Zimbabwe’s retailers have warned of possible food shortages as it becomes increasingly difficult for the country to process foreign payments to raw material suppliers outside country, with the backlog estimated at $180 million.
Businesses have been struggling to make foreign payments since the banknote shortage intensified at the beginning of 2016.
Zimbabwe dumped its inflation-ravaged dollar in 2009, adopting the use of the United States dollar and, to a lesser extent, South Africa’s rand.
However, a widening trade gap, on the back of declining local production, and illicit financial flows have left the country in a liquidity trap.
Government has drawn up a priority list for foreign payments and imposed a ban on some imports it deems to be non-essential in a bid to manage the little available foreign currency.
Over the past year, local retailers have resorted to buying foreign currency on the black market at a premium to facilitate imports, which they say comprise on average of 40 percent of their current stock.
Confederation of Zimbabwe Retailers (CZR) Marketing and Stakeholder Relations Director, Alois Burutsa told a meeting with central bank governor, John Mangudya that most local shops were failing to import crucial product lines as local banks are failing to process international payments on time.
“Payments have not been going through fast enough for both the manufacturing and retailing sectors. We are afraid that shortages challenges have started to creep in driven by this,” Burutsa said.
“The problem is very soon we will be unable to supply certain imported lines because the cash premiums are just unsustainable. You will find that they (cash premiums) range from 10 percent to as high as 35 percent,” CZR president Denford Mutashu told the same meeting.
Mangudya said the apex bank was working to ensure the situation did not escalate further.
“Naturally, (food shortages) are a possible outcome. However we have put measures in place to ensure that payments go through, albeit slowly, but go through all the same,” said Mangudya.
In a Monetary Policy Statement last month, Mangudya said the central bank was negotiating a $600 million nostro stabilisation facility from Afreximbank to manage the cyclical nature of Zimbabwe’s foreign currency receipts.-The Source