LIVINGSTONE MARUFU
HARARE – The day looks like any simple day where most people are under the spell of an energy-sapping weekend hangover. The day is moving in slow motion. Except this is not a Monday. It is a Wednesday afternoon which is supposed to be drowning with frenzied economic activity in downtown Harare, the heart of the country’s informal businesses.
As one of the largest — if not the largest — informal markets in Zimbabwe, where all manner of goods ranging from building materials, timber, car parts, household goods and farming implements are sold, the symbolism is not lost.
It is a mirror image of the toll the cash and forex shortages that have been affecting Zimbabwe, has had on informal businesses.
As it is now, customers are fleeing the informal businesses in favour of formal retail shops like OK, Pick ‘n’ Pay and Food World as they offer better prices which do not have a strictly cash condition.
Tuck-shops offer a premium when paying using Ecocash at 25% while there is no swipe option in most shops.
Spaghetti is going for $0,60 per packet in tuck shops while in big retails its selling between $0,60 and $0,70, a 2 litre bottle of Mazoe is going for $3 in the informal sector whereas in supermarkets its going between $2,80 and $2,99. Cremora 1kg is selling at $4,60 in tuck-shops while in formal shops is selling at $4,50, jade soap is sold at $0,99 in supermarkets and $1 in tuck shops. A 2 litre bottle of cooking oil is going for $3,25 in various informal markets against $3,46 in formal shops.
However only two grocery items are cheaper in the tuck-shops than in formal retail; MAQ washing powder and Nivea lotion. MQA washing powder is going for $4,50 per 2kg packet against $6,70 in formal shops and Nivea is going for $4,50 against $7 to $9 in formal supermarkets.
The tuck-shops phenomena proliferated as the country’s economy largely became informal, a key characteristic of what former Finance minister Tendai Biti termed “supermarket economy.” The country became predominantly consumptive but very unproductive, indicative of severe economic decline.
Although some offer smart-cash facilities, the majority of these enterprises thrive, not on plastic money, bank transfers or mobile banking through EcoCash, but run/operate on cash. They especially depend on foreign exchange, often demanding half of the currency of purchase from their customers to be denominated in foreign currency. Worsened by outright externalisation of foreign currency by certain elites and other people as reported in the media, it is little wonder that foreign currency is fast disappearing from the banking sector and is increasingly becoming monopolised by these traders. Entrepreneurs operating in the downtown area told Business Times last week that they were struggling to offload old stock, particularly in the last three months as customers are now favouring formal retail.
Patrick Muchenje, who operates near Bhadella wholesalers, said customer counts had noticeably dropped after the price increases set in.
“We come as early as 5am, but it’s not surprising that by the time we go home some of us won’t have even bus-fares to go back home as people are now reverting to OK and Pick ‘n’ Pay.
“We used to sell goods worth $70 or $80 by 10am everyday but now we can go for two days without even reaching that figure,” said Muchenje.
“What’s happening is that we are importing at an inflated price and we can’t come here and sell at the same price, that’s why we have increased the price. The fact that we are buying cash at 30 percent on the black market means we are in for a long summer.
“If the economy is really going informal why can’t the authorities do something to make sure we survive? Why can’t they put us on the priority list because we are generating as much as the exporters?” asked Muchenje.
Desperate
Things have become so bad that downtown’s entrepreneurs, many of whom were skeptical about Point- of –Sale (POS) machines are now willing to try them out.
Some entrepreneurs are beginning to see the value of setting up formal structures that would enable them to compete with big business on electronic transactions.
Informal businesses used to leverage on heavily discounted prices, which were made possible by virtually non-existent costs for rentals, wages and statutory obligations.
Changing of dynamics
Large retail outlets are feasting as they have the infrastructure to transact electronically.
They also have the added incentive of offering cash-back facilities, where consumers can get a certain amount of cash from the retailer depending on the value of goods purchased using their debit cards on point of sale machines.
Despite the fact that the market has caught onto plastic money and bank transfers as alternatives to cash — with such transactions jumping $96 billion in 2017 — people still require money in their pockets for miscellaneous transactions.
POS purchases now account for more than 96 percent of all transactions in most retail shops around the country.
