Zimbabwe supermarkets face implosion

ZIMBABWE's retail industry says it is facing an implosion unless the mid-term fiscal policy review set for July makes wide-ranging reforms to stimulate demand after 12 million consumers hit hard times in the past year.

At least 83% of Zimbabwe's 14,5 million citizens have hit hard times, Confederation of Zimbabwe Retailers (CZR) data showed on Thursday.

This translates into about 12,03 million people struggling to make ends meet.

The crisis confronting retailers has also been compounded by the emergence of basic commodity shortages, which may erode the industry's top line.

CZR president Denford Mutashu said government could avoid bankruptcies by lifting the tax-free threshold to at least $50 000 per month and inject liquidity into the pockets of about 2,74 million still formally employed Zimbabweans.

The windfall translates to a near $660 million spending pool annually that retailers can compete for.

An average Zimbabwean has been earning about $20 000 per month.

But suggestions to channel more funding into consumers might not be sweet music to the ears of under-fire Finance minister Mthuli Ncube, who has battled to balance between saving people from escalating hardships and funding government commitments.

The CZR chief said Ncube had only two options at his disposal.

He could choose to maintain the tax-free bracket at current levels of $10 000 per month and aggravate the pain, or widen it, thereby increasing disposable incomes and consumer spending to drive up tax revenues.

"While annual inflation declined significantly from 838% in July 2020 to the last recorded 194% in April 2021, the rate is still very high and far from the 10% which is associated with ideal economic stability," the CZR said in its paper, which spelt out its expectations for the mid-term review.

"The national lockdown which was imposed in the first two months of the year severely constrained prospects for the first quarter. While most retail outlets were open for reduced trading hours, demand was weak due to the closure of other sectors of the economy during that time and reduced disposable incomes. Although the lockdown measures were relaxed at the beginning of March, we are not out of the woods yet as demand is still weak," the lobby noted.

It added: "A report by the World Food Programme (WFP) established that 83% of households are now struggling to buy food for their families. According to WFP, by the end of March 2021, an estimated 2,4 million people were struggling to meet their basic food needs, coping by skipping meals, selling their hard-earned assets and taking their children out of school.

"The CZR calls for a pro-poor fiscal policy with significant allocation of resources to basic social and economic sectors that directly reach the poor, and sectors that greatly enhance access to economic and social opportunities for the poor. As a short-term measure, the poor consumers' spending power should be invigorated by some government support to enable them to afford basic needs. This will in turn help the retail sector grow through sales growth, which will in turn raise the domestic demand and industrial capacity utilisation," the CZR noted.

It said such measures must be accompanied by widening the scope of companies paying taxes by including the informal sectors and scaling up surveillance against smuggling.
Retailers have been shaken by the overflow of cheaper smuggled merchandise, which has triggered a consumer flight and pushed them to the brink.

"The confederation urges the government to outline a major rescue package for the retail industry, as there is an economic imperative to ensure that various retail sub-sectors are not left on the ground as we begin to emerge from the pandemic," CZR said.

"A comprehensive rescue package which incorporates key issues such as rents, grants and waivers is a pre-requisite for retail establishments that have suffered numerous hurdles," the CZR said.