HARARE: Introduced in November last year as part of measures meant to address the liquidity crisis, bond notes have fallen sharply in their value, stirring a wave of massive price increases, especially of basic goods.
Reports that the high demand for foreign currencies required to effect payments for goods and services sourced externally has seen the value of bond notes declining by as much as 50 percent on the currency black market.
Though illegal, Zimbabwe operates a three-tier pricing system, which dominates domestic transactions.
This is where a buyer is charged different prices depending on the mode of payment used.
For instance, it is cheaper to pay using hard currencies, while a heavy premium is paid on transactions effected through electronic transfers (including swipe) and bond notes.
Owing to the liquidity crunch affecting banks, the bulk of transactions are now going through currency dealers operating on the parallel market.
Because Zimbabwe imports more than it exports, the black market is now influencing pricing trends.
As such, a transfer now attracts a 48 percent premium, while cash transactions for smaller denominations range between eight and 9,5 percent, depending on the currency involved.
For larger notes such as US$50 and $100, it can cost the buyer up to 10 percent.
The majority of companies, whose payments fall outside the Reserve Bank of Zimbabwe (RBZ) priority list for accessing the elusive US dollars in banks, rely on bank transfers to get the coveted currency on the parallel market.
As a result, prices for all basic consumer goods have gone up by between 20 and 50 percent as companies and retailers pass on the costs to the ordinary consumer.
Most supermarkets yesterday were displaying new prices consistent with the fall of the bond notes.
Cooking oil increased from $2,85 in August to $3,15 inside a month while prices of some beverages increased by between 30 and 40 percent.
Beef prices are now averaging $6 for economy and as high as $13 per kilogramme for the super grade.
Other goods whose prices have gone up are chicken, eggs, rice, mealie-meal and sugar.
Confederation of Zimbabwe Retailers president Denford Mutashu told the Daily News that there has been a surge in prices of most goods owing to the cost of money on the parallel market.
“Most manufacturers and importers are resorting to the illegal market for foreign payments for raw materials and other critical goods,” he said.
“The cash premiums of an upwards of 30 percent is seriously causing price distortions on the market. This is hurting the economy and the consumers are most affected as business has simply passed on the cost of money to the customer,” added Mutashu.
Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe said companies were left with no option but to increase prices given the sharp depreciation of the bond notes.
“Businesses are raising prices to avoid closing down due the US dollar premiums being paid for on the black market. This is an unbudgeted cost that is eating into the small (profit) margins of most,” Jabangwe told the Daily News.
Most companies that import raw materials have abandoned the RBZ route where approvals of their foreign currency applications are now taking between one month and six weeks — depending on the availability of US dollars and priority.
This comes at a time when the country is experiencing acute cash crisis due to a burgeoning government expenditure, huge import bill and alleged illicit financial inflows among other things.
Long-suffering Zimbabweans are now being forced to accept huge sackfuls of coins from their banks and mobile money agents as bond notes vanish from the local market on the back of currency dealers who are either hoarding them for speculative purposes or taking the surrogate currency into the black market.
Analysts have said Zimbabwe needs to increase its production to earn more foreign currency.
Businesses and a larger section of society have been pushing for the adoption of the South African rand to save the country from plunging further into an economic crisis.
President Robert Mugabe also backed Zimbabwe’s greater use of the South African currency when he spoke in an interview with the ZBC to mark his 93rd birthday early this year.
The Zanu PF leader also said bonds notes were a temporary measure to mitigate cash shortages in the country.
“Bond notes are just a temporary thing. We want you to bear with us. We want you to bear with us. We wanted to adopt them for a short period,” he said then. daily news
