NDAMU SANDU/CHENGETAI ZVAUYA
The fuel crisis has deepened amid revelations that some fuel service stations are selling the precious liquid in hard currency despite the government’s threat to revoke their licences. The crisis has entered its third month with motorists sleeping in queues for days as no solution is in sight.
This has spawned a thriving parallel market where prices have doubled in recent weeks, and 5 litres of petrol is selling for $50, up from $25. Some enterprising attendants at fuel stations are charging a “fee” of between $10 and $20 for motorists to refuel.
Combi operators have hiked fares by 100%, citing the shortage of fuel which, they claim, has forced them to buy on the thriving parallel market. A one-way trip from town to Chitungwiza now cost $3, up from $1,50, while a trip to Norton requires $4.
Zimbabwe is currently experiencing widespread fuel shortages, which is threatening to push the country down a slippery slope, due to foreign currency shortages. Fuel supplies are currently funded through an allocation of hard currency from the central bank.
Last week, the government announced a foreign currency allocation committee to promote efficiency in the management of the country’s forex inflows.
The situation has been exacerbated by a move by the Finance Minister Mthuli Ncube, who last month, increased excise duty on petrol and diesel by 6,5 cents and 7 cents per litre respectively.
Energy and Power Development Minister Joram Gumbo, this week told Business Times that the government was contemplating cancelling the licences of fuel retailers who are refusing to accept bond notes and electronic transactions from members of the public, and insisting to be paid in US dollars.
While instructing the country’s energy regulator, the Zimbabwe Energy Regulatory Authority, to launch an investigation into the matter, Gumbo accused fuel companies of holding the country to ransom.
“I know that many companies are getting the forex from the Reserve Bank to buy fuel but are now demanding members of the public to buy the fuel in forex. There is no government policy as yet about charging fuel in forex,” Gumbo said.
“The companies selling their products in forex risk having their licences withdrawn, and I understand they have developed a three-tier payment – one in forex, one in credit cards in forex, and the other in RTGS.”
Established operators such as Zuva and other smaller players are selling in hard currency. Some operators such as Trek have told motorists that they would not guarantee fuel supplies to those on pre-paid cards, and that the company would reimburse them.
But Gumbo said selling fuel in forex was against government policy. “We don’t have a policy of charging fuel in forex and we are not going to allow that to happen. We are going to inspect and investigate the fuel service stations and stop this malpractice,” Gumbo said. “The government, through the Reserve Bank of Zimbabwe, is helping fuel companies to get the forex to buy the fuel.”
Motorists are restricted to $25 worth of fuel at the few service stations where fuel is available in local currency.
The pricing of goods and services in hard currency has now become the in-thing as the foreign currency shortage persists and the bond note continues to lose value against the US dollar.
Economists say re-dollarisation was inevitable. The government took a giant step towards re-dollarisation in October last year when it ordered banks to have nostro FCA and RTGS FCA despite insisting that the bond note and the US dollar are at par.
In November, Finance Minister Mthuli Ncube levied duty in hard currency on imported vehicles and other luxuries in what analysts say was an admission that the bond note and the US dollar are not at par.
In downtown Harare, a school satchel is priced at US$20. Some months ago such an exercise would have been akin to committing murder.
The Fast foods firm, Simbisa, has a two-tier pricing system – bond note/ RTGS and forex. Recently, Delta Corporation announced a US dollar pricing for its products to raise the foreign currency to import critical raw materials. The government had to intervene and Delta was forced to rescind its decision after the central bank said it would allocate foreign currency to the beverages maker.
The loss of confidence in the bond note has seen traders seeking a safe haven in US dollars.
“We lost the opportunity to rebalance the currency regime by leaning on a stronger currency, yet softer currencies where available in our basket,” says one economist.
“We therefore became too comfortable.
“Whilst the bond note is a surrogate Zim dollar, we still deny the fact. Yet the market has picked up the inconsistency in our monetary policy regime. All valves have come off. It is all a confidence crisis and the market has taken a position. It is up to the policy makers to recalibrate accordingly,” said the economist. Zimbabwe adopted a basket of currencies in 2009 to tame hyperinflation which had gone over the 200 million per cent mark in 2008, rendering the local currency worthless. The basket was dominated by the US dollar.
According to Sifelani Jabangwe, president of the Confederation of Zimbabwe Industries: “We will not be competitive in a US dollar environment. We need a softer currency, and RTGS is serving as a currency, the challenge is how we convert that to a softer currency.”
Chris Mugaga, the CEO of the Zimbabwe National Chamber of Commerce says re-dollarisation is unstoppable and the economy is feeling the after-effects of the government’s failure to come up with an exit strategy from the multicurrency regime.
“In the period 2009 to 2018, we were supposed to come up with an exit strategy but we failed to catch the bus. What the government has to do to allow the 2009 period to come back is fiscal discipline. But you can’t balance that overnight,” says Mugaga.
The dollar pricing prevailing in the economy has seen civil servants demanding salaries in hard currency as the bond note loses ground.
