic commodities like maize-meal, sugar, cooking oil, school uniforms and medicines would be sold in local currency unless there was proof they had been imported.
The most used foreign currencies in Zimbabwe are the rand and the US dollar.
Basic goods are scarce in Zimbabwe and when they become available they are sold at high prices.
Consumers pay less when using cash, which is in short supply, while those using electronic transfers and cheques can pay up to ten times more.
One US dollar fetches Z$100 at the bank, Z$1 000 on the black market when using cash, and Z$120 000 when paid for via an electronic transfer.
The central bank has repeatedly re-denominated the Zimbabwe dollar to try keep up with inflation. In its latest move it lopped off 10 zeros on August 1 to help bring relief to consumers forced to carry large bags of money to buy everyday goods.
Analysts do not anticipate an economic rebound until a post-election crisis is resolved.
President Robert Mugabe and opposition MDC leader Morgan Tsvangirai signed a power-sharing deal but remain deadlocked over the allocation of ministries.
Local manufacturers would be allowed to sell to the licensed shops in foreign currency. Zimbabweans and foreigners would be able to run the stores.
Gono removed foreign currency restrictions for individuals, saying this was meant to allow them to use their foreign currency to buy from the shops.
Previously individuals were allowed to withdraw a maximum of $1 000 from their accounts upon producing proof of travel. They will now be able to withdraw any amount.
The central bank governor said from next Monday the daily Zimbabwe dollar withdrawal limit would be hiked from 1 000 to 20 000. Thousands of desperate Zimbabweans were enduring long hours queuing to withdraw their money from banks. - Reuters