THE recent move by the Reserve Bank of Zimbabwe (RBZ) to allow fuel sales in US dollars could open the floodgates to the dollarisation of the economy, which would also see prices of properties b
eing pegged in United States dollars.
It will give property agents and other businesses leeway to conduct business in foreign currency, a move which governor Gideon Gono declared illegal in a statement in March last year.
The legal currency of tender in Zimbabwe is the Zimbabwe dollar. In this regard the local currency must be used in all quotations for properties sold in Zimbabwe and payment should be effected in the same currency,” the central bank was quoted as saying in the state media.
However, Gono announced in his monetary policy two weeks ago that designated filling stations would sell fuel in US dollars.
The fuel will be sold at US$1 per litre, the equivalent of $17 500 at the new exchange rate.
But analysts say the move will gradually dollarise the economy, giving a leeway for manufacturers and traders to transact in foreign currency. This would be in stark contrast to Gono’s previous statement that the Zimbabwe dollar was the only legal tender.
Property owners and real estate agents have of late been threatened with closure for pegging their rentals or property prices in foreign currency. Gono has in the past blasted estates agents for pegging prices of properties in US dollars.
Property prices have been rising to levels not proportionate with locals’ financial capacity as many foreigners and Zimbabweans in the diaspora use the strength of foreign currencies like the British pound and the greenback against the plunging Zim dollar.
Former RBZ governor, Leonard Tsumba, allowed estate agents to quote property prices in foreign currency. The estate agents then quoted or leased their properties in foreign currency to both foreigners and locals who were prepared to pay in hard currency.
Landlords and property agents said it was a hedge against the country’s high inflation rate, which currently stands at 164,4%. Abraham Sadomba, the managing director and spokesperson of CB Richard Ellis said the government failed to understand them from the beginning.
Property agents say they are not happy that Gono has allowed service stations to charge for fuel in US dollars when he had in the past attacked them for quoting property prices in the same currency.
“Our job as estate agents is to link the seller of property with the buyer,” Sadomba said. He said whether the property price was quoted in foreign or local currency was up to the owner or seller of the property.
In relation to the decision to sell fuel in US dollars, Sadomba said that authorities were implementing policies without thinking of their effects.
He said even if they sold fuel in US dollars, the real price of the commodity would finally prevail.
“It’s very discouraging, we want policies that are well thought out because the current ones are not working,” he said.
He said he was appalled by the so-called economic commentators who keep on supporting policies they know don’t work.
“These people appear frequently saying the same things that they know will not work.”
The property agents and other businesses prefer payment in hard currency because of the flourishing parallel market.
The disparity between the official auction market exchange rate and the parallel market is continuing to widen despite the devaluation from about US$1: $10 800 to US$17 500.
Currently the US dollar is trading at approximately $40 000 after rising sharply in response to Gono’s devaluation. The RBZ has also ruled illegal the payment of salaries in foreign currency.