Retailers fret on import bottlenecks

05 Jun, 2016 - 00:06 0 Views
Retailers fret on import bottlenecks

The Sunday Mail

◆ TT taking up to two weeks

◆ Suppliers losing confidence

◆ Industry call for urgent intervention

Darlington Musarurwa and Livingstone Marufu
IMPORTERS, especially retailers, are fretting over delays in processing Telegraphic Transfers (TT) to cross border suppliers, which, they fear, will seriously affect their ability to seamlessly buy and supply the local market with critical goods and services.
A telegraphic transfer is an electronic method of transferring funds that is used primarily for overseas wire transactions.
It is understood that banks are apportioning blame at the Reserve Bank of Zimbabwe (RBZ).
While some retailers say it is taking up to two weeks for TTs to reflect in suppliers’ accounts, industry representatives said last week some of the transactions that had been originated as far back as April are 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 Government to ensure that the bottleneck is cleared before the situation further deteriorates.
However, last week both parties – Government and business – indicated their willingness to engage.
Meikles Mega Market managing director, Mr Panganai Ngorima said the current difficulties in the market have largely been “as a result of the prevalent cash shortages.”
“Import payments via telegraphic transfer 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 recipient beneficiary.
“As such, imports of finished products and indeed raw materials have been adversely affected leading to shortages of certain basic commodities like our local cooking oil which has an import component,” said Mr Ngorima.
He noted that it is too early to solely depend on local manufacturers to satisfy the local retail 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 countries requirements. Over time, the country will become self sufficient.
“If no significant and urgent steps are taken to avert the current situation; indeed shortages, which have already began to manifest themselves in a number of retail outlets, will become widespread,” added Mr Ngorima.
It is widely believed that urgent steps are needed to ensure that international payments, particularly food imports and related raw materials, are executed without unnecessary delays as this is harming the relationship between importers and foreign suppliers.
Retailers still sufficiently stocked
But as fears grow that there could be shortages of basic commodities on the local market, OK Zimbabwe chief executive officer, Mr Willard Zireva told The Sunday Mail Business last week that the retailer is still sufficiently stocked.
“We have not been selling South African cooking oil for a while since Government took a position of removing it together with other goods like mealie-meal from the general import licence.
“Goods are still very much on the shelves and if there are shortages, I have not been notified as yet. We still have enough goods to supply the market.
“Local industry has no capacity to supply the market.
“We lost that position 15 years ago as we now have obsolete equipment and many factories have closed due to lack of capital, among other pressing issues.
“It’s not possible to supply the local industry as we don’t have enough cash to import raw materials to make our own goods, let alone export.
“The other issue is that with the little foreign currency you have in your bank account, it takes decades to process the transfer hence in my view we don’t have capacity to feed our own people,” said Mr Zireva.
He also noted that the shortage of goods can only be expected if the obtaining liquidity crunch continues.
The country is still importing more than it is exporting.
Recent statistics from South Africa’s department of trade and industry indicate that the country’s exports to South Africa – its biggest trading partner – spiked by more than 380 percent in March to 1,1 billion rands ($71,4 million, using the average 1:15,4 exchange rate for March) from 222 million rands ($14,4 million) in the same month in 2015.
However, imports at 2,3 billion rands ($149 million) in the same period grew 3,1 percent from a year earlier and outpaced exports by more than $77 million.
It is the continued import of trinkets and goods that can ideally be manufactured on the local market that is worrying for Government.
As a result, there have been targeted interventions that have been made to protect local industries.
Under tax measures that became effective on September 1, 2015; goods such as cooking oil, maize meal, meat, sugar and flour; which can ideally be produced by local industries, were removed from the travellers’ rebate.
The traveller’s rebate, a duty-free allowance granted to bona fide travellers, has also been slashed to $200 from $300.
There were also additional interventions targeted at the textiles, and printing and packaging industries to improve the fortunes of local industry.
RBZ, after consultations with industry, also weighed in by drafting a priority list of imports.
Government willing to engage
Last week, the Minister of Industry and Commerce, Mr Mike Bimha said industry had not formally engaged Government on the current challenges that they are facing.
He however indicated that he will soon meet with the RBZ Governor, Dr John Magudya and Finance and Economic Development Minister, Mr Patrick Chinamasa to apprise them on the latest developments in the market.
“No company has approached us pertaining to the delays in importing the raw materials, it’s the first time I’m hearing that complaint.
“However, if they are such complains, companies are free to approach us so that we can see how best we can deal with the matter,” said Mr Bimha.
Government also feels that it is unfair for all local industries to be considered incapable of supplying the domestic market as various industries are performing differently.
Confederation of Zimbabwe Industries (CZI) president, Mr Busisa Moyo said while a priority list of imports was drafted a week ago, it is either not being implemented or there are new challenges in implementing it.
“The key problem is that Government is painting all sectors with the same brush.
“As of last week, some transfers that were done in March, April and May had not gone through . . .
“Banks are saying the situation is beyond them. Nostro accounts are empty. We have been warning authorities that the situation might deteriorate. It is not possible that something as big an issue as this could have escaped our discussions with Government.
“We should engage and we will continue to engage,”said Mr Moyo.
Plastic money usage
While cash shortages continue, retailers believe there must be a deliberate policy to encourage the use of plastic money and electronic funds transfer in all facets of trading to ensure ease of transacting. Economist Mr Persistence Gwanyanya said local and central Government has to take a lead role in accepting and promoting the usage of plastic money through Point of Sale (POS) platforms.
“Surprisingly, while reiterating its thrust towards plastic money, little precious action is being done by RBZ to promote the use of plastic money. The same applies to banks, retailers and wholesalers.
“By now we would expect all service stations to be adequately equipped with Point Of Sale equipment. The same is expected for municipalities, toll gates, schools, churches and Government departments.
“However, it seems as if it’s business as usual. There seems to be more noise on bond notes that anything else yet the introduction of bond notes depends more on confidence levels rather than the use of plastic money,” explained Mr Gwanyanya.
Fees charged by banks for plastic money transactions and fund transfers, especially through the real time gross settlement system (RTGS), are still considered high.
It costs between US50cents and a $1 per transaction using debit cards, which is largely viewed as extortionate and prohibitive. On Thursday, Steward Bank, a subsidiary of mobile giant Econet Wireless Zimbabwe, took the initiative to downwardly review RTGS charges by 50 percent to $5 – still considered too high.
The bank has gone a step further by scrapping transaction costs on Fridays for those holding the Steward Bank Proprietary Card,Steward Bank MasterCard Debit and Steward Bank MasterCard Credit . There is however a feeling in the market that the RBZ also needs to review the minimal residual fee of $2,80 it levies banks for RTGS transfers.

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