Dollarisation reduces Zimbabwean retail sector into tuckshops and roadside vending

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ILLEGAL retail trading in Zimbabwe’s capital Harare continues to flourish, despite joint efforts by the government and the local authority to kick out illegal and mostly foreign-owned tuckshops and street vendors.

Upon her appointment to the Industry and Commerce Ministry, former Small and Medium Enterprises minister, the industrious Sithembiso Nyoni hit the ground running.

As minister of SMEs, Nyoni had earlier in the year promised during an investigation by this publication into the illegal involvement of foreign investors in the retail sector, to deal with the issue. exposed, in an investigation conducted in conjunction with Information for Development Trust, a manifestly corrupt system where local authorities and elements within the country’s political system were assisting foreign nationals to occupy trading spaces illegally and obtain trading licenses in contravention of the law.

When she joined the industry and commerce in September, Nyoni immediately took to the streets of Harare determined to push out peddlers of cheap foreign goods that are killing local industry. She was going to restore sanity to Zimbabwe’s industry by protecting it from the giant-killing chaos reigning on the city streets, she vowed.

She joined hands with the City of Harare which has, for years, been fighting a losing battle to bring order to the chaotic state of affairs in the CBD which has transformed the once Sunshine city into a dumpsite.

According to the Zimbabwe Investments and Development Agency Act (ZIDA) [Chapter 14:37] which was signed into law by President Emmerson Mnangagwa in 2020, foreign investors are allowed to invest in any sector of the economy they wish except in one sector that is categorically stated as reserved for the indigenous people of this country.

The law states that foreigners cannot invest in or operate in businesses in the sub-sectors reserved for Zimbabwean citizens.

Retailing and wholesaling fall under these sectors that the law puts aside to benefit only indigenous Zimbabwean citizens. Our investigations then established that not only were foreign businesses found in these sectors, but they had virtually taken over and now dominated the sectors.

We also spoke to the embassies of several of these foreign nationals and, while some of them expressed ignorance of the development, others sought to defend their nationals claiming there was nothing wrong with them participating in the said sectors since some of them had lived and run businesses in this country for many years.

Others said they were unaware of the law prohibiting foreigners from participating in these sectors and even accused the investigating team of seeking to spark xenophobic attacks on foreigners.

When Minister Nyoni took delegations from her new ministry to the streets and was joined by local government and city authorities, there was high expectation and hope that the chaos on the streets would become a thing of the past and prospective local retailers prepared to take their rightful place in the tuckshops and move away from the pavements – away from the daily running battles with municipal police.

During that whirlwind operation minister Nyoni bumped into refugees who should have been in refugee camps but were now running flourishing retail businesses with fake or no documentation at all.

There were however no reports of any action taken during or after the minister’s visit though. Our sources said the non-action was evidence of how deep-rooted the corruption pervading the multi-million dollar retail sector was.

The city of Harare then followed up the minister’s tour with raids on illegally operating tuckshops which they shut down. There were however no reports of any foreigners being found and removed from the tuckshops that they now dominated.

The story was that although they owned and ran these tuckshops, most of these foreigners, aware they were running afoul of the law, had withdrawn from the shop front and employed local salespersons while they ran affairs from the background.

However, during a recent survey in the CBD, this reporter observed that even as the council blitz raged, many retail businesses, shops and tuckshops were still operating without the required documentation. Reports of bribery of council officers abound.

Where the blitz may have taken some effect, the affected shops have found ways of continuing with their business. One of the shops located in the CBD, at the corner of Jason Moyo and Leopold Takawira, has been selling food through the window after municipal police locked their doors for not having an operating licence.

“They were told to stop operating until they get a licence, but they sell the food through the window,” said a security guard who mans the shopping complex that houses this food joint.

A restaurant shut down by authorities sells food through a window

The Currency factor

Besides the license violations, this investigation found that following the depreciation of the local currency, most of these illegal foreign retailers are no longer accepting bond notes or electronic RTGS.

This rejection of the local currency was one of Minister Nyoni’s major concerns.

The tuck shop owners trade exclusively in foreign currency. Their cash tills are designed to accept only US dollars and most of them do not issue proper point of sale receipts.

During her tour of the retail sector, Minister Nyoni pleaded with retailers to accept both local and foreign currency but her pleas fell on deaf ears.

The minister later called a press conference where she chastised the retail sector for “contributing to a shadow economy” that was harming the local population.

“We are here to prevent a shadow economy. Everybody who is in business must operate openly. Nobody must operate in the shadows so that we all have one system that everyone understands.

“There are people where I have been who have no RTGS swipe machines, they only take USD and yet their shops are very big.

“This means that there are certain Zimbabweans who cannot access those shops because they are paid in Zimdollar. We must value our currency and we must try to use it with pride. What I have seen here is that some people are shunning those who are proud of their currencies,” she said.

A recent visit to the CBD retail businesses confirmed the exclusive use of the USD in the foreign-owned tuckshops and a host of other traders. The minister’s order has been ignored. Shop hands that we spoke to said accepting the volatile local currency was not an option because the ZWL was not accepted where the retailers bought their wares.

We established that most of the retailers get their wares from smugglers who bring in their stuff from South Africa.

Over the years, Zimbabwe’s economy has been dominated by small tuck shops selling mostly imported goods. They are mostly owned by Pakistanis, Kenyans, Indians, Ethiopians, Nigerians and others.