Fuel shortages bleed economy

Motorists queue to buy petrol in Harare, Zimbabwe, October 8, 2018. REUTERS/Philimon Bulawayo

Fuel shortages obtaining in the country have adversely impacted on business, with low production and sales being noted in most sectors as delivery and passenger vehicles run dry.

There are also widespread reports of employees arriving at work late due to a combination of high transport costs and unavailability of public transporters.

This has ignited calls for Government to designate specific service stations for public transporters and commercial vehicles to access fuel, and also speeding up the construction of urban rail lines to reduce demand for fuel.

Industrialists also say fuel shortages are affecting potential consumers, who are also spending most of their time hopping from one fuel queue to the other, a move which has prevented them from restocking.

Wholesalers alone say they are losing up to 15 percent of turnover per day spent without the precious liquid.

This emerged yesterday during a breakfast meeting organised by the Confederation of Zimbabwe Retailers (CZR).

  1. Richards Group director Archie Dongo, told delegates that fuel shortages have seriously impacted on their turnover.

“The fuel shortages, how are they affecting the sector? We have rough estimates that when fuel is unavailable in a town; I am looking at a small town where a small change in the environment is quickly noticed (and) when there is no fuel, our turnovers dip by an estimate of 15 percent on that day.

“So imagine if fuel is not available for 23 days a month, what that does to your performance?” said Dongo.

Fuel shortages are caused by foreign currency shortages, and Government is calling on manufacturers to ramp up exports.

Economists perspectives

Analysist Langton Mabhanga said it was imperative for Government to ensure availability of fuel given its centrality to economic growth.

“Fuel is a critical cog, economic performance indicator and key determinant of the economy. It’s a strategic resource, thus the current shortages represent the trashing of productive hours, days and months by relegating millions of economically active human capital to stalking fuel queues.

“This scuppers the economic prospects of our country. The President (Emmerson Mnangagwa) should sternly dispose his delegated yet lethargic bureaucracies in the administration whose lack of prioritisation could sink
the 2018-2019 agricultural season, the developmental trajectories such as ‘Zimbabwe is
open for Business’, Vision 2030 and the Transitional Stabilisation Programme,” said Mabhanga.

He called on citizens to form “lift clubs to and from work, school runs, rationalising trips, cycling or walking for short distance trips”, to reduce demand for fuel.

The shortages of fuel, together with production challenges, have affected producers’ ability to not only make the products, but also supply the market. Some cement producers have claimed that they are unable to deliver the product to the market because of fuel challenges, together with bread makers.

Dongo said cement and beverage sales have plummeted by about 50 percent year-on-year.

“Cement sales have declined by 50 percent year-on-year because we have not been getting adequate supplies. Beverage sales, including liquor also declined by 50 percent year-on-year due to inadequate supplies,” said Dongo.

He said due to a decline in deliveries, expenses are now mounting for wholesalers given that where they would get 2 000 bags of cement, expenses are now spread over 1 000 bags.

This is now putting pressure on the companies’ margins resulting in price increases.

Said Dongo: “We are in between. We have the manufacturer in form of suppliers and the consumers in front of us; therefore we are price takers.

“And because of that, we are caught between a rock and a hard place where the hard rock is the supplier who demands US dollars (for supplies) and the hard place is the customer who doesn’t have US dollars,” said Dongo.