Zim retailers warn of shortages

Zim retailers warn of shortages
Published: 07 September 2017
ZIMBABWE could soon start experiencing inadequate supplies of food and other products caused by worsening foreign currency shortages, local retailers have warned.

Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu on Tuesday said the retail sector was reeling from foreign payment delays which had resulted in them failing to secure imported product lines, which they say account for an average of 40 percent of total stocks.

"Empty shelves are not far; very soon they will become the thing given that local manufacturers are also failing to secure forex allocations to import raw materials crucial in the manufacturing process.

"Furthermore, as retailers, we have lines that need to be imported but have not been getting allocations from the banks to procure them. In this situation, most of us have been forced to buy forex on the black market in order to import these products but there is a problem with that.

"The problem is the forex has been coming at a premium of between 10 and 35 percent which is frankly unsustainable. You will also notice that, in light of this, some of these costs are being passed on to the consumer.

"Overall, there is a real chance that shortages of certain products will start very soon," Mutashu said at a meeting of the CZR and Reserve Bank of Zimbabwe (RBZ) governor, John Mangudya.

The organisation's Marketing and Stakeholder Relations Director, Alois Burutsa, weighed in, saying local shops were failing to import crucial product lines.

"Payments have not been going through fast enough for both the manufacturing and retailing sectors. We are afraid that shortages have started to creep in driven by this," Burutsa said.

Also hinting at impending shortages, Choppies managing director, Siqokoqela Mphoko, said retailers were mulling job cuts as sales have been going down in the absence of certain import lines.

"Payments are not going through and this is frustrating because they are not even huge amounts required to be processed. Take for example Choppies, we import five percent of our stock but the bank keeps telling us that a mere $48 000 is not going through… Now suppliers are threatening to close our accounts.

"Because of this, we could have shortages and also send our people home," Mphoko, said.

However, Mangudya assured the retailers that they would get their pending payments cleared by mid-month via disbursements of a $600 million nostro stabilisation facility from Afreximbank aimed managing the cyclical nature of Zimbabwe's foreign currency receipts.

"I do not think the situation will get to shortages… We are looking for foreign currency to meet some of the challenges and we hope that by mid this month we will have drawn down the Afreximbank nostro stabilisation facility to meet some of the critical payments that you have given us and we are going to continue exporting our gold and platinum," he said.

The central banker also said he would personally clear the retail sector's outstanding payments to ensure local banks allocate forex to retailers.

"I hear your concerns about banks not allocating the money to you, so I agree with you completely. You need to send in a schedule of your payment needs, details and banks so that we can approve the transactions from here," he said.

At the moment, local companies are failing to secure key raw materials or stock from foreign countries as the country's banks have low nostro account balances leading.

In light of this, retailers have been forced to buy cash from the parallel market at high premiums to fund imports.

In the parallel market, bond notes are trading at an eight to 12 percent discount to the US dollar while electronic balances reportedly exchange at a 25 to 35 percent discount.

"Clearly, this business model is unsustainable and what makes the situation unbearable for some of our members is that they are not on the import priority list so they never get priority in foreign exchange allocations so they are forced to buy the cash," Mutashu said.

- fingaz
Tags: Retailers,


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