Manufacturers vow to continue supplying informal traders for forex, as they defy government

TAKUDZWA HILLARY CHIWANZA 

Zimbabwean manufacturers have vowed to continue supplying goods to informal traders, despite the government's pressure to follow proper supply and distribution channels. The manufacturers say they prefer dealing with the informal sector because they pay in U.S. dollars, which are scarce and vital for their operations.

Manufacturers in Zimbabwe vow to continue supplying the informal sector with goods as they chase the greenback. [Image/ZimPriceCheck]

The Minister of Industry and Commerce, Sithembiso Nyoni, last week accused the manufacturers of cutting out wholesalers and causing market distortions. 

She said the government was bringing order in the commerce sector by ensuring that manufacturers deliver to wholesalers and these are accessed by retail operators, rather than delivering directly to the informal traders.

"That is distorting that value chain. If we do not address that, we are killing the wholesalers and bringing chaos to the market," Nyoni said.

However, manufacturers have dismissed the minister's remarks as out of touch with the reality on the ground. 

They say they need foreign currency to survive the current economic challenges, but the official auction system only provides a limited amount of U.S. dollars per week.

"I don't think minister Nyoni knows what we are going through to survive the current challenges. 

"We need a great deal of foreign currency but the whole economy is only limited to US$5m a week on the auction hence we need these cash payments from the informal traders to oil the industry," said an executive with a Harare based manufacturing company, who requested anonymity.

He added that they cannot be forced to supply wholesalers who pay in Zimbabwean dollars after 45 days, while adjusting prices twice or thrice per week. 

"Instead of spitting venom, the minister should sit down with the industry and discuss what should be done to find common ground," he said.

Some policy observers have also supported the manufacturers' stance, saying that it is simply market forces at play. 

They argue that manufacturers distribute to whoever meets their trading terms best and that they are not bypassing anyone.

"Manufacturers are bypassing nobody; they just distribute to whoever meets their trading terms best. From our members all we hear is that they just want to have that dollar for their product as fast enough so that they are able to keep on producing; remain in business and grow," Kurai Matsheza, president of the Confederation of Zimbabwe Industries, said.

Meanwhile, formal retailers have been complaining about the uneven operating environment, with OK Zimbabwe reporting an 8% drop in sales volumes from last year due to the impact of the informal traders and low disposable income.

The Ministry of Finance and Investment Promotion permanent secretary George Guvamatanga hit back at formal retailers this week, saying that they have no grounds to complain about tuck shops that pay more rent, do not have access to credit and buy all goods in cash.

He also blamed politics for the current economic downturn marked by macroeconomic instability, adding that courtesy, respect, professionalism and ethical conduct are needed for a stable macroeconomic environment.