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Manufacturers Do Not Want Zim Dollar, Supply Chain Is 90% Dollarised - Retailers

Manufacturers Do Not Want Zim Dollar, Supply Chain Is 90% Dollarised - Retailers

Zimbabwean retailers are currently grappling with restocking locally produced goods due to currency-related challenges.

As reported by NewsDay, manufacturers and wholesalers are favouring transactions in United States dollars (USD), which has led to difficulties for retailers buying in the local currency.

The Zim dollar has experienced significant depreciation against the USD, prompting discussions about the potential full dollarization of the economy.

As a result, retailers have encountered prolonged periods without the supply of essential locally produced commodities. Critical shortages of items like sugar have been reported.

Speaking to NewsDay, Denford Mutashu, the president of the Confederation of Zimbabwe Retailers, said that the supply chain for basic commodities has become dollarized.

Mutashu said this situation has left retailers who buy in local currency facing difficulties in maintaining their stock levels. He said:

The biggest challenge is the currency that one uses to source products at the procurement level.

Manufacturers do not want the local currency. Generally, the appetite for the US$ in the market is high.

The supply chain is 90% dollarised, and for the formal stores, it becomes very difficult because they are the only ones that are still selling to the customers in local currency.

So, with a huge local currency balance, running a retail business in this current environment is difficult.

Manufacturers also indicate that most of their suppliers for raw materials or services are demanding payment in US$ and that is why they demand US$ when they sell their products.

It’s a glitch that is happening. That is why most formal retail shops are failing to stock up. Those products are in the informal market.

As of 14 March 2024, the Zim dollar was trading at 1:17 830 against the United States dollar at the interbank market and 1:18 500 in supermarkets, while it stood at 1:20 000 on the parallel market.

Meanwhile, Consumer Council of Zimbabwe (CCZ) director of corporate affairs Philemon Chereni said that prices of goods and services had gone down in US$ terms as operators were offering discounts to encourage foreign currency transactions.

Chereni said the cost of living for a low-income urban-earner family of six, as measured in USD, decreased by 1% from US$551.38 to US$544.71.

He said the stability of the basket’s overall cost is partially attributed to the discounts applied when paying in USD.

More: Pindula News

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