HARARE – Retailers in Zimbabwe can brace for a brisk trading period during the festive season this year after the Government said it would pay bonuses to its workers in United States dollars.
The move was applauded by economic analysts who said it would likely be followed by some private companies.
“I think the impact will be very huge. The US dollar bonuses will give shoppers more buying power,” said Carlos Tadya, an investment analyst with a local research company.
The Government capped the US dollar bonuses for civil servants at US$700 while those requiring more will receive balances in local currency.
Civil service pensioners will receive US$100 plus US$80 for spouses.
The bonuses, to be paid at the end of this month, will amount to about US$90 million, cumulatively.
In a letter to Public Service Commission Jonathan Wutawunashe, acting executive director Health Services Board Angelbert Mbengwa, and Judicial Service Commission secretary Walter Chikwana, Finance secretary George Guvamatanga said:
“Guided by the developments in the market and taking into account the plight of workers and the need to cushion members from the adverse effects of fluctuations in exchange rates and also taking into account the proactive initiative by Government, Treasury advises that the 2021 13th cheque be paid in foreign currency (US dollars) at 100 percent of the pensionable emoluments, capped at a maximum of US$700 whilst those with pay scales exceeding the balance of the 13th cheque will be payable in local currency.
“In light of the foregoing, it is recommended that pensioners be equally cushioned on the basis of the following flat, once-off amount per each category: own right US$100, spouse US$80, child US$60.”
Traditionally, the festive season is the period when retailers attract more customers on the back of extra disposable incomes as employers reward their workers with the 13th cheque.
With many workers earning Zimbabwe dollars, the huge disparity between the official foreign exchange rate and the black market has significantly reduced consumer spending as most businesses are pegging prices using the parallel market rate.
“The US dollar bonus payment will certainly cushion the civil servants,” said Thomas Musara, a development economist with a local university.
“I also think the private sector will do the same given that some companies are already paying their employees in foreign currency. We will see a huge increase in retail sales.”
Observers say the black market rate was also expected to stabilise and decline.
“We will certainly have more (US) dollars on the market not only because of the Government US dollar bonuses but also diaspora remittances as people living will send money back home to their loved ones to spend during Christmas and New Year’s holidays,” said Mr Musara.
“This will help stabilise the widely used exchange rate.”
The retail industry, currently showing signs of recovery, is among sectors that were badly hit by the coronavirus induced lockdowns resulting from reduced trading hours, stricter consumer movement and subdued purchasing power.
