Recently Zuva Petroleum announced that 8 of its fuel stations would now be accepting foreign currency payments. It posted the following messages on social media: “For your convenience, we are excited to announce 8 Zuva DFI Service Stations that will be accepting foreign currency payments across the country as follows; Harare: Lorraine, Groombridge, Pendennis and Valley, Bulawayo: Macs Garage, Beitbridge: Oasis, Mutare: Palmerstone and Victoria Falls: Zambezi”. To add onto that, this does not mean that ZWL$ will no longer be accepted at these fuel stations (though there are some concerns as you will see later herein). Overall, this development obviously got mixed reactions from people and in this article, I will be looking at some them. This is not surprising given the dynamics pertaining to foreign currency payments locally.
A Bit Of Background…
It is common knowledge we adopted a multicurrency regime sometime around 2009. This was in response to the colossal fall of the Zimbabwean dollar. For quite a stretch this brought a relative semblance of stability in the economy. Especially starting 2018 we saw significant indications of hyperinflation beginning to gradually set in. In an unprecedented move last year we saw the revocation of the multicurrency regime in the name of SI 142 of 2019. This statutory instrument categorically made it clear that foreign currency was no longer legal tender.
People still continued to trade using it with no serious enforcement of the SI being done. It even got more interesting when the RBZ, later on, started to issue exemptions. It became contradictory that initially foreign currency had been banned as legal tender and now some traders were now being allowed to. I guess traders saw this hypocrisy and decided to ride on it by defying the SI 142 of 2019. No wonder why all along we have continued to see foreign currency is regarded as legal tender.
Reactions Towards The Zuva DFI Service Stations Development
I am going to discuss some of the public reactions to this development that echo topical issues.
Why Low-Density Areas?
When you look at the 8 fuel stations indicated there they are located in or around low-density areas. So this raised questions about whether this was a deliberate move to avoid high-density areas. This was cited as a concern because there are more customers in high-density areas. Some people even felt that this is as good as segregation and marginalization of high-density areas. Closely tied to this was why some towns were not included. Zuva Petroleum did not say much in response to this but only said, “Thank you for your feedback, we will consider including sites in high-density suburbs.”
Fears Of Foreign Currency Payments Eclipsing Bond Payments
In the beginning, I highlighted that these fuel stations will be accepting foreign currency right? I did also point out that they will still be accepting ZWL$ – that is according to Zuva Petroleum. However, there seem to be two concerns already. One, some are saying that these stations are not actually accepting ZWL$ anymore. Two, saying these stations now accept the foreign currency can be a precursor to eventually not accepting ZWL$ at all. This is a serious concern because it is not everyone who has easy access to foreign currency. In fact, the majority of people earn their incomes in ZWL$.
Are these signs for us reverting back to the US dollar as legal tender?
This is the most topical issue at the moment. Most people feel that developments like these are clear indications of us slowing reverting back to the US dollar. There is, of course, no consensus on this as some feel so and some do not feel so. I personally think it was an established fact from the onset that scrapping the multicurrency system would never make the local currency stronger. Like I once said before, the necessary prerequisites for the re-introduction of the local currency are just not yet there. So I guess we can only wait and see what happens next – there are just so many complex variables at play.
In case you are wondering about the actual foreign currency prices, they are as follows. In Harare it is US$1.25 for diesel and US$1.22 for blend. In Bulawayo, it is US$1.25 for diesel and US$1.24 for blend. In Mutare, it is US$1.23 for diesel and US$1.20 for blend. In Beitbridge, it is US$1.26 for diesel and US$1.25 for blend. In Victoria Falls it is US$1.29 for diesel and US$1.28 for blend. We obviously wait to see how soon more of their fuel stations will be added to this list.