Zimbabwe: No solution in sight as RBZ and corporations clash over currency crisis

The Zimbabwean dollar (ZWL) has weakened nearly 25% in April alone, from ZWL$280 at the start of the month to ZWL$350 currently.

The relationship between government and business has largely been maintained under a mirage of cordiality in the public despite disagreements over several issues concerning the stability of the economy.

It is clear that there have been engagements between the government through the Ministry of Finance and the Central Bank, and business associations on how to stabilize the currency and inflation, but inside sources say that ‘there is mutual mistrust between stakeholders.

On Friday, the Confederation of Zimbabwe Industries (CZI) published a candid article accusing the RBZ of failing to set up the tenants of a Dutch auction system to ensure the proper functioning of the auction system and establish a real discovery of prices for the local currency.

He highlighted the inefficiencies of the auction system, including the payment backlog extending up to 10 weeks.

He also called for the suspension of the auction system until the Bank clears the arrears for the awarded bids.

In its response, the RBZ accused CZI of basing its article on unsubstantiated claims that the country was already in a single currency system, saying these claims gave a negative impression of the market.

“The Reserve Bank of Zimbabwe wishes to draw public attention to the fact that the content of the CZI document is a response to rumors and not based on facts on the ground. The content of the said CZI document and the impressions described therein are unfortunate and unwarranted as they have the potential to destabilize the country’s financial markets and economic stability,” the RBZ said in a statement released over the weekend.

The RBZ has repeatedly blamed economic actors for allegedly undermining the local currency and engaging in unscrupulous behavior.

Retailers such as OK Zimbabwe have recently challenged these claims saying the environment is difficult to manage as late disbursement of funds often leads to storage delays which affects the existence of the business.

Other retailers grew impatient with the RBZ auction system and would buy foreign currency in the parallel market as a result.

The Confederation of Zimbabwe Retailers (CZR) called for restraint and implored businesses and government to continue to engage.

“CZR, therefore, reiterates dialogue and engagement between government and business on matters concerning the economy and urges restraint,” CZR Chairman Denford Mutashu said.

“Dialogue and engagement are key to ensuring market stability, as dealing with unintended consequences costs more. Crucially, business and government engaged cordially behind closed doors through multiple platforms.”

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