SUPPLIERS of fast-moving consumer goods are reportedly pushing the bulk of their products into the informal sector ahead of the festive season in an apparent bid to harvest hard cash, which is easy to convert into foreign currency.
Despite the recent cash injection into the market by the Reserve Bank of Zimbabwe (RBZ), physical cash is still on high demand, as evidenced by continued long queues at banks.
With informal grocery trading recently on the rise in cities and towns, those with cash have become “kings” and enjoy enticing discounts as incentive against electronic payments, whose pricing is relatively expensive.
In an interview Confederation of Zimbabwe Retailers (CZR) president, Mr Denford Mutashu, said although producers were supplying products to the market in anticipation of huge trade volumes, most of them were now showing preference for the informal sector.
He claimed the informal retail sector was operating at an advantage as they are attractive to suppliers because they pay cash up-front compared to formal retailers who use swipe or mobile money and at times order goods on credit.
“They have got an upper hand because suppliers are attracted to those that can pay cash compared to those traders that use swipe or pay via mobile platforms,” said Mr Mutashu.
“We believe that the spending pattern is going to be concentrated on the informal retail players as they are the ones who were able to get deliveries of most basic goods from the manufacturers who prefer them over formal players.
“They (informal traders) have the capacity to charge their goods on conditional selling where they charge most of the goods in cash only.”
Contacted for comment, Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter deputy president, Mr Raymond Shoniwa, said he was not aware of preferential supplies and pledged to consult his industry colleagues to examine the issue.
Meanwhile, Mr Mutashu expressed optimism that aggregate demand would increase in the coming festive season on the back of cash injection by the Reserve Bank of Zimbabwe (RBZ) and the bonus payments in the public and private sector.
Government has already started paying its workers the 13th cheque while the apex bank is continuing to issue more notes and coins into the market to boost liquidity. The availability of cash means consumers will have more disposable income and that is good for business.
“We remain very optimistic owing to the introduction of the new notes, as that can spur some spending,” said Mr Mutashu.
He also explained that sales volumes were traditionally not good in the month of November although business picks up later in December. CZR is on record saying sales volumes for the sector dropped by about 40 percent in the past few months due to weakening consumer spending as a result of rising inflation and cash shortages.