FORMER finance minister, Tendai Biti, says the suspension and cancellation of trading licences for pharmaceutical companies for flouting foreign exchange regulations is "blatantly illegal, puerile and irrational”.
Seventeen pharmacies had their trading licences suspended or cancelled after government accused them of destabilising the economy by forward pricing and violating the country’s exchange control regulations.
However, Biti has described government’s decision as illegal.
“For starters, as a question of law, no adverse decision can be taken against any party without due process and respect for the right to be heard; what lawyers call the audi alteram (pattern) principle codified in section 68 of the Zimbabwean constitution,” Biti said..
"As an economic measure, we have always argued that ‘ginyanomics’ does not and cannot work. Retailers are subject to market exigencies. In a cash economy, they will always possess huge amounts of cash. That on its own is no basis for their criminalisation."
Some of the pharmacies, which have been suspended or had their trading licences cancelled, include Greenwood Pharmacy in Kwekwe, Global Pharmacy in Kadoma, Apex Pharmacist Pharmacy in Gweru, Greenview Pharmacy in Rusape and Grey Pharmacy in Mutare, among others.
A number of service providers are using the black market rate, forward pricing or exclusively demanding United States dollar payments to hedge against losses emanating from a weakening local currency. President Emmerson Mnangagwa re-introduced the Zimdollar in February 2019, and has on several occasions threatened to punish businesses for rejecting the local currency.
As of this week, the Zimdollar was trading at $4 998 against the greenback down from $7 000 in previous weeks.
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Biti said it was a myth that the local currency had gained value against the greenback.
"Truth of the matter is that cleaning up all RTGS dollars in the economy and thus starving the economy of liquidity is not sustainable. It is an ephemeral measure that will be exposed once the printing press begins to run to finance insatiable fiscal demands,” Biti said. “We have been here before. This economy cannot be turned around by patchwork or kick-and-hop economics.”
Mnangagwa has resisted calls to dollarise the economy.