Sub-standard imports continue to stifle clothing industry giants
CLOTHING retailer Truworths Limited chief executive officer Bekithemba Ndebele says sales and profitability continue to be adversely affected by the importation of sub-standard clothing and footwear by the informal sector that does not pay tax.
Established clothing and footwear outlets are caught up in a vicious price war with the informal sector, which sources most of its used apparel from China, South Africa, Botswana and Tanzania.
Recently, the Ministry of Industry and Commerce revealed that the Consignment-Based Conformity Assessment (CBCA) is yielding tangible results as more than 154 million assortments of products that do not meet set importation standards have been rejected from entering Zimbabwe since 2015 in the process safeguarding the local industry from unfair competition presented by non-compliant imported products.
The CBCA programme was first implemented under Statutory Instrument No 132 of 2015 gazetted on December 18, 2015, by the then Ministry of Industry and Enterprise Development to verify and assess the conformity of goods in exporting countries to prevent hazardous and substandard products from entering the country
And it entered into full implementation stage in March 2016.
Under the General Goods category, goods listed under SI 124 OF 2020, which include medicaments, electrical and children’s toys, will be inspected by Bureau Veritas and Cotecna Inspection SA before they are shipped to the country.
BV was given the mandate to do shipment inspection, verification of documentation, sample testing and risk assessment of goods in the country of origin.
Under the CBCA programme, all products regulated by the Ministry of Industry and Commerce exported into Zimbabwe are expected to be accompanied by a CBCA certificate
In a trading update for the six months to January, Mr Ndebele highlighted that sales and profitability continue to be adversely affected by what he termed restrictive pricing laws, which give an unfair advantage to the informal sector.
He added that the importation of sub-standard clothing and footwear by the informal sector continues to affect sales.
However, in the period under review, Mr Ndebele noted that United States dollar sales accounted for 71,4 percent of cash sales with local currency accounting for 28,6 percent saying the recent announcement regarding the continued use of the multi-currency regime until 2030 is welcome.
He said the growth of US dollar credit sales is being hampered by a lack of US Dollar long-term finance.
“All credit sales were in US Dollars, the growth in the credit sales is being hampered by lack of US Dollar long-term finance. Of the cash sales 71,4 percent were in US Dollars and 28,6 percent in Zimbabwe Dollars,” noted Mr Ndebele.
In terms of store establishment, post January 2024, under the group, Truworths had 13 stores, Topics (14) and Number 1 had 11 outlets bringing a total of 38 down from 46 in the corresponding period last year.
Mr Ndebele noted that re-alignment of the store establishment is a continuing process taking into account trading densities and store viability.
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