Almot Maqolo, Staff Writer 
THE Reserve Bank of Zimbabwe (RBZ) says the challenges encountered by formal business operators regarding the statutory 10 percent trading margin on the official exchange rate for instore use will no longer be an issue following the introduction of a much stable new local currency, the Zimbabwe Gold (ZiG).
Government through a Statutory Instrument 118a of 2022 instructed businesses to use an instore exchange rate that is 10 percent below or above the official exchange rate that was meant to cushion consumers from exchange rate fluctuations.
The move became a hurdle for formal businesses compelled to use it when competing against informal traders applying much higher parallel market exchange rates.
The ZiG is expected to stabilize the exchange rate market that was heavily distorted, with multiple values under the Zimbabwe Dollar regime.
Reserve Bank of Zimbabwe governor, John Mushayavanhu
RBZ governor John Mushayavanhu told a post monetary policy breakfast meeting hosted by 3Ktv this week that the in-store exchange rate had outlived its purpose. “If you are a retailer and you put 10 percent on the interbank exchange rate of ZIG, you are mostly going to be outside the market. So it’s irrelevant whether that 10 percent is there or not; in fact, it has just killed itself,” Mushayavanhu said.
The central bank chief stressed that retailers need to moderate themselves instead of applying the trading margin. The legislation, however, remains in place but is no longer economically viable. “You are not flouting the law; do not apply it at all.
“If you apply it, your exchange rate, instead of being 13 500, is going to be nearly 14 000 you are going to be way out of the market and you will not be able to sell your goods,” Mushayavanhu said. Retailers were required to price products in Zim dollars, with the option of pricing in US dollars using the official exchange rate which was heavily discounted.
Formal retailers have been complaining about the uneven operating environment, which they say favours informal traders.
The formal businesses meet massive compliance hurdles ranging from tax compliance, social security payments, Aids Levy, heavily priced rentals, and payment of salaries governed by Nes’s, while the informal sector evades most of these costs. The informal sector can beat this challenge by solely selling in United States dollars.
