Zimbabwe gov’t warns businesses against ‘dollarising’ economy

Zimbabwe’s Industry and Commerce Minister Nqobizitha Mangaliso Ndlovu, has warned the business community in the country to stop the practice of ‘dollarising the economy’ in the wake of foreign currency shortages.

Ndlovu was reacting to a decision by Zimbabwe’s largest brewing company, Delta Corporation which said that its beverages subsidiary will accept hard currency only from January this year.

The African country adopted the use of foreign currencies, mainly the U.S. dollar, in 2009 in an effort to tame inflation, but a severe shortage of physical notes has left Zimbabweans watching the dollars in their bank accounts lose value compared with cash.

In a letter to customers of Delta Beverages posted on Twitter, the company said it did not have enough foreign currency, prompting foreign suppliers, some of which have not been paid for long periods, to cut off credit and new orders.

“Our business has been adversely affected by the prevailing shortages in hard currency, resulting in the company failing to meet your orders. To sustain our operations, the company advises wholesale and retail customers that our products will be charged in hard currency”, the letter said, adding that soft drinks had been out of stock for prolonged periods.

The decision means Delta, will no longer accept electronic dollars known as “Zollars” or a quasi-currency known as “bond notes” at its Delta Beverages subsidiary.

Delta said it had invested US$600 million in plant and equipment, vehicles and ancillary services since 2009 and that it needs to protect this investment.

“There is need for wider consultation on policy interventions to build consensus and market confidence among stakeholders to stabilise the macroeconomic environment,” the letter added.

The move by the company is the latest evidence showing the extent at which the shortage of the currency is having on businesses, with some shutting down shops and the government taking steps to ensure others remain viable.

However, Mr. Ndlovu said that Delta’s decision had breached ‘agreed principles’ and was taken in bad faith.

“We have noted with concern a proliferation in the number of companies and businesses engaging in preferential currency practices. This is not only against the spirit of fairness, but it is also an illegal practice”.

“Government is very clear that this practice is unacceptable and has to stop forthwith and if not, the law will take its course”, the minister said.