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Saturday, 5 December 2015

Pricing in dollars

The government is apparently considering reintroduction of suspended Statutory Instrument (SI) 33 of 2012 which prohibits quoting prices in dollars, according to the Ministry of Finance.

Times of Zambia’s James Muyanwa in a recent summary of President Lungu’s press conference reported that the President as saying the “dollarisation of prices is illegal and unjustifiable, hence it should be stopped with immediate effect”.

A closer reading of the President’s speech actually said, "It is not just illegal, but immoral too, that the unscrupulous businesses who price in dollars maintain the same pricing of a higher rate even when the Kwacha has appreciated”.

Based on those words President Lungu is not saying it is illegal to quote in dollars nor is he against quoting in dollars per se. Contrary to many media reports, the President appeared focused on those who wrongly priced in dollars.

The big question now, given the recent Ministry of Finance statement, is whether the Ministry of Finance will simply reinstate the suspended SI33 or focus on preventing people from incorrect conversions as originally suggested by President Lungu.

We will wait to see details of the new legislation before commenting further. Suffice to say that if the problem is incorrect conversion then the key is to ensure that where dollar prices are being quoted, the equivalent price in Kwacha is always given.

AUTHOR
Chola Mukanga
Copyright © Zambian Economist 2015

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