HARARE – As the country hurtles towards the watershed national elections, struggling companies are warning of steep price increases and debilitating shortages of basic goods due to Zimbabwe’s worsening foreign currency squeeze.
This comes as the country’s biggest food and beverages firm, Delta, has lamented the worsening foreign currency shortages — adding that its popular alcoholic and soft drink brands could run out soon if authorities don’t take measures to mitigate the situation.
Zimbabwe has for a long time now been struggling to generate enough foreign currency to meet its imports bill, with the manufacturing sector seriously affected by the political and economic crisis that began under ousted former leader Robert Mugabe’s iron-fisted rule.
“Businesses are having great difficulties accessing foreign currency. This has been mainly due to the fact that our requirements have grown, in addition to the backlog which we still had. Thus, supply has not matched this demand.
“There is a realistic danger that this could cause prices to go up while in some instances there could be products shortages.
“Our economy is not generating enough foreign currency and this is why we are encouraging our companies to export more and not just consume the foreign currency they generate,” Confederation of Zimbabwe Industries (CZI) president Sifelani Jabangwe told the Daily News on Sunday yesterday.
“There are encouraging signs though given that our exports to South Africa have gone up. So far, we are a currency dependent economy and that is what we want changed,” he added.
Zimbabwe National Chamber of Commerce (ZNCC) president, Divine Ndhlukula, said the current quarter had been one of the worst for business in terms of accessing foreign currency.
“Incidentally, I have just finished talking to my colleague at CZI Mr Jabangwe and we agreed that this has been the worst quarter so far. Most of our members can’t access foreign currency.
“We don’t know what is happening because we thought since we are in the middle of the tobacco selling season the situation would improve.
“If the foreign currency shortage persists, businesses will be forced to look for money on the parallel market. They will then put a premium on their products to cushion themselves and this will have an inherent effect of increasing prices,” Ndhlukula warned.
Reserve Bank of Zimbabwe (RBZ) governor John Mangudya was not reachable on his phone yesterday.
However, it is public information that the RBZ has in recent months been swamped by requests for the scarce foreign currency.
Among the goods and items that qualify for the RBZ’s priority list are fuel, hospital drugs and electricity imports.
RBZ has a huge backlog running into hundreds of millions of dollars, and cannot even service its burgeoning priority list.
The president of the Confederation of Zimbabwe Retailers, Denford Mutashu, also described the situation as “sad and worrisome”.
“From the reports that are coming from industry, business and other sectors, it’s getting worse and it’s worrisome. The lack of a response strategy to the foreign currency shortages is damning.
“It looks like there are some people in authority who are living in denial, hoping that the foreign currency situation will sort itself out. It is very sad,” Mutashu told the Daily News on Sunday.
In the run-up to Christmas last year, Zimbabwe recorded price hikes on several commodities, which resulted in a gloomy festive season for many families.
There are now fears that if prices increase further, Zimbabwe could start slipping into another hyper-inflationary era reminiscent of the 2007/08 period when soaring inflation obliterated the Zimbabwe dollar — along with pensions and other savings.
To escape the hyper-inflation which had topped 500 billion percent, the country was forced to adopt the United States dollar in 2009 as its main currency of trade, along with the British pound and the South African rand.
But the relative financial stability of the last decade has unravelled in recent years, as acute foreign exchange shortages have led to sharp price increases.