News / National
Basics disappear from Zimbabwe shop shelves
15 Mar 2024 at 03:19hrs | Views
ZIMBABWEAN retailers are struggling to restock locally produced goods using the local unit as manufacturers and wholesalers are turning them away in favour of those that pay in the United States dollar.
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."
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."
Source - newsday
