Zimbabwean businesses are calling on the authorities to allow businesses to peg prices in US dollars, arguing that this would enhance stability, reduce uncertainty and boost the economy.
President Emmerson Mnangagwa last week proclaimed that the country would maintain its multi-currency system, with the US dollar as the anchor currency, until 2030.
However, restrictions still remain on the use of the US dollar, including a requirement that retailers, municipalities and telecommunication companies peg their prices in Zimbabwe dollars.
But business leaders say pegging prices in US dollars would provide greater certainty and predictability, making Zimbabwe more attractive to foreign investors and boosting economic growth.
“The USD allows for better planning and predictability of revenues or reward for goods and services,” said Busisa Moyo, former president of the Confederation of Zimbabwe Industries.
“When businesses charge in US dollars, they are less likely to raise prices in response to inflation,” added Ngoni Dzirutwe, CEO of Global Renaissance Investments.
“This is because the US dollar is a stable currency, and its value is not subject to the same fluctuations as the Zimbabwean dollar.”
Dzirutwe also noted that pegging prices to the US dollar would eliminate the risk of exchange losses, which have been a major challenge for businesses in Zimbabwe.
Several listed firms have in recent years suffered huge losses owing to exchange rate movements.
The telecommunications sector has been particularly hard hit by currency devaluation and inflationary pressures on the local currency.
This resulted in the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz) director general Gift Machengete last month calling on the government to allow telecom operators to peg the rates in US dollars, arguing that this would bring price stability and certainty to the sector.
Economist Yona Banda said the pegging of telecommunication tariffs in USD could improve the financial capacity of network providers to deal with rising operating costs.
“This could help stabilise network issues under the current power supply challenges,” he said, adding that in the long-term, the sector would be more attractive for investors if the capacity of local consumers also improved.
“It’s more of a stabilizing and securing effect, which is important. But the big picture outlook for the sector is largely tied to the general economic outlook, which is quite uncertain,” he said.