Zimbabwe’s retailers yesterday said President Emmerson Mnangagwa’s administration should not threaten the already riskier market without “proffering solutions to problems faced by local businesses”.
The retailers said threats by the government could lead to a “mess” or a real setback where the market will be hit by severe shortages.
It comes after Finance and Economic Development Minister, Mthuli Ncube, on Tuesday this week launched a broad assault on business threatening to withdraw licences of those pegging their prices exclusively in foreign currency.
Ncube said the government would not “tolerate this kind of nonsense”.
On Monday, the Ministry of Finance and Economic Development secretary, George Guvamatanga withdrew the duty rebate licence extended to Schweppes’ Beitbridge Juicing for the importation of orange and other raw materials.
But retailers said the government was addressing the symptoms and not the problem.
“It is not advisable to threaten the market without resolving challenges being faced by business as it has unintended consequences of product shortages and emergence of black market for basic goods and services,” the president of the Confederation of Zimbabwe Retailers, Denford Mutashu, told Business Times.
He added: “Government ought to suspend payments to its own suppliers and carry out an investigation from that end and see if the rate will not stop. We firmly believe the government suppliers are offloading excess liquidity on the market thereby creating demand for forex on the parallel market.”
Retailers are also in a catch 22 after the central bank directed formal shops to sell their goods at a premium of 10% above the official rate.
The official rate is at around ZWL$392 per US$1 with shops allowed to trade at around ZWL$435 per US$1.
With the parallel market rate galloping to ZWL$800 per US$1, most manufacturers now prefer informal traders known as tuck shops who pay with hard currency, leaving the formal shops struggling to restock.
Mutashu told Business Times that manufacturers were reluctant to sell products to the retailers in protest of waning ZWL$.
“The charging of goods using the official rate has a serious knock to our businesses as suppliers and manufacturers are not supplying us on a regular basis as they don’t want the local currency. We are struggling to re-stock as they go for informal traders who have hard currency,” Mutashu said.
He added: “If we may want to sell in US$, very few customers would come with the hard currency to buy in formal shops instead the money changers are swiping for the customers at a better rate, with the pricing conundrum at play, reduced stock and a subdued US$ rate, retailers are in a catch 22 situation which needs dialogue between us and other stakeholders.
“It is very difficult for a supplier or manufacturer to give me a product where I am paying in ZWL$ understandably because they would also want to use their product to generate foreign currency from their own internal source.
He said basic commodities were disappearing from the shelves as manufacturers were selling to informal traders in foreign currency owing to the depreciation of local currency against the greenback.
“If you go to the manufacturers, a formal retailer gets one thirty tonne truck per month which only lasts three days due to the industry’s urgent need of the US$ with tuck shops getting as many trucks as they want,” Mutashu said.
In a survey carried out by this publication, products like cooking oil, soap, fresh milk and sugar among other goods were not on the shelves for a couple of weeks.
The Confederation of Zimbabwe Industries president Kurai Matsheza told this publication that industry has no choice but to go with the flow.
“Businesses are not getting enough money from the foreign currency auction platform hence they depend much on those US$ sales to survive,” Matsheza said.
He said high costs of inputs due to surging inflation and diminished export competitiveness due to heavily taxing exporters through the parallel market premium on surrender requirements are affecting the industry.
“Goods are vanishing from shelves into grey markets where they are priced in US$ only and there is a general inability to replace stocks in the market,” Matsheza said.