Retailers in Zimbabwe are struggling to restock locally produced goods using the local unit as manufacturers and wholesalers reject them in favor of those who pay in US dollars.
The failure of retailers to buy in local currency comes as the zimdollar has seen a sharp decline in the value of the US dollar amid calls for a full redollarization of the economy.
Retailers told NewsDay they had been without supplies of locally produced basic goods for weeks and warned of severe shortages of some products such as sugar.
Denford Mutasho, president of the Zimbabwe Retailers Association, said the supply chain for basic goods had switched to dollars, leaving retailers who buy in local currency in a lurch.
“The biggest challenge is the currency one uses to obtain products at the purchase level,” Motashu said.
“Manufacturers do not want the local currency. In general, the demand for the US dollar in the market is high.
“The supply chain is 90% dollar-denominated, and for official stores, it becomes very difficult because they are the only ones who still sell to customers in local currency.
“Therefore, with a huge balance of the local currency, managing a retail business in this current environment is difficult.”
As of yesterday, Zimdollar was trading at 1:17830 against the US dollar on the interbank market and 1:18500 in supermarkets, while it stood at 1:20000 on the parallel market.
US economics professor Steve Hanke said on Wednesday that annual inflation in Zimbabwe reached 1,630%, the highest in the world.
However, the authorities claim that they have met all the necessary requirements to contain annual inflation, which according to official statistics reached 47.62% in February.
As the value of Zimbabwe continues to depreciate, the Consumer Council of Zimbabwe (CCZ) has also failed to calculate the price of the February Family Food Basket in local currency due to regular increases in the prices of basics and services.
“Manufacturers also point out that most of their suppliers of raw materials or services demand payment in US dollars, which is why they ask for US dollars when they sell their products,” Mutashu said.
“It’s a glitch that happens. That’s why most formal retail stores fail to stock them. These products exist in the informal market.”
Mutashu said he held a meeting with business owners from the wholesale industry who indicated that it was no longer possible to continue operating in the current environment.
“Most suppliers do not provide products to those who have complied with new financial legislation that requires supplier and retailers to use QR codes for the purposes of tracking tax evaders,” he said.
“Most suppliers do not comply, so they prefer to supply to the informal market. The cost of store licenses has also risen by more than 300% in US dollars.
“Employees are also demanding their salaries in US dollars, so the environment is volatile.”
President Emmerson Mnangagwa reintroduced the local currency in 2019 after a decade of dollarization.
There are growing calls to bring back the dollar as the local currency continues its free fall, sending prices for basics and services soaring as businesses and service providers seek to hedge against losses.
The International Monetary Fund says the local currency has fallen by 95% since January this year.
However, CCZ said prices of goods and services fell in US dollars as operators offered discounts to encourage foreign currency transactions.
“Measured in the monthly urban low-income basket for a family of six, the cost of living measured in US dollars decreased by 1% from US$551.38 to US$544.71,” said CCZ Corporate Affairs Director Philemon Shireni. .
“One of the reasons why the basket has remained fairly stable and only marginally decreased by 1% is the discount enjoyed when the product was paid for in US dollars.
“In addition, monitoring has shown that prices in US dollars are not significantly affected by the movement of the local exchange rate.”
CCZ also said that the price of a meal was generally high due to drought caused by El Niño.
“Meli meal prices remain stable, but at a higher price due to the demand for the product as families expect a shortage due to the drought,” Shirini said.
“It is also important to note that the prices of most essential commodities decreased in US dollar terms due to the natural adjustment of prices towards equilibrium which was observed during February 2024 when suppliers sharply increased their prices after the announcement of the national budget in anticipation of a shortage of commodities in the market, which did not happen.” Newsday
