Retail group Choppies says the currency volatility in Zimbabwe had a severe knock on effect on the business which resulted in revenue falling by P1,1 billion ($6,71 billion) or by 69 percent to P508,5 million ($3,4 billion) for the financial year 2019.
The Zimbabwe economy has experienced headwinds, key among them being foreign currency shortages, low production and low disposable incomes due to inflationary pressures.
“The Zimbabwean business continued to operate with great degree of tenacity. Hyperinflation in three digits, concerns surrounding the economy, changes in the money market and public disturbances made operating in the market challenging.
“The abrupt change and volatility in the currency makes operating in Zimbabwe extremely difficult,” said Choppies.
During the year under review, Government introduced some policy interventions to help stabilize the economy and tame inflation although they did not score the desired results. These include the abolishment of the multi-currency basket and reintroduction of local currency as the only medium for local transactions.
However, despite the difficult operating environment, the business had remained self-sustaining without any cash flow constraints.
Said Choppies : “Despite all these issues, a small net profit was realized.”
The group however remains concerned on the repatriation of profits to Botswana which will “continue to be difficult until the economy undergoes a structural change.”
This comes as the economy already has a back log for foreign currency shortages allocations due to shortages on the official market.
Government recently introduced the foreign currency auction system as one of the measures to address the shortages as well as the unsustainable exchange rate. The auction system which on Tuesday closed at $76,76 against the greenback is also expected to enhance transparency in the foreign currency allocation.
Going forward, the retail sector and the general economic performance will be largely determined by the impact of the COVID 19 pandemic, which has already caused disturbances to production.
Low demand, low sales volume as well as supply chain disruptions at both local and regional level were also telling as travel restrictions were imposed to limit the spread of the pandemic. Zimbabwe effected a national lockdown effective March 30, 2020.
Although agriculture, food industry, groceries stores and health services were deemed essential services from the onset of the lockdown, businesses were generally affected at varying degrees.