Drug prices skyrocket – NewZimbabwe.com
per press day
ZIMBABWEAN drug retailers sell drugs at exchange rates between US $ 1: $ 220 and US $ 1: $ 230, raising fears that the industry could become one of the drivers of a massive depreciation of the market. the national currency.
The Zimbabwean dollar was trading at around $ 1 to $ 110 when the foreign currency auction system closed for the holiday season two weeks ago.
This means drug retailers sell essential products at exchange rates that are more than double the official US dollar exchange rate.
Consumers find it difficult to purchase essentials like food and medicine due to the difficult economic climate resulting from hyperinflation and shortages of foreign currency.
A new wave of price increases supported by currency weaknesses could worsen an already difficult situation.
Reserve Bank of Zimbabwe (RBZ) Governor John Mangudya told NewsDay Business on Monday that authorities have set up cheaper financing kiosks for pharmaceutical retailers.
He said most of the foreign currency obtained through the arrangement had not been used.
Foreign currency acquired through the official system is cheaper.
The system was put in place by the government to give critical industries like the pharmaceutical sector easy access to finance.
“We have a facility for the pharmaceutical industry to access foreign currency,” Mangudya said.
“But adoption has been low for this facility, so in the coming weeks we will meet with them to find out why they are using such exchange rates,” Mangudya said.
However, pharmaceutical retailers blamed the wholesalers.
Pharmaceutical Society of Zimbabwe president Portifa Mwendera said drug retailers are not importers and only pass costs on to consumers on the basis of the prices at which they buy the drugs from wholesalers.
“What I do know is that retail pharmacies are not very keen on importing drugs, so they are not more involved in the forex market auction system,” Mwendera said.
“Even if you look at the list of those who got forex in the last 18 months, retail pharmacies are in the minority.
“You might find four or five pharmacies that are there because retail pharmacies are not inherently responsible for importing drugs.
“So what they do next is mainly apply a markup on the price that they would have bought the product from a wholesaler.
“It is the wholesaler who determines the exchange rate he uses for a product. And most exchange rates are implied, ”Mwendera added.
Before Christmas, former finance minister and MDC Alliance vice-chairman Tendai Biti warned that the exchange rate could reach US $ 1: $ 500 in the parallel market.
“Today, the US rate was trading between US $ 1: $ 220 and US $ 1: US $ 230. In a few months, it will reach $ 1: $ 500. A rate hike has dramatic inflationary consequences, ”Biti warned.
The black market exchange rate climbed 27% in the third quarter (3Q) of this year, marking its strongest growth on record in a year, researchers from Inter Horizon Securities (IH) said.
“Month-over-month inflation trended upward for the quarter, possibly in response to increased government spending on agricultural inputs,” IH said.
“The parallel market has been considerably volatile, gaining 27% for the quarter, the highest quarterly gain since 2Q20.
“As a result, the parallel market premium closed 3Q21 at 98% vs. 59%.
“On the Zimbabwe stock exchange, the All-Share index trended higher, outperforming 2Q21,” IH noted.