GOVERNMENT has been challenged to take the lead in accepting payment in the recently introduced Zimbabwe Gold (ZiG) to promote market and consumer confidence in the currency.
The call was made by various stakeholders when the Joint Portfolio Committee on Budget, Finance and Investment Promotion, and Industry and Commerce was receiving oral evidence on the recently announced 2024 Monetary Policy Statement.
Reserve Bank of Zimbabwe (RBZ) governor John Mushayavanhu and Finance minister Mthuli Ncube are expected to appear before the same committee and respond to issues raised by stakeholders.
The stakeholders also called for the expeditious release of the ZiG notes onto the market.
Consumer Council of Zimbabwe (CCZ) chief executive Rosemary Mpofu said: “The council is of the view that all government departments, including the passport offices, fuel stations, the Vehicle Inspection Department and Zimra, among others should take the lead and demand payment for their services in the local currency, ZiGs.
“This does not only help to boost confidence in the local currency, but will send a clear signal to the region and globally that the ZiG is a real and acceptable currency and thus speed up its acceptance in the international markets.”
She said delays in introducing the new currency had created some challenges both to businesses and the transacting public.
“There is also a need to shorten this lag period to avoid rejection of the new currency before it is introduced onto the market,” she said while noting that prices have also gone up since the announcement of the 2024 Monetary Policy Statement, especially of mealie-meal and rice as civil servants rush to swipe out all ZiGs in their accounts fearing that the currency could lose value as what happened to the former Zimbabwe dollar currency.
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“Under such circumstances, retailers often take advantage of the sudden increase in demand and tend to raise their prices though this usually happens only for a short period of time during that panic mode.
“CCZ is, therefore, calling for the relevant authorities to closely monitor this abuse of consumers during this transition period,” Mpofu added.
In his presentation, Confederation of Zimbabwe Retailers president Denford Mutashu called for collaboration among the government, central bank and industry stakeholders, saying this was crucial in addressing specific concerns from the sector.
Mutashu also called for the repeal of Statutory Instrument 118A of 2022, saying the legal instrument was causing needless market distortions.
He said: “While CZR welcomes the new further liberalised interbank foreign exchange system, there are indications from our members that the platform seems to not be well funded. There is an apparent lack of willing sellers of foreign currency, therefore suppliers do not have an effective and meaningful way of using ZiG for imports and, therefore, they are not willing to accept it yet.
“This issue is one aspect of particular concern that also seems to be fuelling the parallel market, where their exchange rate is US$1:ZiG20, due to the fact that industry has no real downstream use of ZiG.”
He also urged monetary authorities to take concrete measures to ensure that the interbank market is adequately funded and that sellers are motivated to participate.
Bankers Association of Zimbabwe chief executive Fanwell Mutogo said while they acknowledged the RBZ’s call for all the current non-interest-bearing non-negotiable certificates of deposits in ZiG to be converted to a tenure of one year and above, there was need for RBZ to settle the obligations in a year.
“Clients also request tradable and shorter-dated instruments for the outstanding 25% surrender liquidations to enable cash flow planning,” he said.
Mutogo said bankers increased the statutory reserve of 20% for US dollar deposits and 15% for ZiG deposits to ensure macroeconomic stability.
“While we fully understand the RBZ’s concern on locally-funded loans creating money supply, this may lead to a reduction in lending capacity. Moreover, accessing alternative external lines of credit to alleviate liquidity constraints does not come cheaply and can be challenging, adding to the financial burden.
“To alleviate fears by the RBZ, banks should commit to maximum loan-to-deposit ratios to ensure that banks have sufficient funds on hand to meet withdrawal demands from depositors while also promoting responsible lending practices,” he said.
Mutogo added that the major demand for US dollars was to buy fuel, suggesting that banks must be allowed to cater for local foreign currency demands at a wholesale level including allowing suppliers to replenish after selling in ZiG.
