Retailers dump Zimdollar

RETAILERS in Harare have dumped the Zimbabwe dollar and are demanding payment in United States dollars for a number of basic goods such as cooking oil and dairy products.

Some large wholesalers were selling cooking oil, alcohol and dairy products exclusively in US dollars.

Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu yesterday said retailers were being "forced" to charge for some basic goods exclusively in US dollars because manufacturers were demanding hard currency because of the weakening local currency.

"The reason why some players are selling exclusively in US$ is because of the value chain challenges they are facing for one to get the cooking oil," Mutashu said in a telephone interview yesterday.

"The supplier or manufacturer demands foreign currency in advance and it is the reason most formal shops are in disarray because the bulk of their transactions is constituted by swipe and mobile money, which is local money, so in order to get products, someone has to get foreign currency from somewhere."

Some informal traders in the capital have resorted to either selling all their products in US dollars or selling selected basics like sugar, maize meal, cooking oil, salt and soap exclusively in forex.

Dairy products, rice, beef, poultry products and the Mazoe brand juices have also been added to the US dollar only list.

"For formal business, it's not practical for them to get foreign currency from the parallel market or participate in the auction for local bids, so the only option left is to sell in foreign currency, particular products, in order for one to be able to procure it again later from the manufacturers," Mutashu said.

"It's a value chain issue more than it is a retailer or wholesaler issue. The value chain has now been disrupted. Some producers are saying if you want two trucks of sugar or rice, you pay for one in US dollars and another one using local currency."

Edible oil expressers are struggling to import raw materials which constitute more than 80% of their requirements, given that local edible oil production is only enough to feed the nation for six or so weeks, due to foreign currency shortages.

The war in Ukraine, where the bulk of global sunflower oil originates, has further hamstrung industry with shipping delays and price hikes of more than 50% as other major oil producing nations suspended exports to satisfy domestic demand.

Meanwhile, Reserve Bank of Zimbabwe allocations for oil imports remained the same.

Efforts to get an official comment from Oil Expressers Association of Zimbabwe (OEAZ) president Busisa Moyo were fruitless.

But OEAZ members confirmed the sector was in crisis and operating at between 10% and 15% capacity compared to between 25% and 30% when COVID-19 hit the country.

"Oil expressers need increased forex to match the increased international crude oil prices which have more than doubled in the last 12 months. The war in Ukraine will further worsen the supply position for cooking oil and will see further increases in the cost of the crude oil," OEAZ past president Sylvester Mangani said.

Mangani is the chief executive of Surface Wilmar, a Singaporean cooking oil producer which has a majority stake in Olivine Industries.