Retailers harness greenback

LIVINGSTONE MARUFU

Local  retailers are harnessing the much needed United States dollar (US$) by offering a higher than the official foreign exchange rate to customers who buy using the greenback.

The official exchange rate is ZWL$130.1567: US$1.

But, Business Times can report that several retailers are using a  rate of between  ZWL$200:US$1 and ZWL$210:US$1.

They said they wanted to harness the US dollar to sustain operations.

“Having seen that forex is taking a long time to be settled on the auction system, retailers have put in place measures that ensure they get forex  from the market to sustain  their operations,” the Confederation of Zimbabwe Retailers president Denford Mutashu told Business Times.

The Reserve Bank of Zimbabwe has been struggling to release  the forex  allotted to companies , resulting in a backlog of more than US$75m.

However, the RBZ governor John Mangudya,  said he was working to clear the backlog  by the end of this month.

The backlog has left many companies without working capital to sustain the operations.

“We were struggling to import because the forex auction system was taking too long to settle bids hence we didn’t have  enough  forex  to procure our goods. With a fair rate of ZWL$210: US$1, customers are trickling into our shops and the statistics have been amazing since last week when we started this scheme,” a manager with a leading retail chain, who preferred anonymity, said.

Some retailers said they were also concerned by delays in processing telegraphic transfers (TTs) to cross border suppliers. Some banks are blaming the central bank for the delay in the electronic method of transferring funds that is used primarily for overseas wire transactions.

While some retailers say it is taking up to 10 days for TTs to reflect in suppliers’ accounts, industry representatives said last week some of the transactions that had originated as far back as early  February were still outstanding.

Resultantly, imports of both finished products and raw materials have been adversely affected.

Industry, which claims to have earlier raised the red flag with stakeholders, is now imploring the government to ensure that the bottlenecks are cleared before the situation further deteriorates.

However, last week both parties – government and business — indicated their willingness to engage.

“Import payments via TTs have become more difficult and are taking longer than the norm. Transactions that are supposed to be processed within 48 hours can take up to a couple of weeks to reflect at the recipient beneficiary.

“As such, imports of finished products and indeed raw materials have been adversely affected leading to shortages of certain basic commodities,” a retailer said.

The retailer said it was  not feasible to depend on local manufacturers to satisfy the local market as they still have capacity constraints and production inefficiencies arising from aged equipment.

“Whilst good progress has been registered in certain sectors like cooking oil manufacturing, there is still a dependence on imported raw materials that make the manufacturers susceptible to supply side shocks which can have devastating consequences on the supply chain.

“Government needs to do more work to encourage investments such as ones made in the cooking oil manufacturing industry to foster local production of most of the country’s requirements. Over time, the country will become self-sufficient.

“If no significant and urgent steps are taken to avert the current situation, shortages will begin to manifest in a number of retail outlets, and will become widespread,” he  said.