Former Finance Minister Tendai Biti said the prevailing multi-tier pricing system and the multi-tier exchange rate regime are bad for the country’s economy.
Service providers and shops use different exchange rates depending on the nature of the local currency being used by the customers, for example, Zimbabwe dollar banknotes, EcoCash, swipe, etcetera.
Moreover, supermarkets use different exchange rates, making it difficult for consumers to plan their shopping.
Speaking during a Twitter Space titled Uncensored with Mzala Tom on the State of the economy of Zimbabwe: Challenges of State Capture and Corruption, Biti, who is Harare East MP (CCC), said:
One of the challenges of the inflation is that the pricing itself is crazy, we have a multi-tier pricing system in Zimbabwe and no economy can exist given that disequilibrium when you have the same goods having the price in rand, USD, RTGs, on Zipit, Ecocash, Ecocash USD platform.
In addition to a multi-tier pricing system, we now have a multi-tier exchange rate regime.
So, we now have the auction rate, then we have the open market, willing buyer, willing seller which we know doesn’t exist, then we have the parallel market, the black market in fourth street, then we have the blended rate which supermarkets are using and different supermarkets are using different rates.
There is no country that can survive this multi-tier pricing system, multi-tier exchange system.
Biti asserted that Zimbabwe’s main problem is the unrestrained creation of money by the Reserve Bank of Zimbabwe (RBZ). He said:
The exchange rate itself is shooting, we are in no man’s land, it’s like kick and walk football, economics is a science of logic, here in Zimbabwe we have a problem, there is too much money, they are generating too much money.
In March we had money financing by-elections, nobody told us the cost of the election, I think they might have cost around US$120 Million.
That money is given to suppliers, they sell in RTGs, and they go on the black market to monetize it but the biggest form of an increase in money supply, in fact, is the auction system which is rigged.