CZR urges govt to lead from the front in promoting ZiG

Harare, (New Ziana) – The Confederation of Zimbabwe Retailers (CZR) has called on the government to lead from the front in promoting the use of the new local currency, the Zimbabwe Gold (ZiG), for it to achieve stability and gain market confidence.

In a statement on Tuesday, CZR president Denford Mutashu urged the government to provide incentives and mandates for manufacturers and suppliers to use ZIG and ensure a more equitable currency ratio in transactions.

Mutashu said current market perception suggests that the government does not trust its own currency thereby undermining its credibility.

“This sentiment is further exacerbated by the reluctance of manufacturers and suppliers to accept ZIG at a fair ratio, opting instead for an 80% USD to 20% ZIG payment structure. Such practices place formal retail players at a competitive disadvantage, unable to source and price goods competitively,” he said.

“The struggle extends to formal retailers and wholesalers who face a procurement structure that does not favour formal business operations. This inequity in the market forces formal entities to adhere to regulations that their informal counterparts may bypass, creating an unlevel playing field.”

The situation was compounded by the recent surge in employment costs, which have risen by an average of 20 to 30 percent in USD terms, sparking a scramble for USD-denominated salaries, as employees seek refuge from the speculated eroding purchasing power of the ZIG.

Mutashu said the refusal to transact in ZiG by companies that are unable to procure foreign currency for raw materials, forcing them to source internationally at higher rates, increased costs that are eventually passed on to the retailers as price takers, a process that is courting the ire of the authorities that perceive it as intentional rate inflation.

Since the ZiG is not equivalent to the USD for local transactions as it cannot discharge all local obligations, Mutashu said the CZR proposed that ZiG be treated as an equal to other currencies in the currency basket, allowing all taxes to be paid in ZIG alongside USD at the taxpayer’s discretion.

He said the limited amount of ZIG in circulation (approximately US$80 million equivalent) means government receivables in ZIG are minimal even if 30 percent which amounts to US$24 million is paid to it, considering the money can easily be purchased from the RBZ.

The government, Mutashu said, should ensure that all its fees (passport fees, Zimborder fees, number plate fees, etc.) have a ZiG payment option, allowing contractors and the government to use the received ZiG for local costs or convert it on demand through the RBZ.

Other measures the CZR suggested include that all fees and charges are denominated in ZiG to make it the primary currency for local payments and IMTT costs in ZiG be reduced to 0.5 percent.

“Currently, the 2% or 1% IMTT makes ZiG uncompetitive in the informal market given that transactions in the formal economy are in USD cash with zero transaction costs,” the CZR statement said.

These measures will mark the beginning of true de-dollarization, end the inflation era, establish a stable ZiG currency fully convertible on demand, and give ZiG the properties of a medium of exchange and store of value.

In addition, de-dollarization will reduce the country’s dependence on foreign currency and promote economic sovereignty, attract foreign investment as investors will have confidence in the local currency, reduce the informal economy as transactions will be encouraged in ZiG instead of USD cash, resulting in higher taxes received by the fiscus.

The measures will also facilitate international trade and promote regional integration as well as et an example for the private sector and citizens, promoting a culture of using the local currency.

New Ziana