The failure by retailers to procure in local currency comes
as the Zimdollar has experienced a sharp depreciation against the US$ amid
calls for the full redollarisation of the economy.
Retailers told NewsDay that they had gone for weeks without
the supply of locally produced basic commodities and warned of critical
shortages of some products such as sugar.
Confederation of Zimbabwe Retailers president Denford
Mutashu said the supply chain of basic commodities had dollarised, leaving
retailers who buy in local currency in a lurch.
“The biggest challenge is the currency that one uses to
source products at procurement level,” Mutashu said.
“Manufacturers do not want the local currency. Generally,
the appetite for the US$ in the market is high.
“The supply chain is 90% dollarised, and for the formal
stores, it becomes very difficult because they are the only ones that are still
selling to the customers in local currency.
“So, with a huge local currency balance, running a retail
business under this current environment is difficult.”
As of yesterday, the Zimdollar was trading at 1:17 830
against the United States dollar at the interbank market and 1:18 500 in
supermarkets, while it stood at 1:20 000 on the parallel market.
American economics professor Steve Hanke on Wednesday said
Zimbabwe’s year-on-year inflation stood at 1 630%, the world’s highest.
Yet authorities claim that they have ticked all the boxes
to contain annual inflation, which according to official statistics was 47,62%
in February.
As the Zimdollar continues depreciating, the Consumer
Council of Zimbabwe (CCZ) has also failed to calculate the price of the family
food basket for the month of February in local currency due to regular price
increases of basics and services.
“Manufacturers also indicate that most of their suppliers
for raw materials or services are demanding payment in US$ and that is why they
demand US$ when they sell their products,” Mutashu said.
“It’s a glitch that is happening. That is why most formal
retailing shops are failing to stock up. Those products are in the informal
market.”
Mutashu said he had a meeting with business owners from the
wholesale industry who had indicated that it was no longer viable to continue
operating under the current environment.
“Most suppliers are not giving products to those that have
complied with the new Finance legislation which requires the supplier and the
retailers to use QR codes for the purposes of tracking tax evaders,” he said.
“Most suppliers are not complying, so they prefer to supply
to the informal market. The cost of shop licences has also gone up by over 300%
in US$.
“Employees are also demanding salaries in US$, so the
environment is just volatile.”
President Emmerson Mnangagwa re-introduced the local
currency in 2019 after a decade of dollarisation.
There are growing calls to redollarise as the local
currency continues on a free-fall, pushing up the prices of basics and services
as businesses and service providers seek to hedge against losses.
The International Monetary Fund says the local currency has
depreciated by 95% since January this year.
However, the CCZ said prices of goods and services had gone
down in US$ terms as operators were offering discounts to encourage foreign
currency transactions.
“As measured by the CCZ’s low income urban earner monthly
basket for a family of six, the cost of living as measured in US$ decreased by
1% from US$551,38 to US$544,71,” CCZ director corporate affairs Philemon
Chereni said.
“One of the reasons to explain why the basket remained
fairly stable and only decreased marginally by 1% is because of the discounting
enjoyed when the product was paid in US$.
“In addition, observation revealed that prices in US$ are
insignificantly impacted by the movement of the local exchange rate.”
CCZ also said the price of mealie meal was generally high
owing to the El Niño-induced drought.
“Mealie meal prices remain stable, but at a higher price
because of the demand for the product as households anticipate shortages due to
drought,” Chereni said.
“It is also vital to note that prices of most of the basic
commodities went down in US$ because of the natural price adjustment towards
equilibrium which was observed during the month of February 2024 when suppliers
had increased their prices sharply after the pronouncement of the national
budget in anticipation of commodity shortage in the market, which, however, did
not happen.” Newsday
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