RBZ governor backs street sales

RBZ governor backs street sales
Published: 06 August 2017 (844 Views)
STUNG by poor cash circulation on the market, Reserve Bank of Zimbabwe (RBZ) is encouraging local manufacturers to sell their produce directly to the market as a way of tapping into the money that is circulating outside the mainstream market.

This comes after Standardbusiness reported three weeks ago that Zimbabwe's retailers were facing a new threat as companies in the fast-moving consumer goods (FMCG) sector were now pushing their products directly to consumers on the streets, bypassing supermarkets and wholesalers in search of the elusive hard cash.

RBZ governor John Mangudya last week justified the move by manufacturers to sell their produce directly to the market, saying this would help bring back money to the formal banking system.

"If you go to the informal sector you will find there is about 10-15% plastic money while the rest is all cash," he said.

"What we need to do under these circumstances is to formalise by ensuring that the bigger companies [manufacturers] sell their produce to the informal sector and get cash.

"Then they bank the cash. When formal businesses take money from the formal sector they will be formalising the formal sector.

"As long as the informal sector is bigger than the formal sector, we have a big problem. Those are the challenges we are facing."

Mangudya added: "So we need to find ways and means to get money from them and put the money into the formal sector.

"Those guys who are in the informal sector don't put their money in the bank. If Bakers Inn sells their bread to the informal market, they get cash and money comes to the formal sector because they bank their cash."

Zimbabwe is experiencing serious cash shortages, with most people spending nights in bank queues to withdraw as little as $40 cash.

The cash shortages continue to prevail despite the RBZ boss disclosing that there were $25 million worth of bond coins, $175 million in bond notes and approximately $800 million in various currencies under the multicurrency regime in circulation, to give a total of around $1 billion.

Food processor Cairns' CEO Nancy Guzha told standardbusiness that the company's strategy was to service consumers wherever they were, and wherever they choose to shop from.

"With regards to our products being more available on the streets, this phenomenon is more reflective of the current macro and socio-economic environment wherein informal trade has increased," she said.

"As a business, we continue to sell into retail and wholesale chains, and most of the products being sold on the streets will have reached the sellers via these channels.

"In an informal economy, the likes of which you see in most of Africa, Asia and Latin America, informal selling on the streets is a viable business option, and it only reduces to the extent that the economy becomes formal."

Dairibord CEO Anthony Mandiwanza also confirmed recently that his company was selling some of its products directly to the consumer at a discounted rate to get cash.

Confederation of Zimbabwe Retailer president Denford Mutashu, said the informal sector was an integral part of the value chain and it was high time government focused on aligning the informal and formal sectors.

"It is critical that the government focuses on strengthening the whole value chain for accelerated economic development as collective efforts to promote production in the country cannot be expedited without a vibrant retail and wholesale sector," he said.

"The informal sector is indeed an integral part of the value chain and it is high time government focuses on aligning the informal and formal sectors.

"This will improve the overall contribution to economic revival as a number of informal and unregistered businesses will decline. It has the effect of causing price distortions as the formal and informal cost structures differ."

Financial expert Persistence Gwanyanya said although a lot of money was circulating in the informal sector, such an intervention was not the best method to deal with the situation.

"There should be a mechanism of getting that money," he said.

"Is such a business model sustainable? Will it provide the permanent solution?

"Zimbabwe is a consumptive economy, which is highly informalised. So all the consumption is happening in the informal sector."

The Zimbabwe Revenue Authority said it could be losing potential revenue through this new phenomenon.

- the standard

Tags: RBZ, Street, Sales,
 0

You May Like These Videos

Comments

There are no comments.

Latest stories

Don't vote for Mnangagwa

by Staff reporter | 16 July 2018 | 293 Views

Govt justifies shortage of hospitals in Matebeleland

by Staff reporter | 16 July 2018 | 146 Views

Chiwenga recounts role he played in Mnangagwa's escape

by Staff reporter | 16 July 2018 | 219 Views

Concerns over Zimbabwe elections grow

by Staff reporter | 16 July 2018 | 241 Views

Zimbabwe ranked lowest on income equality

by Staff reporter | 16 July 2018 | 176 Views

Chigumba must talk to Chamisa

by Staff reporter | 16 July 2018 | 219 Views

Soldier shoots children over sex

by Staff reporter | 16 July 2018 | 231 Views

Prophet Makandiwa 'mansion' up for auction

by Staff reporter | 16 July 2018 | 260 Views

Biti, Chamisa need not cross the red line

by Staff reporter | 16 July 2018 | 193 Views

Chamisa's supporters freed

by Staff reporter | 16 July 2018 | 142 Views

Mnanganwa's Authoritarian Elections

by Dr Gus Manatsa | 16 July 2018 | 167 Views

Chigumba reminds me of Tobaiwa Mudede

by Dr. Gus Manatsa | 16 July 2018 | 165 Views

Govt realigns Air Zimbabwe, Zimbabwe Airways

by Staff reporter | 16 July 2018 | 169 Views

Chamisa's rally blessed by rain

by Staff reporter | 16 July 2018 | 241 Views

Beitbridge upgrade to speed up border efficiency

by Staff reporter | 16 July 2018 | 140 Views

Law Society wins tax exemption case

by Staff reporter | 16 July 2018 | 146 Views

Lawyer sues over SMS campaign

by Staff reporter | 16 July 2018 | 149 Views

Mugabe's planes ready to fly

by Staff reporter | 16 July 2018 | 224 Views

UK stockbroker to woo FDI to Zimbabwe

by Staff reporter | 16 July 2018 | 143 Views

MDC-Alliance threatens to expel defiant members

by Staff reporter | 16 July 2018 | 151 Views

Blair toilets banned

by Staff reporter | 16 July 2018 | 217 Views

Chamisa, prepare for defeat in a dignified manner

by Isdore Guvamombe | 16 July 2018 | 244 Views

Biti anoints himselves custodian of all Ndebele memory

by Reason Wafawarova | 16 July 2018 | 156 Views

Council threatens legal action over bills

by Staff reporter | 16 July 2018 | 126 Views

Matebeleland people should stop crying about marginalisation

by Staff reporter | 16 July 2018 | 91 Views

Zimbabwe trade deficit reaches $1,3 billion

by Staff reporter | 16 July 2018 | 121 Views

1 family, 5 dead in an accident

by Staff reporter | 16 July 2018 | 158 Views

One week no water for Bulawayo suburbs

by Staff reporter | 16 July 2018 | 112 Views

Miracle baby survives winter dumping

by Staff reporter | 16 July 2018 | 160 Views

MDC Alliance remains talk show as clock ticks

by Isdore Guvamombe | 16 July 2018 | 127 Views

4 000 school drop outs!

by Staff reporter | 16 July 2018 | 122 Views

Khupe slams parties threatening to boycott polls

by Staff reporter | 16 July 2018 | 177 Views

Postal votes remain valid, says Zec

by Staff reporter | 16 July 2018 | 107 Views

Lovers drag cops to maintenance courts

by Staff reporter | 16 July 2018 | 107 Views

Mnangagwa off to Mashonaland West

by Staff reporter | 16 July 2018 | 82 Views