The Sunday Mail
— Cash crisis takes its toll
— Customers shift to formal businesses
Livingstone Marufu —
IT looks like any other lazy, easy Monday where most people are under the spell of an energy-sapping weekend hangover. The day is moving in slow motion.
Except this is not a Monday. It is a Thursday afternoon which is supposed to be drowning with frenzied economic activity at Mbare’s Siyaso Market, the heart of one the country’s oldest black urban communities.
As one of the largest — if not the largest — informal markets in Zimbabwe, where all manner of goods ranging from building materials, timber, car parts, household goods and farming implements are sold, the symbolism is not lost.
It is a mirror image of the toll the cash shortages that have been affecting Zimbabwe has had on informal businesses. The bite that the cash shortages have had on Siyaso market, especially since March, is now apparent.
The informal businesses, housed in the 109-year-old high-density suburb of Mbare — the country’s oldest — rely solely on cash transactions.
Economists say more than US$100 million circulates in Mbare’s informal businesses annually. The Siyaso and Magaba markets account for US$36 million of this, while the fresh produce market remains incontestably lucrative.
But customers have disappeared. Entrepreneurs at the informal market told The Sunday Mail Business last week they were struggling to offload old stock, particularly in the last three months.
Business seems to be grinding to a painful halt. Mr Nyararai Nyararayi, who specialises in manufacturing cage and wire mesh, said customer counts had noticeably dropped after the cash shortages set in.
“Everyday we are coming as early as 5am, but it’s not surprising anymore that by the time we go home most of us wont have even bus-fares to get to our homes.
“We don’t know where this cash crunch came from and what it is but it’s destroying us and our businesses. Cash is our source of livelihood as we buy all our raw materials in and outside the country using cash. My brother, we can’t survive . . . we just can’t.
“We used to have sold goods worth US$70 or US$80 by 10am everyday but now we can go for two days without even selling a US$5 product. The situation here is just unbearable. We are not surviving but we are struggling.
“If the economy is really going informal why can’t the authorities do something to make sure we survive? . . . Why cant they put us on the priority list because we are generating as much as the exporters?” asked Mr Nyararayi.
As creatures with a strong lust for cash, which for social reasons is a physical demonstration of “progress”, most informal businesses do not find either plastic money or mobile money appealing.
It is the big retailers that are capitalising on mobile payment platforms such as EcoCash, TeleCash and OneWallet.
Desperate
Things have become so bad that Mbare’s entrepreneurs, many of whom were skeptical about the bond notes that are set to be rolled out this week are now willing to try them out.
Mr Nyararayi said: “We are now waiting for the bond notes to come. We are now left with no option but to use them and see where they can take us.
“The problem we are having is that most people have held on to their US dollars and don’t want to release it as they are anxious to see how the bond notes will work.
“We urge the Governor (of the Reserve Bank of Zimbabwe) to release them and see if they work at par with the US dollar for a very long time.
The continuous failure to release (bond notes) is causing more harm than good . . . we never know, they may be a necessary evil needed to change the fortunes of our sector and economy as a whole.”
Some entrepreneurs are beginning to see the value of setting up formal structures that would enable them to compete with big business on electronic transacting.
Informal businesses used to leverage on heavily discounted prices, which were made possible by virtually non-existent costs for rentals, wages and statutory obligations.
The dynamics have changed.
Large retail outlets are feasting on the misery of the desperate businesses as they have the infrastructure to transact electronically.
They also have the added incentive of offering cash-back facilities, where consumers can get a certain amount of cash from the retailer depending on the value of goods purchased using their debit cards on point of sale machines.
Despite the fact that the market has caught onto plastic money and bank transfers as alternatives to cash — with such transactions jumping from US$4,8 billion to US$5,5 billion between May and July 2016 — people still require money in their pockets for miscellaneous transactions.
OK Zimbabwe reported in the half-year to September 30, 2016 that its bottom line, or net profit, rose 87 percent to US$2,3 million from US$1,2 million realised in the same period a year ago.
POS purchases now account for more than 80 percent of all transactions in most retail shops around the country. But it is a different story for SMEs, especially those that operate in Mbare’s Siyaso and Magaba as they do not use even mobile payment platforms, let alone POS machines.
Taxes are better
Mbare-based informal timber retailer Mr Tichaona Makombe, popularly known as Mukoma at the market, said mobile money payments were no longer as convenient as before because of high transacting charges.
“We can’t afford to use EcoCash as we have fallen prey to most of these agents who want at least US$2 on every US$10 transaction — this means in every US$100 transaction agents take around US$20 . . . when in actual fact he or she didn’t do anything. Consequently, we have cancelled mobile money payments.”
He said many businesses were contemplating going to Zimra to get registered.
“We might pool our resources together to form a huge company that can be registered at Zimra with a greater hope of finding some investors who can inject capital into our projects.
“We know there are tax issues here and there which might consume some of our revenues but we have realised that in these times of cash shortages you can do more if you are not using electronic money to transact. Taxes are nothing compared to losses we are currently encountering,” he said.
And, as the Reserve Bank of Zimbabwe prepares to have a go at the cash shortages by issuing bond notes, informal businesses are leaving everything to chance, hoping that the new dispensation will be kind to them.
