The new rulers of downtown Harare
IN NORTH America, “downtown” refers to the core of the city, the central business district where financial wizards immerse themselves in the dark arts of bond-yield retardation, subprime loans and other esoteric things lesser mortals cannot decode.
The British simply refer to this same space as the city centre. And those with a British colonial heritage have a totally different definition of “downtown”.
For Zimbabweans, downtown is the opposite of the financial district. It is the crowded section of the city where low-end retailers, vendors and the street smart equivalents of the CBD’s financial shysters carve out their territory.
As in the CBD, if you blink you lose, and it seems big time wholesalers in downtown Harare blinked a few weeks and now a new brood of bulk commodity suppliers is ruling the roost. The area around Abercon, Cameron and Leopold Takawira is now teeming with people who can supply anything and everything in bulk, starting from last month when traditional wholesalers experienced stock-outs linked to illegal foreign currency trading and panic buying.
While the façades of the buildings from which this new crop of “wholesalers” operate sis unassuming, entering any one of them is like a transition into Wonderland.
They are almost always brimful with supplies of basic commodities — cooking oil, sugar, floor et cetera — that are neatly stacked against walls.
Strictly Cash
Everything is sold in bulk, and in cash — either in bond notes or United States dollars.
In an economy that is considered illiquid, this condition might be considered to be deterrent, right? Wrong.
Business is brisk, from consumers thronging the “tuckshops” to light trucks endlessly offloading or taking delivery of goods.
A 20kg box of 2kg Hullet Tongaat brown sugar goes for US$20, $35 in bond notes, or $39 in bond coins; while 10x2 litres of ZimGold cooking sells for US$18,50, $52 bond notes or $56 bond coins. A six-pack of 2-litre Schweppes Mazoe Orange crush is priced at $30 bond notes or US$15.
It’s a real potpourri of local commodities: Pure Drop cooking oil, Gloria self-raising flour, washing powder and roller meal and many others that traditional wholesalers and retailers did not have on their shelves when the shortages bit. While the major retailers close shop early, the new rulers of downtown Harare appear to have greater activity after hours.
Going Informal
Confederation of Zimbabwe Retailers president Mr Denford Mutashu told The Sunday Mail last week that the changing environment was being driven by manufacturers who prefer supplying people with cash.
“However, what this is doing is creating unfair competition and creating artificial shortages,” he said.
The Sunday Mail traced the market for these new wholesalers to roadside vendors in high-density suburbs where the bulk products are broken up and sold at extortionate prices.
A recent IMF study indicates Zimbabwe has the world’s second-largest informal sector.
The working paper titled “Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?” says more than 60 percent of the Zimbabwean economy is informal, second only to Bolivia’s 62 percent.
It is estimated that between $2 billion and $7 billion is circulation outside Zimbabwe’s formal banking system.
Tax man snoozes
The magnitude of commerce in downtown Harare possibly moves these businesses into the realm of the big time. But the tax man seems to be snoozing. A 2011 a study by the African Forum and Network on Debt and Development railed against the Zimbabwe Revenue Authority for failing to effectively monitor business transactions. While formal workers, most of who earn less than $1 000 per month, give Caesar his due, money-spinning enterprises in downtown largely remain untaxed or under-taxed.
CZR’s Mr Mutashu said: “We also understand most of them do not have bank accounts; thus, fuelling the parallel market. It is time Zimra and RBZ visited these areas and bring sanity to such areas.
“We cannot talk of bringing sanity into the economy when we have not yet sanitised the informal sector in Zimbabwe.”
Zimra is owed more than $4 billion in unpaid taxes and penalties.
Government is currently mulling a lower rate of two to three percent effective January 2019 as presumptive tax, which is mainly designed for small businesses presumed earnings. Fiscal tax registers also improve compliance.