Rédaction Africa Links 24 with Zimeye
Published on 2024-03-17 09:08:45
The country is facing a potential crisis of food shortages as manufacturers and wholesalers are increasingly demanding United States dollars for their products. This shift has been prompted by the sharp depreciation of the Zimbabwean dollar against the US dollar, leading to calls for the full dollarization of the economy.
Retailers in the country have reported difficulties in procuring locally produced basic commodities due to the widespread demand for US dollars. Denford Mutashu, the president of the Confederation of Zimbabwe Retailers, highlighted the challenges faced by retailers who are forced to purchase goods in local currency while suppliers insist on being paid in US dollars. This mismatch in currency preferences has resulted in significant disruptions to the supply chain of basic commodities, with critical shortages being observed in essential products such as sugar.
The prevailing exchange rate environment further exacerbates the situation, with the Zimbabwean dollar trading at different rates across various markets. The discrepancy between official and parallel market rates, coupled with high inflation rates, has created a challenging economic landscape for retailers and consumers alike.
Manufacturers have also cited their own challenges, stating that their suppliers for raw materials and services are increasingly demanding payment in US dollars. This trend has further fueled the demand for US dollars in the market, making it difficult for formal retail stores to maintain their operations.
The situation is compounded by the reluctance of suppliers to comply with new financial regulations that require the use of QR codes for tax tracking purposes. This has led many suppliers to divert their products to the informal market, exacerbating shortages in formal retail outlets.
The introduction of the local currency in 2019 has not yielded the desired results, as its continuous depreciation has led to higher prices for basic goods and services. Calls for a return to full dollarization have gained momentum as businesses and service providers seek to mitigate losses from the volatile currency environment.
The Consumer Council of Zimbabwe (CCZ) has noted a decrease in the cost of living when measured in US dollars, attributing this to discounts offered by operators for foreign currency transactions. However, the prices of essential commodities such as mealie meal remain high due to factors like the El Niño-induced drought.
Despite challenges in the supply chain and currency volatility, there have been efforts to stabilize prices and ensure the availability of basic goods. Price adjustments and discounts in US dollar transactions have helped mitigate some of the impacts of currency fluctuations on consumer prices.
In conclusion, the demand for US dollars in the market, coupled with currency depreciation and economic uncertainties, has created challenges for retailers, manufacturers, and consumers in Zimbabwe. Efforts to address these issues, such as price adjustments and discounts, are essential to ensure the availability and affordability of basic commodities for the population.
Read the original article on The Zimbabwe Eye
