Local businesses have castigated the ongoing targeted persecution of its leaders accused of fueling the rapid exchange rate movement saying the current crisis is a result of failure by authorities to implement its policy interventions.
As an intervention, the local businesses are calling for dialogue to reach an amicable solution to the crisis.
Government through the Reserve Bank of Zimbabwe (RBZ) and its Financial Intelligence Unit (FIU) have in recent weeks tightened surveillance on business players that are using the parallel market rates when pricing goods in local currency.
This has triggered an increase in inflation and the devaluation of the local currency.
On Monday, the RBZ met with captains of industry consisting of the Bankers Association of Zimbabwe, Confederation of Zimbabwe Industries and Confederation of Zimbabwe Retailers to discussion ways of containing the run-away exchange rate.
“We are of the view that the Government cannot be seen to be on the negotiating table with business while at the same time undertaking a parallel operation,” CZR president Denford Mutashu said in a statement.
“We strongly understand the concerns being raised by both Government and the business sector but confrontation has never been a sustainable solution to addressing challenges of an economic nature. CZR therefore believes that an amicable solution can be reached if the Government reverts to its previous stance of consistently engaging business in addressing underlying problems in the economy,” said Mutashu.
This week the authorities announced that they wanted to arrest Shingi Chibanguza, CEO of ZSE-listed CFI. The FIU went on to arrest two directors of agri-business Company, Farm & City store for pricing using a parallel market exchange rate.
In defense, the CZI blames monetary authorities for sub-optimal policy implementation creating arbitrage opportunities, particularly in the operations of the foreign currency auction system which has failed to establish a fair market price discovery of the local currency.
The difference between the foreign currency auction market’s Weighted Average Rate (WAR) and the parallel market rate has widened to 100 percent at ZWL$ 90 and ZWL$ 180, respectively, against the American Dollar.
“Essentially, at the center of this is a policy correction, when policies fail we should not arrest people, we should correct the policies for efficacy,” the CZI said in a statement.
“As CZI we reiterate that a true Dutch auction would perform the function of price discovery and pave way for a more liberal exchange rate regime,”
“Fear will drive business decision making as happened with the 2007 arrests with resultant shortages, as companies could not find any other ways of funding their forex requirements legitimately.”
The Central Bank has failed to live up to its promises of clearing the allotted foreign currency backlog owing to unavailability of currency.
Some companies have had to wait for up to 10 weeks in some instances 15 weeks before getting foreign currency from the RBZ.
The situation has forced some businesses into sourcing foreign currency from the parallel market.
Economic experts warn that the current blitz on business leaders for their efforts to sustain companies during this crisis may lead to shortages in basic commodities as previously witnessed in 2007 when late former President Robert Mugabe ordered the arrest of over 5 000 business people for “economic sabotage.”
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