Reserve Bank of Zimbabwe Governor, Mr Gideon Gono has announced the introduction of Foreign Currency Licenced Warehouses and Retail Shops(FOLIWARS) because of the need to stand for and defend the welfare of the citizens of Zimbabwe. These shops will be licensed to sell goods in foreign currency.
Here we take a closer look at FOLIWARS. Why Gono has decided to ‘dolarise’ the economy? and what criteria operators should meet to be considered for licensing?
Why introduce FOLIWARS?
1. The Reserve Bank has watched and observed with heavy hearts the suffering of fellow Zimbabweans as they waited and continue to wait in long queues at the borders seeking to bring in basic commodities.
2. Desperate mothers and youths continue to spend cold nights in foreign lands in pursuit of basic commodities.
3. Gono also said: “Our hearts are bleeding at the daily sight of workers being laid off their jobs due to industrial capacity under utilization.
For these reasons Gono said “it has become compellingly clear that innovations be invoked to increase internal capacity utilization, as well as shoring up the availability of basic goods and services.”
So foreign currency shops have been introduced because of “the need to stand for and defend the welfare of fellow Zimbabweans. They are being introduced as an experiment for an initial period of 18 months until 31 March 2010.” said Gono.
Gono also added that, it was important to make sure the country is ready to cater for all visitors to Zimbabwe during the FIFA World Cup 2010 to be hosted by South Africa.
LICENSING CRITERIA
To be considered for licensing as a registered Foreign Currency Denominated Shops, applicants must meet the following conditions:
1. Submit an application to the Reserve Bank of Zimbabwe supported by the capability statement indicating:
- Nature of goods or service to be sold
- IT Systems in use
- Capacity to handle foreign currency transactions.
- Estimated sales volumes
- Ownership structure
- Wholesale or Retail and also the shop size.
2. Refundable security deposit of US$20 000 for a store owned by a Zimbabwean and US$50 000 for a foreign owned shop.
3.System of product or service quality checks.
4. Locations of outlets
5. For wholesalers – US$100 000 if owned by Zimbabweans and US$250 000 if foreign owned.
Submissions of applications should be by no later than 22nd of September 2008 with licenses being issued no latter than Friday 26th of September 2008.
Zimbabweans in the Diaspora have until 10 October 2008 to send their applications and operating licenses will be issued no later than 30 October 2008.
Some products and services have been put on an exclusion list, that is meant to ensure vulnerable members of society have access to basic commodities and these will continue to be sold in local currency, even in Foreign Exchange Licensed Wholesalers and Retail shops.
These include mealie meal, milk, bread, cooking oil, sugar, salt, locally manufactured sanitary pads, school uniforms and medicines.
All Foreign Currency Licensed shops will be entitled to an 85 percent retention of their foreign currency earnings in special FCA deposits which should be held at local Authorised Banks. 15 percent goes to the Reserve Bank.
Given the high cost (between US$20 000 and US$250 000) required to apply for a license, it’s obvious this latest Reserve Bank initiative is not meant for the small business operator. Where are they going to get that kind of money from?
So, is this another plan which is going to make the rich get richer? Or is it another plan by the reserve bank to raise money foreign currency for the government?
Have your say by posting your comments.
Related posts: