The Sunday Mail
Persistence Gwanyanya
THE Confederation of Zimbabwe Retailers (CZR) hosted the International Retailers and Wholesalers Indaba on May 31, 2017.I was part of the panellists who included the Deputy Governor of the Reserve Bank of Zimbabwe (RBZ) Dr Kupikile Mlambo and the president of CZR, Mr Denford Mutashu.
It was quite comforting to learn that both the CZR and the RBZ agreed with my earlier assertion that the country’s cash crisis is inextricably linked to the structural challenges affecting the economy.
Equally comforting was the fact that the two key entities are agreed that addressing the local cash crisis should be a priority for policy makers.
The toll that this crisis is having on the economy is undeniably huge.
Admittedly, the retailers and wholesalers are a key constituency to the goings on in the market.
In most cases, market indiscipline is perpetuated by and through the two sectors, itself a reflection of the consumptive nature of the economy.
Nevertheless, it is encouraging that the central bank admitted that market indiscipline – though not condoned – is largely a symptom of underlying structural challenges in the economy.
The panellists were quite concerned by the country’s increasing dependence on imports, considering the dwindling monetary base.
The market is also agreed that reindustrialisation would offer a lasting solution to the cash crunch.
Further, as reindustrialisation efforts become visible, it will be increasingly difficult for the market to support arbitrage.
Clearly, the retail and wholesale sectors are dominating the country’s economic landscape.
Statistics provided by the Zimbabwe National Statistics Agency (Zimstat) on business operators and employment are quite revealing.
In their Central Business Register Inquiry Report (August 2013 to June 2014), Zimstat-USAID revealed that the bulk of business operators in Zimbabwe (59 percent) were in the wholesale, retail trade, repair of motor vehicle and cycle section.
This compares favourably with 11 percent in manufacturing; 9,2 percent in education; 5 percent in services; 4,7 percent in accommodation and food services, as well as 0,2 percent in mining and quarrying.
They also showed in their survey of 2014 that the wholesale and retail sector was the largest employer at 61 percent of labour force.
These statistics just demonstrate the importance the retail sector has assumed in the country’s economic discourse.
It would be remiss for policy makers to underplay the power of these two sectors in policy formulation.
A look at the role played by this sector in the success of recent economic measures – including Statutory Instrument (SI) 64 of 2016, promotion of electronic money and the multi-currency system – is quite revealing.
To a certain extent, the rise of the three-tier pricing system and discounting of electronic money and bond notes on the alternative market is quite understandable especially in view of the US$350 million cash gap in the market.
This shortage might as well be the reason why some retailers and wholesalers have been sabotaging electronic payments as a way of getting hard cash for importing, merchandise.
This, coupled by challenges such as increasing system downtime, errors and duplication, are threatening to reverse the traction gained on electronic payment platforms so far.
It is heartening that the central bank acknowledged the need to urgently intervene in order to address these anomalies.
Perhaps the most important indication that has been given by the RBZ so far is the commitment to the idea of infrastructure sharing to strengthen electronic payment platforms.
It is however important to back that commitment with action.
What is quite clear from my analysis and observations is that solving the country’s cash challenges is a two-way street which requires participation by all concerned parties.
Whilst the retail and wholesale sectors would appear to be on the forefront of market indiscipline, this challenge is mainly a symptom of underlying structural factors that need to be sorted out as a matter of urgency.
It’s imperative that we implement economic and structural reforms sooner rather than later.
Economic history has taught us that, though painful, reforms are necessary for economic turnaround.
China provides a good example of this assertion.
It gradually transformed itself from an economic backwater in the late 1970s to become not only the second-largest economy in the world, but the talk of the new millennium.
Persistence Gwanyanya is the founder and CEO of percycon Advisory. For feedback: email: [email protected] and WhatsApp: +263 773 030 691.
