Address multi-tier exchange rate system: Zamfi

HARARE - The multi-tier exchange rate system is negatively affecting the pricing system of both goods and services, the Zimbabwe Association of Microfinance Institutions (Zamfi) has said.

In its microfinance sector performance report for the first half of this year, Zamfi said the multi-tier exchange rate system was undermining economic performance.

“Like other sectors in the country, the microfinance sector is being affected by the multiple exchange rate system (RTGS, bond notes, USD, EcoCash) which both government and the monetary authorities have allowed to exist,” said the Zamfi half-yearly report.

The report added that price distortions were having a toxic effect on the microfinance sector.

“In addition, the value of the underlying balances on financial accounts which are used to monitor the financial performance of the respective MFIs is again distorted,” lamented the microfinance body, adding that the delay in addressing the multi-tier exchange rate system would also spook both local and foreign investors.

“This is a matter of grave concern not only to the local investors but to international investors with keen interest to invest in the country.

“A prudent and cautious investor would require a guarantee of the safety of his investment and an existence of robust financial reporting system that reflects the true and fair performance of his investment over time.

“The longer it takes to deal with this matter of multiple exchange system, the greater the financial risk that MFIs are exposed to. Ultimately no significant international investment funds will be brought into the country by the investors,” the half-yearly report added.

Zamfi, whose executive director is Godfrey Chitambo, is not the first association which has called on the government to decisively deal with the multi-tier exchange rate system. In April this year, the Confederation of Zimbabwe Retailers (CZR) called for currency reforms arguing that multi-tier pricing system in the country was causing distortions.

“This multi-tier pricing system has meant that a product carries more than three prices depending on the method of payment a consumer chooses.

“There is a price for cash (US$), for bond notes, for swipe and another for mobile payment methods. The multi-tier pricing has led to many manufacturers and suppliers demanding cash payments hence causing the price distortion,” said CZR president Denford Mutashu.

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