CZR seeks dialogue on retail, wholesale sectors

The Confederation of Zimbabwe Retailers (CZR) has called for closer engagement between Government, regulators and other key stakeholders to address challenges in the retail and wholesale sectors.

CZR said the situation in the sectors was unsustainable, with some operators facing serious viability issues that could ultimately weigh on economic growth.

“The current trajectory is unsustainable, and without meaningful intervention, we risk further closures and economic stagnation,” CZR said.

The lobby group highlighted the need for constructive dialogue to find solutions that can drive the sector’s full contribution to Zimbabwe’s economic growth.

The CZR reiterated its commitment to working with all key stakeholders to ensure the sector’s growth while protecting consumer interests. A central concern raised by the CZR was the need to create a level playing field for retailers and wholesalers within Zimbabwe’s multi-currency system.

A representative of small traders, CZR, stressed that businesses in the retail and wholesale sectors did not need special treatment but fairness in the doing business environment.

CRZ called for interventions to address issues related to the exchange rate as well as regulations that promote the interests of both established and emerging businesses.

“We specifically call for the (further) liberalisation of the exchange rate to reflect market conditions, which would allow for fair pricing of goods,” the CZR stated.

The central bank liberalised the exchange rate when it abolished the auction market earlier this year, allowing price discovery among willing buyers and willing sellers on the interbank market.

But additional measures are required to further refine and tighten the system and insulate the domestic currency from market shocks. This also includes putting in place measures to increase the number of active sellers other than the Reserve Bank of Zimbabwe and Treasury, who have limited resources.

It is estimated Zimbabwe’s banking sector is sitting on more than US$3 billion, largely from export, which is not circulating to meet the needs of importers.

CZR pointed out that many businesses were operating under pressure due to the widening gap between the cost of sourcing goods in US dollars and selling price in Zimbabwean Gold (ZiG), based on the official exchange rate.

The disparity between the official and open market rates has created pricing distortions that are eating into profit margins.

Distorted pricing strategies ultimately hurt both businesses and consumers.

Last week the central bank said it had injected a total of US$64 million as part of addressing a growing pipeline demand for forex, which it said was exerting pressure on the local currency. Since the introduction of the new currency in April this year, the apex bank has injected close to US$300 million to bolster the ZiG’s stability.

The CZR also called on manufacturers and distributors to exercise discipline in their supply chains, urging them to prioritise selling through formal channels rather than engaging in direct-to-consumer sales that bypass registered retailers.

Formal channels would help create a structured and accountable supply chain that benefits all stakeholders.

CZR also cited the need to address regulatory oversight deficiencies, noting that while the formal sector was well regulated, the informal sector operators seemed to receive little scrutiny.

“Equal rules for all are needed, so that both formal and informal sectors operate under the same framework, ensuring fair competition and stability in the business environment,” CZR emphasised.

“The primary driver of price increases is the prevailing exchange rate,” CZR explained.

The Reserve Bank of Zimbabwe said at the weekend that it was making elaborate moves to ensure the stability of ZiG through the “back-to-basics” approach to the country’s monetary policy and execution of the bank’s mandate.

“Back-to-basics means that the central bank will uphold in strict terms, it’s core mandate of ensuring price and currency stability as well as its commitment to ensure that the money in circulation is fully backed by gold, other precious minerals and foreign currency reserves,” said RBZ.

“ZiG is our currency and our future, and the Reserve Bank is assuring all stakeholders that the elaborate steps that the bank is taking will weather the shocks that may occur”.

The recent volatility of ZiG has seen suppliers demanding payment in a USD to ZiG ratio of 80:20, with some imposing a heavy premium on goods sold in local currency.

“Retailers are forced to either source goods with a majority US dollar payment or absorb the inflated cost of goods priced in ZiG,” CZR said.

CZR noted that the Exchange Control Act, which enforces pricing regulations, was not helping matters under the current scenario as it prohibited businesses from adjusting prices beyond the prescribed exchange rate when selling in ZiG.

As a result, retailers face unsustainable operational costs that are not adequately reflected in the prevailing official exchange rate. This comes as the Financial Intelligence Unit (FIU) of the Reserve Bank of Zimbabwe has intensified crackdowns on businesses found to be in breach of the Exchange Control Act.

“These crackdowns often overlook the operational realities faced by the sector, leaving businesses exposed to undue risk,” CZR noted.

CZR clarified that the price adjustments seen across the sector were primarily driven by the need for survival. Retailers are struggling to navigate an environment characterised by a fluctuating exchange rate, inflationary pressures, and foreign currency shortages.

CZR pointed out that several major retail chains have already been forced to shut down due to the untenable business environment.

“The challenges have led to the closure of several major retail chains, with others teetering on the brink of closure,” CZR stated.

The organisation stressed that if the Government does not take immediate steps to address these issues, the sector’s future looks bleak.

To address the issues facing retailers and wholesalers, the CZR made several recommendations. Among them are the proposals for enhanced liberalisation of the exchange rate to allow businesses to operate at market-related rates, which would enable fair pricing of goods.

The organisation also called for fuel provisions in ZiG for retailers or the removal of fuel taxes to mitigate the impact of ongoing power shortages and the reliance on generators.

Another key recommendation was the reopening of borders to allow retailers to import basic goods and essentials.-herald