RBZ governor backs street sales

RBZ governor backs street sales
Published: 06 August 2017 (314 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

First Lady should lead by example - Linda Masarira

by Stephen Jakes | 18 August 2017 | 409 Views

Njelele must be protected- Zanu PF youth member

by Stephen Jakes | 18 August 2017 | 185 Views

Gokwe, Gutu youth pledges to uphold peace ahead of the 2018 elections

by Stephen Jakes | 18 August 2017 | 152 Views

Harare mayor, MDC-T leadership clash

by Staff Reporter | 18 August 2017 | 229 Views

Cancer cases on the rise in Zimbabwe

by Staff Reporter | 18 August 2017 | 170 Views

Bosso, DeMbare pull out of tournament

by Staff Reporter | 18 August 2017 | 158 Views

Econet launches new credit scheme for civil servants

by Staff Reporter | 18 August 2017 | 113 Views

85% of Zimbabweans consult prophets, traditional healers

by Staff Reporter | 18 August 2017 | 118 Views

Grace Mugabe's sons were not using drugs - AfriForum

by Staff Reporter | 18 August 2017 | 329 Views

Teacher kidnapped, tied to tree, raped for 5 hrs

by Staff Reporter | 18 August 2017 | 164 Views

Pastor sprays anointed perfume into congregants' mouths

by Staff Reporter | 18 August 2017 | 146 Views

Man (26) thoroughly beats up his mother for not paying his rent

by Staff Reporter | 18 August 2017 | 157 Views

What I Learnt From My Most Outstanding Learner

by Mthokozisi Gwizi | 18 August 2017 | 104 Views

I will not vote for a Zezuru president in 2018 - Mliswa

by New Zimbabwe | 18 August 2017 | 130 Views

No immunity for #GraceMugabe, says Dirco

by Staff Reporter | 18 August 2017 | 201 Views

Zimbabwe invokes Grace Mugabe diplomatic immunity

by Staff reporter | 16 August 2017 | 542 Views

'Zimbabwe most hackable country'

by Staff reporter | 16 August 2017 | 298 Views

Grace Mugabe's victim won't drop charges

by Staff reporter | 16 August 2017 | 521 Views

'I'm not political,' says Mudhara achauya hit maker

by Staff reporter | 16 August 2017 | 377 Views

Woman surrenders goblins

by Staff reporter | 16 August 2017 | 443 Views

Kombi driver barred from driving

by Staff reporter | 16 August 2017 | 209 Views

Bus conductor bashes cop

by Staff reporter | 16 August 2017 | 205 Views

BREAKING: SA police confirms Grace Mugabe still in SA

by Staff reporter | 16 August 2017 | 257 Views

Mugabe calls for peace

by Staff reporter | 16 August 2017 | 193 Views

Grace Mugabe still in South Africa

by Staff reporter | 16 August 2017 | 165 Views

Grace Mugabe's alleged criminal conduct dents Zimbabwe's image

by Staff reporter | 16 August 2017 | 162 Views

SA police know where Grace Mugabe is

by Staff reporter | 16 August 2017 | 229 Views

Grace Mugabe latest - LIVE Updates

by Staff reporter | 16 August 2017 | 318 Views

Biti in Solidarity with Hakainde Hichilema in Lusaka

by PDP | 16 August 2017 | 171 Views

Grace Mugabe is similar to a fruitless figtree

by Sikhumbuzo Moyo | 16 August 2017 | 302 Views

Man strikes girlfriend with brick over sex

by Simbarashe Sithole | 16 August 2017 | 270 Views

Gold panning destroying river: RDC

by Staff Reporter | 16 August 2017 | 143 Views

Grace Mugabe should be in SA, says SA police commissioner

by Staff reporter | 16 August 2017 | 139 Views

Zimbabwe govt officials remain mum on Grace Mugabe's whereabouts

by Staff reporter | 16 August 2017 | 132 Views