Dual Pricing in Zimbabwe

On the 17^th of June 2020, the Reserve Bank of Zimbabwe issued a statement wherein part of it stated as follows:

“In order to enhance the pricing system in the economy, businesses will be required to display goods and services and charge for all domestic transactions in both local and foreign currency at the ruling market rate.”

It was not long after that a Statutory Instrument to that effect was gazetted, being the Exchange Control (Exclusive Use of Zimbabwe Dollar for Domestic Transactions) (Amendment) Regulations, 2020 (No. 3) (hereinafter referred to as the Regulations).

These regulations provide as follows:

“7(1) Any person who provides goods or services in Zimbabwe shall display, quote or offer the price for such goods or services in both Zimbabwe dollar and foreign currency at the ruling exchange rate.”

The use of the

word ‘shall’ leaves no room for doubt that it is mandatory that providers of goods and services ensure that such goods and services have dual prices. The Regulations do not specify which exchange rate is applicable but currently, the legal exchange rate is the auction rate, which is subject to change every week as the auctions are done weekly.

The Regulations also attaches civil penalties for the failure to provide dual pricing. The penalties differ depending on whether the contravention of the Regulations is irremediable or continuing. Where the contravention is a continuing act, the penalty is higher.

It would appear that previously, businesses had not paid much heed to the Reserve Bank directive to implement dual pricing given that it was based on nothing more than moral suasion. However, now that such paradormirmejor.org moral suasion has become law with consequences following non-compliance, compliance numbers will most likely be higher.

However, there is a danger that prices in foreign currency will become inflated by business entities given the variance between the auction rate (the formal system) and the prevailing rate in terms of the formal market.