Zimbabwe allows 570 shops to sell goods in foreign currency

HARARE (AFP) — Zimbabwe's central bank chief on Thursday said nearly 600 shops had been licensed to sell goods in foreign currency to fight the world's highest inflation rate and critical shortages of basic goods.

"It is encouraging to note that the take up of the licences has been spread across the country. The licences have been long overdue in coming," reserve bank governor Gideon Gono told business executives.

A total of 600 applications have been approved but 570 had been signed, he said, adding that the initiative -- announced earlier this month -- followed recommendations by business leaders.

Allowing foreign currency trade was expected to lower prices of goods and increase domestic output.

Zimbabwe's central Bank Governor Gideon Gono

Zimbabwe's currency, once on a par with the British pound, has been in a freefall as the southern African nation's economy lies in tatters. Food and foreign exchange as well as basic goods are in critically short supply.

The meltdown and strictures on foreign exchange have led Zimbabweans to shop in neighbouring countries and pushed up the price of local goods.

The US dollar fetches 10 times more on the flourishing black market than the official rate.

President Robert Mugabe's government has imposed price controls to cushion shoppers against price hikes but there is a booming black market where scarce goods are available at more than 30 times the official price.

Critics blame the economic crisis on Mugabe's policies, including controversial land reforms which saw the government seizing white-owned farms to resettle landless blacks many of whom had no previous experience in agriculture.