Zimbabweans shop abroad amid claims of profiteering
The last time Fanuel Mpofu*, a teller at a bank in Bulawayo, the second-largest city in Zimbabwe, bought groceries from a local supermarket for his family of three was in 2017. For two years, he has opted to buy groceries from either Botswana or Namibia.
"It's too expensive here. It's much cheaper and better for me to buy groceries from outside the country," he said this week.
At Pick n Pay in SA, a 410g can of Koo baked beans costs R11.99, 1kg of Kellogg's corn flakes R61.99, Huggies nappies R179.99 and a 2l bottle of cooking oil R51.99.
The same products in Zimbabwe are sold for $8.00 (R112), $12 (R168), $59.99 (R840) and $10 (R140) respectively by the same retailer, which has more than 40 stores in the country.
Pick n Pay, which is enjoying a boom in business across the Limpopo River, last month added a store at the newly built Sawanga Shopping Mall in the resort town of Victoria Falls.
Working in Mpofu's favour — given the severe foreign-currency shortages of nearly four years — is that he is partly paid in US dollars. It is with his forex earnings that he is able to buy groceries worth $300 every three to four months in neighbouring countries.
The only expenses he has locally are rent, fuel and buying day-to-day perishable goods such as meat and vegetables.
"I also pay for my DStv account from outside the country. If I tried to do things here, I wouldn't be able to survive. I am trying to live within my means: no excess, no surplus," he said.
Buying groceries and paying for services from outside the country are just some of the many thrifty ways to survive that Zimbabweans have adopted as the economy continues to tank.
Inflation is at its highest in a decade and at 59% is in hyperinflation territory. A severe drought has also set in and poses a threat to food security. Agricultural experts estimate that the country will need maize imports of more than 500,000 tons from SA to augment food stocks.
A new currency, the real time gross settlement (RTGS) dollar, unveiled by the Reserve Bank of Zimbabwe in February, has failed to end foreign-currency cash shortages.
The RTGS dollar denotes all bank balances, bond notes and coins in use.
The loss in value of the RTGS dollar against the US dollar has been the catalyst for the latest round of price hikes across the country. Businesses are pegging their prices against the exchange rate between the local unit and the greenback.
The cost of living is ticking upwards, and according to the Consumer Council of Zimbabwe, the monthly shopping basket for a family of six now costs $790.77, up from $781.35 in February.
Salary increases awarded to public servants last month by the government, the largest employer in the country, which range between 13% and 29%, are not enough to match the cost of living. The lowest-paid public servant earns $600.
The Zimbabwe Congress of Trade Unions wants the minimum wage to either be paid in US dollars or raised to RTGS1,800.
But in the biggest blow yet, the International Monetary Fund (IMF) said in its world economic outlook this week that the economy would contract 5.2% this year. Finance minister Mthuli Ncube had projected growth upwards of 3% this year. It will be the first time that the economy has slipped into recession since 2008, when it shrank 16.5%."Zimbabwe is facing deep macroeconomic imbalances, with large fiscal deficits and significant distortions in foreign exchange and other markets, which severely hamper the functioning of the economy," said Gene Leon, IMF mission chief to Zimbabwe.Ncube lashed out at businesses and said they were engaging in "profiteering" by pegging their prices in line with the exchange rate. "It is actually bad economics to link price increases to the exchange rate. That's not how you do it. It is profiteering," he said.Mangaliso Ndlovu, the industry and commerce minister, said businesses were at fault as they hiked prices wantonly."It doesn't make sense. They are pushing consumers to revolt. We will sit down with retailers and find a solution," he said.Officially, the exchange rate between the two currencies, according to the central bank, was $1:RTGS3.1 on Thursday.On the parallel market it was $1:RTGS4.6, according to Zimbollar, a website that tracks parallel market rates.The ditching of parity between the two currencies in late February was supposed to result in businesses being able to access foreign currency from official banking channels. However, businesses continue to turn to the parallel market to access foreign currency - with the demand pushing the rate of collapse of the RTGS dollar against the greenback.A bank teller in Zimbabwe said: "We aren't giving any dollars to companies and any people."What we are doing is to facilitate payments for imports and also payment of school fees. But we never hand US dollars over the counter to you."* Not his real name