Ev­ery­thing from fuel to medicines and gro­ceries are in short sup­ply in Zim­babwe fol­low­ing a month-long panic-buy­ing spree sparked by re­forms an­nounced by fi­nance min­is­ter Mthuli Ncube

Financial Mail - - FEATURE - Peta Thorny­croft

Af­ter a month-long run on Zim­babwe’s petrol sta­tions, there seems to be more fuel avail­able in Harare this week. The queues have ta­pered off — but not ev­ery­one be­lieves the sup­ply is now re­li­able.

Fuel — 120Ml is im­ported by the gov­ern­ment ev­ery month — is a cen­tral sup­ply con­cern, given the for­eign cur­rency cri­sis. As a re­sult, some Mercedes-ben­zes seem to be con­stantly queu­ing at the pumps. The driv­ers all say the same thing: their em­ploy­ers don’t trust the sta­bil­ity of the fuel sup­ply, so they will be fill­ing up as often as pos­si­ble.

De­mand has been pushed up by in­for­mal traders who sell fuel across the bor­ders. At $1.41 a litre when paid for elec­tron­i­cally, fuel in Zim­babwe is at least two-thirds cheaper than in Mozam­bique, Zam­bia and Botswana.

“We did well in Mutare [south­east­ern Zim­babwe] … Our fuel is much cheaper, so we sold via the moun­tains into Mozam­bique,” says a small-scale fuel trader.

Ac­cord­ing to en­ergy min­is­ter Jo­ram Gumbo, fuel con­sump­tion dou­bled for a 10day pe­riod af­ter the panic be­gan on Oc­to­ber 5. In the nick of time late last month, the gov­ern­ment was able to se­cure a loan from its in­ter­na­tional sup­plier for six months’ fuel.

Re­forms an­nounced by new fi­nance min­is­ter Mthuli Ncube early last month un­leashed the buy­ing frenzy for fuel and other items. In ad­di­tion to a 2% tax on cash trans­fers above $10, Ncube an­nounced the sepa­ra­tion of for­eign cur­rency ac­counts, for those who trade in in­ter­na­tional money, and lo­cal ac­counts.

Pick n Pay in Zim­babwe usu­ally car­ries more hard-to-find prod­ucts than other su­per­mar­ket chains, but this week sev­eral of its stores had nei­ther cook­ing oil nor sugar on their shelves.

“Don’t de­spair,” said a shop­per push­ing a huge trol­ley, “there is a new con­sign­ment of smoked salmon to­day.” And near the bread counter, black for­est cake was avail­able in abun­dance.

The price of bread is up about 30% since late Oc­to­ber, and shop­pers are lim­ited to two loaves each. And the cost of ev­ery­day gro­ceries has risen about 20%-40%.

Pick n Pay, with its lo­cal part­ner TM Su­per­mar­kets, is Zim­babwe’s largest su­per­mar­ket chain. But it is un­der strain, in­sid­ers say — not only due to stock is­sues, but pric­ing con­cerns as well. No-one is sure what is go­ing to hap­pen to the value of lo­cal money against the US dol­lar. Given that Zim­babwe im­ports about 70% of its gro­ceries, it’s a large con­cern.

The health-care sec­tor is also af­fected. Zim­babwe spends at least $12m a month on im­ported med­i­ca­tions, and is said to owe sup­pli­ers $30m. Those in need of med­i­ca­tion find that the drugs are ei­ther not avail­able or phar­ma­cies — in Harare, at least — will only ac­cept US dol­lars. Other re­tail­ers are try­ing to work around the is­sue. A bou­tique cho­co­late shop in the up­mar­ket Vil­lage Walk cen­tre marks two prices on its prod­ucts, one in phys­i­cal dol­lars and the other in elec­tronic dol­lars or bond notes. So a 50g bar of cho­co­late costs $1 if you pay cash, but $3 if you pay by “swipe” (debit card) or Eco­cash.

The gov­ern­ment says all dol­lar val­ues — for US cur­rency, mo­bile money, swipe or bond note — are equiv­a­lent, but this is not so in prac­tice. Since the peak of the lat­est cri­sis, the rate has set­tled at three to four elec­tronic dol­lars or bond-note dol­lars to ev­ery dol­lar of hard cash. That’s more than dou­ble the rate a month ago.

And in­sid­ers say it may rise again at the end of the month, when Ncube de­liv­ers his na­tional bud­get.

When Ncube an­nounced his re­forms last month, peo­ple who re­mem­bered the 2008 hy­per­in­fla­tion crash wanted to spend as much as pos­si­ble be­fore their cash or the goods — or both — dis­ap­peared. Dur­ing the 2008 crash, Zim­babwe dol­lars were ren­dered worth­less and for­eign cur­rency ac­counts were pil­laged by the then cen­tral bank gov­er­nor Gideon Gono.

Clearly Ncube is try­ing to avoid this, but money traders and bankers say they don’t know if it is pos­si­ble. They say Zim­babwe sim­ply does not have the for­eign cur­rency to meet pay­ments made elec­tron­i­cally.

Cen­tral bank gov­er­nor John Man­gudya said at an emer­gency meet­ing last week that Zim­babwe had $9.5bn in elec­tronic funds but only $200,000 in dol­lar bills. Some bankers have ex­pressed sur­prise at those fig­ures; they say the banks have a com­bined to­tal of $50m in phys­i­cal money. That’s still a far cry from the $360m that was avail­able ahead of the 2013 elec­tions.

Then there’s the $2bn bud­get deficit. Ncube is hop­ing the 2% tax on trans­fers will bring in about $700m within a year. By next week — a month since he in­tro­duced the tax — there should be some indi­ca­tion of whether this will ease the deficit.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.