Currency challenges for rural businesspeople, villagers

02 Jun, 2023 - 00:06 0 Views
Currency challenges for rural businesspeople, villagers FOREIGN exchange rate

eBusiness Weekly

Michael Tome

FOREIGN exchange rate disparities obtaining in the local economy are wreaking havoc in rural Zimbabwe as businesspeople and villagers alike grapple with turbulent Zimbabwean dollar value.

The situation is dire in outlying parts of the country compared to the urban centres where citizens are spoilt for choice when it comes to the currency to use as a medium of exchange.

A recent visit to the distant Kanyemba area in Mbire District, which borders Zambia and Mozambique painted a dull picture of the currency situation in the country.

Similar to other parts of Zimbabwe, businesses have grown to price their commodities in US dollars or benchmark with parallel market exchange rates.

Unlike how the urban populace is privy to both exchange rates every day, the story is entirely different to fellow villagers in rural Zimbabwe given the lack of effective communication channels.

Both villagers and the business people in the area are struggling to use the Zimbabwean dollar either in the plastic form or physical.

The reason being the fickle foreign exchange rate.

Residents of Kanyemba now rely heavily on the Zambian Kwacha or the Mozambican Meticais as the local currency has become highly invaluable to them.

What is of concern, however, is how the community earns from safari or wildlife proceeds in RTGS, only to encounter steep priced commodities due to an exorbitant parallel market exchange rate.

“Our Zimbabwe dollar is not wanted in the shops, we hear about it as stories, only the US dollar works here. The exchange rate in shops is prohibitive, Zimbabwe dollar here can only be used for airtime, we have grown to use Kwacha and Meticais,” said Christmas Kachasu, a Councilor in Kanyemba.

“We have wildlife proceeds we are receiving in RTGS but they are of no use here.”

The local businessmen say they do not know how to charge some of their products using EcoCash or any mobile money platform arguing for a couple of times they have charged lesser than the prevailing exchange rate.

The other challenge is that wholesalers in the nearby towns of Guruve and Mvurwi are now charging US dollars exclusively for some products, which further put the business people in confusion.

“We acquire goods in wholesales where we are not allowed to buy specific products like cooking oil or sugar in other currency but US dollar.

“When I then come here I have the challenge to price the products in EcoCash, now the rate sometimes moves so fast that I can be selling cooking oil at a rate of $3000 per US$1 in the morning, and open tomorrow at a rate of$3200, that is making our customers think we are stealing from them,” said Jim Manamba a local businessman in Kanyemba.

He said it was getting hard to stay in business by day since business people are sometimes overtaken by events in terms of currency pricing, leaving them unable to recoup their capital or funds for continuity.

“This is making rural businesses die, we are getting broke bit by bit, it is getting hard for us to continue increasing prices because we service a poor population here.

“Can the Government solve that issue because many people here have EcoCash, and we are getting some products from wholesales at a US dollar cost,” he said.

The people were speaking during the consumer and community engagement outreach programme held by the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) in Kanyemba in conjunction with the Reserve Bank of Zimbabwe (RBZ) and Procurement Regulatory Authority Zimbabwe (PRAZ).

RBZ Principal -Oversight, Projects, Risk Management and National Payment Systems, Douglas Muranda, could not fully address the grievances by villagers but indicated that the central bank’s primary mandate was financial stability.

Adding that the central bank was absorbed with converging the parallel and official market rate so that it becomes easier to use any mode of payment.

“As Reserve Bank we are fighting to have a converged exchange rate, but parallel market rate is our challenge right now. Ordinarily we would want the difference between parallel market and official exchange rate to be 10-15 percent at best but it has gone far beyond that.

“The other problem right now is forward pricing, once we achieve stability the pricing becomes less difficult,” said Muranda.

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