Over the weekend I waltzed into some of Gono’s FOLIWARS (Foreign Exchange Licensed Warehouses and Retail Shops) at Fife Avenue. It was a sight I had not seen for close to a year. Shelves were overflowing with goods. Cooking oil sat gracefully among other basic commodities that have been scarce and the shops were brimming with cheery shoppers. There was also the unmistakable smell of freshly baked confectionery wafting in the air from laden breadbaskets, an unusual occurrence. All looked rosy until I reached the back of one supermarket where there were lots of empty or near empty shelves. This was the Zimbabwean dollar section and it hardly had any basic commodities one needs to purchase for a household. There was a lot of cleaning things, overpriced chocolates and kapenta, all locally manufactured. One of the conditions for operating a FOLIWAR is to sell all locally manufactured goods in Zimbabwean dollars. This in principle is meant to cushion ‘vulnerable’ members of society to enable them to access basic commodities.

Already one particular supermarket at this shopping center was flouting the regulations. Mazoe orange crush, famously manufactured in Zimbabwe and widely exported to neighboring countries, was being sold for US$2,50.

FOLIWARS have achieved the desired effect, i.e ostensibly to help improve availability of goods on the market. However, there are some flaws in this latest policy that have seen the central bank once again fail to protect the consumer.

It seems most retailers suffer from the overcharging syndrome. Used to working with billions and trillions, they are overcharging the goods being sold in US dollars. Most of them are too expensive even by American standards. You find something you’d expect to cost less than a dollar pegged at thrice the price simply because the price looks or sounds too little, even if it is not in exchange rate terms.

The NIPC Chairman, Mr Goodwills Masimirembwa attempted to excuse this problem saying that unlike other countries, Zimbabwe is not manufacturing the goods hence it is inevitable for them to be more expensive, especially when transport costs and other mark-ups have been factored in. True, but how does he explain the locally manufactured orange crush being sold in US dollars?

On the other hand, under Gono’s system, some goods will perpetually be in short supply as there will be no incentive for people to make them available for purchase in the increasingly depreciating Zimbabwean dollar. Artificial shortages will continue, while the locally manufactured goods will be widely available on the black-market for purchase in the Rand or USD. It will also mean FOLIWARS will shun local goods in favor of imports in order to get around the regulations of charging in Zimbabwean dollars. This probably explains why the Zimbabwean dollar sections of most supermarkets have next to nothing on the shelves. The few goods found on these shelves are obviously at the RTGS cost, despite the fact that Gono scrapped that system. Else, how is it possible to explain a piece of chocolate that costs half a million revalued Zimbabwean dollars?

The empty Zim dollar shelves will mean that the street corner vegetable vendor or the grandmother from Dotito who has never seen the US dollar in her entire life will continue to struggle to purchase basic goods available on the black-market at prohibitive costs in Zimbabwean dollars.

Then there is the issue of change. If there is anyone paying a higher price for this dollarization, it is the tellers operating the forex tills in the supermarkets. Somebody purchases a product for $4,75. They demand their 25 cents change, even if they themselves have never seen what 25US cents look like. As a result the teller embarks on the grueling task of haggling with the customer. Often, the customer settles for a compromise seeing them either leave their change behind or purchasing something else they didn’t even want. As a result the ‘forex’ queues, though short take longer to move as the tellers haggle over change with each customer for at least five minutes. Most rude customers do not spare a thought for the poor exhausted teller who is underpaid in Zim dollars anyway. At the end of the day one wonders, why don’t they just round of the prices? I mean, if customers are still going to leave their few precious cents, why not save everyone the hassle? Obviously retailers have ways of reaching a final price for a product, but the mere fact that they are now charging in USD reflects an abnormal situation, they may as well employ the Mickey Mouse economics we are used to and just round off prices of goods. Some FOLIWARS have resorted to putting up notices informing customers that they can only purchase goods for $50 and above. Unfair but it works.

Another thing is that the forex craze has silently sanctioned the use of foreign currency in many quarters of the economy. Landlords are now unashamedly and openly demanding rentals in forex, and those who initially did not charge their tenants as such have joined the bandwagon. Dollarization has set a bad precedent and everyone will soon be demanding payment in that form in whatever transaction.

At the advent of the FOLIWARS, the RBZ governor was widely criticized and in several places, calls were made that civil servants must therefore be remunerated in foreign currency. Most were sure the policy would not be sustainable, given that most people do not earn their salaries in forex. However, despite earlier skepticism, ‘forex shops’ like Shoppa Stoppa are suddenly attracting so many customers that by 6pm, long queues are still outside their walls. It is surprising how a lot of ordinary folk actually possess US dollars. As much as one US dollar is not little money in exchange rate terms, many shoppers are hoarding whatever goods they can lay their hands on. The panic buyer mentality has not dissipated a bit even with the reassurance that products are bound to be widely available now that a more stable currency is in use.

It will be a long time yet before Zimbabweans have faith in this economy and its ability to meet the entire consumer’s needs.

This entry was posted on October 20th, 2008 at 12:14 pm by Natasha Msonza and is filed under Shortages and Inflation, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.