THE Confederation of Zimbabwe Retailers (CZR) has urged the central bank to reduce and standardise bank charges to make digital transactions more attractive and curb the growing shift towards a cash economy.
This plea comes as the government has standardised the two percent intermediated money transfer tax (IMTT) for both local and foreign currency transactions, exacerbating the heavy tax burden on businesses.
Denford-Mutashu, Confederation of Zimbabwe Retailers president
“These charges are becoming increasingly burdensome for businesses, eroding profit margins and straining financial resources,” said CZR president Denford Mutashu.
The high cost of digital transactions has driven businesses and consumers towards cash, posing operational risks and hindering efforts to formalise the economy.
“The move towards a cash economy is counterproductive, reducing the efficiency of transactions and increasing the potential for financial exclusion,” Mutashu warned.
The CZR also called for a transparent and market-driven exchange rate system, arguing that the current mechanism makes it difficult for businesses to recoup their investments.
“The primary constraint currently facing businesses in the retail wholesale sector is the volatility of the exchange rate, which is severely hampering operations across the supply chain,” Mutashu explained.
Retailers and wholesalers are stuck with large amounts of ZiG, which the market struggles to absorb.
“For instance, sugar suppliers now require payments in a split of 85 percent US$ and 15 percent ZiG, highlighting the disparity between available currencies and the operational needs of businesses,” he added.
The Reserve Bank of Zimbabwe recently acknowledged the market challenges but downplayed the severity of the situation.
“The economy is 70 percent dollarised. Therefore, we expect businesses to meet most of their foreign currency requirements through their internally generated sources of funds,” said Persistence Gwanyanya, a member of the central bank’s monetary policy committee.
“We have observed an increased acceptance of the ZiG in the economy, which is crucial for meeting some local requirements.”
“The notion that there is a crisis or that the situation is not working is somewhat exaggerated considering the economy’s high dollarisation,” Gwanyanya added. newsdesk@fingaz.co.zw