Statutory Instrument 127 of 2021 Rattles Market – Mutashu (CZR)
The Confederation of Zimbabwe Retailers (CZR) President Mr Denford Mutashu says Statutory Instrument 127 of 2021 has rattled the market as the new forex laws are not in tandem with the market yet.Mr Mutashu believes market forces must be let to determine pricing yet when it comes to the foreign currency auction system it must not be abused.Speaking to TechnoMag the Retailers boss commented that According to Statutory Instrument 127 of 2021, gazetted under Presidential Powers (Temporary Measures) (Financial Laws Amendment) Regulations, 2021, the central bank can impose the penalties in the event of default in complying with Exchange Control regulations that govern use of funds obtained from the forex auction.
Speaking to Ross Moyo’s TechoMag over the telephone Mutashu said ”THE STATUTORY INSTRUMENT 127 OF 2021 HAS RATTLED THE MARKET AND SO FAR FROM THE PRELIMINARY ASSESSMENTS THAT THE CONFEDERATION OF ZIMBABWE RETAILERS HAS DONE IT SHOWS THAT THE GENERAL PRICE OF. GOODS AND SERVICES HAVE SIGNIFICANTLY SHOT UP BY A WIDER MARGIN OF BETWEEN 50 AND 100 PERCENT.AH WE ALSO IDENTIFY THAT CLOTHING APPARELS, ELECTRICALS, BASIC COMMODITIES, NON BASIC COMMODITIES, ESSENTIAL AND NON ESSENTIAL COMMODITIES, HARDWARE GOODS AND GENERAL SERVICES JUST SHOT UP AND I THINK IT IS A MARKET THAT HAS BEEN RATTLED TRYING TO FIND ITS WAY BACK TO NOMARLCY. WE JUST HOPING THAT THE TWO WEEKS GRACE PERIOD THAT HAS BEEN GIVEN BY GOVERNMENT SHOULD THEN DEFINITELY BE USED TO ASSESS THE REACTIONS AND THE IMPACT THAT THE POLICY HAS HAD BUT SUFFICE TO SAY ITS VERY UNFORTUNATE THAT THE POLICY HAS COME THROUGH AND RATTLED THE MARKET WITH SUCH SIGNIFICANCE.”
Reserve Bank of Zimbabwe(RBZ) Governor’s new powers to impose civil penalties on institutions and individuals that use foreign currency obtained from the auction trading system for a purpose other than that specified in the application of the foreign currency is good or bad depending.
This may not be abuse from the President of the Republic Emmerson Mnangagwa who has given RBZ this prerogative either but this will have ramifications.Already the CZR President Mutashu has been vocal indicating goods and services have since gone up 50-100 % as a result.
Those found guilt of infringing Exchange Control regulations will be slapped with a fixed penalty of the amount of one million Zimbabwe dollars or an amount equivalent to the value of the foreign currency obtained (whichever is the greater amount).
Offenders will however be given 48 hours, from the date of its issuance to show cause why the penalty order should not have been issued, that is to say, to show that the order to penalise was issued in error.
Also gazetted under Statutory Instrument 127 of 2021 is penalisation of natural or legal person guilty of being a seller of goods or services not authorised by law to charge for them exclusively in foreign currency.
Mr Mutashu said ”’GIVEN THE BACKGROUND OF NEAR STABILITY THAT WE WERE PUSHING TOWARDS AS FAR AS WORKING TOWARDS THE EXCHANGE RATE CONVERGANCE BETWEEN THE AUCTION SYSTEM EXCHANGE RATE AND OF CAUSE THE PARALLEL MARKET EXCHANGE RATE AND THAT ALSO HAD BEEN QUITE SIGNIFICANT.”
This includes businesses and individuals that refuses to allow any buyer to tender payment for them in Zimbabwe dollars at the ruling exchange rate.
Business that refuse payment at the ruling exchange rate will be fined a fixed penalty of the amount of fifty thousand Zimbabwe dollars or an amount equivalent to the value of the foreign currency charged for the goods or services in question (whichever is the greater amount).
Statutory Instrument 127 of 2021 also deems as a civil infringement if an authorised dealer submits to the Reserve Bank an application for foreign currency or exchange control authority, or a return or any other document without exercising reasonable due diligence to verify the correctness of the information in or accompanying the application.
Mutashu further added that ”BECAUSE WE SAW EVEN INFLATION COMING DOWN OWING TO THE SLOW DOWN OF THE RATE AT WHICH PRICES OF GOODS AND SERVICES ESPECIALLY BASICS HAVE BEEN GOING UP.”
IT ACTUALLY DECLINED QUITE TREMENDOUSLY OWING TO THE STABILITY ALSO THAT WE SAW ON PRICES OF OUR MAJOR 17 BASIC COMMODITIES ACROSS THE COUNTRY.”
”AND EVEN AVAILABILITY OF THOSE GOODS HAD BEEN ASSURED AND WE ACTUALLY HAVE BEEN WORKING WITH OUR MANUFACTURERS AND PRODUCERS AND SUPPLIERS TO ENSURE THAT THOSE 17 KEY BASIC COMMODITIES ESSENTIALS AND NON ESSENTIALS COMMODITIES ARE READILY AVAILABLE.”
If found guilty, the authorised dealer be hit by a civil penalty of the amount of five million Zimbabwe dollars plus penalties for late payment of the fine.
Statutory Instrument 127 of 2021 also says a natural or legal person shall be guilty of a civil infringement if he or she sells, displays or offers goods or services for sale at an exchange rate above the ruling exchange rate, or imposes (for the predominant purpose of encouraging payment in a foreign currency) a premium on Zimbabwe dollar payments or allows a discount on foreign currency payments.
In the event of default in complying with the above, the offender will be fined a fixed penalty of the amount of fifty thousand Zimbabwe dollars.
The new law also provide for penalties for a natural or legal person who being a seller of goods or services, issues to a buyer thereof a receipt in Zimbabwe dollars for payment received in foreign currency, or records sales other than in the currency in which the sale was conducted.
Upon the expiry of the ninety-day period within which any civil penalty order of any category must be paid or complied with, the defaulter shall be guilty of an offence and liable to a fine not exceeding level six or to imprisonment for a period not exceeding one year or to both.
In the case of a corporate defaulter, every one of its officers is liable to the penalty of imprisonment, and to the fine if the corporate defaulter fails to pay it.
The Presidential Powers have also been used to amend the The Bank Use Promotion Act [Chapter 24:24] which now penalises business entities that fail to open bank accounts.
Failure to bank surplus cash in a bank account within the time specified, will now also attract a penalty of the amount equivalent to a single day’s banking of cash, being the estimated average daily banking of cash in a continuous period of seven business days within the last twenty-one days preceding the issuance of the order.
Mr Mutashu went on to say ”THAT MERE EQUILIBRIUM IS SOMETHING THAT HAS ALREADY BEEN RATTLED BY THE POLICY.THERE HAS NOT BEEN A SUPPORT SYSTEM FROM THE GOVERNMENT SIDE TO COME THROUGH AND HELP UNPACK THE POLICY.GOVERNMENT JUST THREW THE POLICY, IT HIT THE MARKET.ITS A CASE OF THE PROVERBIAL CAT THROWN AMONGST THE PEGIONS AND THAT IS EXACTLY HOW THE M,ARKLET HAS REACTED.”
He ended by saying ”with a lot of uncertainity and anxiety growing amongst and within the business community.And it is also the lack of engangement by government that is very worrying.We actually advice and encourage government to engage appropriately and also quite extensively and intensely before such policy and measures are actually unravelled.”
Industry feel they were not consulted no wonder the market panicked and government must learn the art of engaging.
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