Rédaction Africa Links 24 with Zimeye
Published on 2024-03-16 19:53:14
The retail sector in Zimbabwe is facing challenges as basic commodities are disappearing from shops due to the demand for the United States dollar by manufacturers and wholesalers. This has resulted in retailers struggling to restock locally produced goods in the midst of a sharp depreciation of the Zimdollar against the US$. Retailers have reported weeks without the supply of essential items and have warned of critical shortages, particularly of products like sugar.
Denford Mutashu, the president of the Confederation of Zimbabwe Retailers, highlighted the difficulties faced by retailers who are required to buy in local currency but are being pressured to pay in US$. This mismatch in currency preferences has led to a dollarization of the supply chain, making it challenging for formal stores to stock up on essential items. With the Zimdollar trading at different rates in various markets, the situation is further complicated by high inflation rates, with the country experiencing the world’s highest year-on-year inflation.
As the Zimdollar continues to depreciate, businesses and service providers are increasingly demanding payment in US$, further exacerbating the challenges faced by retailers. Mutashu noted that the implementation of new financial legislation, such as the use of QR codes for tracking tax evaders, has also created obstacles for retailers in terms of product supply. Many suppliers are opting to sell to the informal market rather than comply with the new regulations, making it difficult for formal retail stores to source essential goods.
President Emmerson Mnangagwa’s decision to reintroduce the local currency in 2019 has been met with growing calls for redollarization as the Zimdollar’s value continues to plummet. The International Monetary Fund has reported a significant depreciation of the local currency since the beginning of the year. While the Consumer Council of Zimbabwe has observed a decrease in the cost of living when measured in US$ terms, prices of basic commodities like mealie meal remain high due to factors like the El Niño-induced drought.
Despite some stability in the prices of goods and services when paid in US$, the overall economic environment in Zimbabwe remains volatile. High demand for the US$ and the reluctance of suppliers to accept the local currency have contributed to the challenges faced by retailers. Mutashu highlighted the various pressures faced by retailers, including increased shop license costs and employee demands for salaries in US$.
In conclusion, the retail sector in Zimbabwe is grappling with a complex set of challenges ranging from currency mismatches to regulatory hurdles. The ongoing depreciation of the Zimdollar and high inflation rates have further compounded the difficulties faced by retailers in restocking essential goods. As calls for redollarization grow louder, the future of the retail industry in Zimbabwe remains uncertain amidst an increasingly volatile economic environment.
Read the original article on The Zimbabwe Eye
