Retailers are recording low volumes of US$ sales amid indications that parallel market traders are buying customers at a better rate than the central bank’s recommended 10% premium on the official exchange rate.
The current willing buyer willing seller exchange rate is at ZWL$521.26 per US$1 and the retail shops are allowed to sell at ZWL$573 per US$1 at a time when the foreign currency dealers are using the average of ZWL$700 per US$1.
The Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu told Business Times that this has left the retailers on the edge as they no longer have a significant US$ supply.
“Customers always look for a higher rate so they look for money changers outside to give them a better exchange rate as compared to formal business rate which is just at 10% above the official rate therefore we are not getting the US$,” Mutashu said.
“From the surveys we carry out, customers say it’s more expensive to use the official rate and there is still a lot of work to be done for it to converge with the parallel market hence they won’t use US$ and it’s affecting formal players.”
He said consumers do not want to run exchange losses at the formal businesses.
“This is not promoting the flow of hard currency in formal establishments and that’s a quagmire for us,” Mutashu said.
The scarce dollar inflows come as manufacturers now favour tuck shops that pay in hard currency.
An executive with a leading retailer said the situation has been compounded by that “even some of our staff are swiping customers through their cards”. He said retailers confiscate the dollars if it is captured on camera. The retailers are pinning hopes on the government spending for relief.
“We are banking on government departments which spend over ZWL$30m on their groceries per month and there are a lot of them which use more or less the same amount,” the retailer said.
In a survey carried out by this publication, retailers get the bulk of their US$ sales in leafy suburbs where customers do not use moneychangers to buy their groceries.
Money changers are not familiar in these areas as they risk being prosecuted for nagging the customers.
Mutashu said the authorities should reduce taxes on formal goods to enable them to compete with informal players who do not pay tax and solely use US$ as their transacting currency.
He commended the government for stabilising the exchange rate which is now at around ZWL$800 per US$1 from ZWL$950 per US$1 a fortnight ago.
Recently, the Reserve bank of Zimbabwe issued over 5000 gold coins into the market to mop out excess local currency balances.
Mutashu believes this could be a panacea to runaway exchange rate which has wreaked havoc in the market, threatening business viability.