Retailers cry foul as licences fees skyrocket 400%

LIVINGSTONE MARUFU

Zimbabwe’s retailers are feeling the pinch after operating licence fees skyrocketed by more than 400%, amid fears the move could trigger fresh increases in the prices of basic goods, Business Times can report.

The local retailers are already struggling with the effects of Covid-19-induced lockdown imposed by the government to curb the spread of the deadly virus in addition to consumer low disposable incomes and foreign currency shortages.

The retailers said the move by the local authority to rocket the operating licence fees would exacerbate their situation.

There is a likelihood of reduced demand of basic goods and commodities due to reduced spending power due to a spike in prices of basic goods.

Retailers Association of Zimbabwe (RAZ) president, Themba Ndebele, said the sharp spike would negatively impact on prices of food stuffs and other goods.

Retailers would be forced to push the cost to long suffering consumers.

RAZ represents retail giants including OK Zimbabwe, Pick n Pay, Edgars and Truworths among others.

“Bills are still coming through but everybody (RAZ members) is talking about a 300% to 400% increase so far. This could trigger some price increases,” said Ndebele, who is also the chief executive officer of Truworths Zimbabwe.

Confederation of Zimbabwe Retailers president, Denford Mutashu warned of a wave of fresh price increases as companies grapple for survival.

“Licence fees’ increase is a great cause for concern and flies in the face of business and government effort to reignite confidence in the country,” Mutashu told Business Times.

“Councils have become a huge cost driver and biggest threat to business existence and survival. Zimbabweans and businesses are at the mercy of arbitrary rates and utilities hikes.”

Prices of basic commodities have been going up since the beginning of January this year due to a movement in parallel foreign currency exchanges.

This has made the prices of basic commodities go beyond the reach of many. They appear to be linking their prices to the parallel market exchange rate.

Analysts fear a strong wave of price increases, due to punitive operating licence fees, high forex parallel market exchange rates, spike in fuel prices and other utility bills, could aggravate the situation for retailers.

The development comes at a time when some commercial space barons and cartels are fleecing desperate retailers seeking trading space by charging them exorbitant rentals in United States Dollars.

This is prejudicing the city council and private commercial property owners of the much needed revenue.

It is understood that they are taking advantage of the current rush for retail space in the capital city of Harare. Retailers from large chain supermarkets to small independently owned stores now dominate the city centre.

It is understood that the space barons are charging, depending on the size of the space, at least US$20,000 goodwill while monthly rentals are pegged at between US$5,000 and US$10, 000.

The figure could be higher in other centres.

In turn, they pay paltry monthly rentals to the local authority, NRZ and pension funds in Zimbabwe dollar.