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Governor Mangudya Takes Price Madness Personal, Summons Companies

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Reserve Bank of Zimbabwe (RBZ) Governor Dr John Panonetsa Mangudya made it personal to stop the price madness in most businesses.Dr Mangudya summoned companies for price madness stating that his business meeting he held earlier in the week is not a witch hunt, but an effort by the authorities to grasp the root cause of the prevailing price madness.

RBZ Governor Dr John Mangudya showed that some retailers in the formal market were selling their products at an exchange rate of around ZWL $ 200 to USD 1. Speaking exclusively to TechnoMag, Dr Mangudya said: “We will meet with the entire business community, manufacturers, retailers and wholesalers to find a sustainable solution.”

The all-stakeholder forum attended by representatives from retailers, manufacturers, wholesalers and all those involved in the value chain, he said, explored sustainable solutions to the widespread parallel market price that is eroding economic stability. In recent weeks, the formal market has been gripped by benchmarking the prices of goods and services using the black market rate, resulting in a surge in prices.

Last week, the exchange rate in the parallel market was set at US $ 1 : ZWL $ 180 compared to the margins between ZWL $ 150 and ZWL $ 160 three weeks ago. As a result, some retailers and companies in the formal market have set their prices above the official rate of US $ 1: ZWL $ 88.55 as of last week.

“It occurred to us that everyone in this country has become a price taker, so we want to find out who is causing it. It is not about arresting people; it is about understanding the true cause of what is happening.”

“The most sustainable way to run a business or run a country is not to shut down, but it’s about understanding behavior and the dynamics of behavior is not critical,” he said, adding that the behavioral dynamics were due to arbitrage trends.

Dr. Mangudya said that any business to operate profitably requires a stable environment, adding that the gaining of volatility caused by parallel market activities was threatening the macroeconomic gains the country has so far made.

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