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Rates hike standoff turns political

by Staff reporter
20 Aug 2021 at 07:11hrs | Views
ZIMBABWE's retail industry came out guns blazing this week, slamming local authorities for undermining President Emmerson Mnangagwa's ‘Zimbabwe is Open for Business' campaign after extensive rate hikes they blamed for a sharp downturn.

Mnangagwa's ‘Zimbabwe is Open for Business' mantra shot to prominence as he assumed power about three years ago, promising to reverse a prolonged economic crisis that saw the country's gross domestic product (GDP) plummet by 50% between 2000 and 2008 after inflation hit 500 billion percent.

However, the hype has been losing traction, with the economy struggling to overcome a sustained foreign currency crisis and rampaging parallel market rates that have aggravated a gruelling industrial crisis.

But in a 10-page review of the 2021 first half released on Wednesday, the Confederation of Zimbabwe Retailers (CZR) warned that local authorities had become the biggest threat to Mnangagwa's reforms, after hiking rates and fees by 5 000% since December last year.

The CZR demanded an immediate reversal of the fees to save a sector projected to slow down by 5,7% this year due to slackening demand.

"The confederation has observed that local authorities have increased fees by an average of 5 000%, cumulatively, since the last quarter of 2020 to date," the CRZ said.

"Landlords have also followed suit despite Covid-19 lockdown-induced restrictions which affected optimum trading. These increases defeat President Mnangagwa's 'Zimbabwe is Open for Business' mantra and should be revised downwards as they only increase the cost of doing business and affect competitiveness of brick and mortar retail establishments. The decision to increase fees was taken when businesses were already reeling under the effects of the lockdown and pandemic."

Retailers were among the worst affected by Covid-19-induced hard lockdowns throughout 2020, which amplified an already difficult situation as extensive de-industrialisation had battered spending power and reduced traffic into supermarkets.

However, as the government moved to relax restrictions this year to save an economy that fell by 4% last year, south Africa went up in flames.

Rioters, angry about the jailing of former President Jacob Zuma, overran industries, torching companies, blocking roads, while closing corridors to ports and delaying raw material merchandise destined for Zimbabwe by up to three days.

The CZR said this became one of the most difficult phases in the battle to rebuild the sector.

It said the disturbances and instability in south Africa were of concern to Zimbabwe's retail industry, given the deeper trade ties between the two countries.

Aouth Africa is Zimbabwe's biggest trading partner, in terms of both exports and imports, largely due to the proximity of the two countries.

"During the first quarter of the year alone, 50% of Zimbabwe's imports came from south Africa, with 34% of total exports going there as well. The disruption of business in south Africa affected supply chains for goods for Zimbabwean retailers," the lobby noted.

"Most retailers failed to receive their goods on time, which they had already paid for from south Africa because of the violent riots and looting. There were lots of delays of more than 72 hours experienced by retailers and wholesalers, which affected the replenishment routine of goods and smooth trading."

Zimbabwe's industries last month kicked off a push to broaden foreign markets after the crisis.

As raw materials stocks for manufacturers depleted, the Confederation of Zimbabwe industries said the three weeks of upheavals should prompt companies to rekindle a discussion towards diversifying markets.

Source - the independent