Property owners demand rentals in forex

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The majority of players in the retail and wholesale sectors rely on renting properties and the unjustified demand by property owners to be paid rent in forex negatively affects the viability of these sectors as well as the manufacturing establishments.

LONG suffering Zimbabweans could be in for more price hikes as property owners are now demanding rent in hard currency as the economy continues to tank.

This comes as price of basic commodities are spiraling out of control occasioned by limited foreign currency and the introduction of a two percent tax per dollar transacted.

The separation of the Real Time Gross Settlement (RTGS) balances from Foreign Currency Accounts (FCA) has also been interpreted by the market as the devaluation of RTGS bank balances further pushing up prices of goods sold through electronic transactions and bond notes.

Further, government’s failure to avail adequate foreign currency to the sector has seen some players resorting to the black market where the cost of foreign currency has been rising, and that has reflected on the final prices facing the consumer.

Addressing players in the retail and wholesale sector during a Confederation of Zimbabwe Retailers (CZR) awards ceremony in Harare on Tuesday, Vice president Kembo Mohadi acknowledged the rent challenge facing the sector.

He added that government was concerned that the new form of payment flies in the face of price stabilization efforts but did not provide a solution to the new challenge.

“Government notes with concern the new development where property owners are now demanding rent in foreign currency,” Mohadi said.

“The majority of players in the retail and wholesale sectors rely on renting properties and the unjustified demand by property owners to be paid rent in forex negatively affects the viability of these sectors as well as the manufacturing establishments.”

CZR president Denford Mutashu said  the sector was working around the clock to ensure there is responsible pricing to protect the consumers but various challenges facing the sector had created an unsustainable environment.

The retail sector supports many value chains in the economy, across all levels from farmers, producers, manufacturers among others.

“Smuggling of goods through our porous borders remains one of the key challenges,” Mutashu said.

“These smuggled goods are the ones sustaining the perpetuation of informalisation of the economy, which is more pronounced in the retail sector. Formal retail players are failing to cope with this level of informalisation, as traders sell smuggled goods in the streets and in front of retail shops, posing unjustified competition. The situation is compounded by the fact that the operating costs of formal retailers have gone up significantly, with property owners now demanding their monthly rentals in foreign currency, fuel shortages also significantly affecting our logistics and the general increase in the prices by our suppliers also weakening consumers’ spending power. The situation has also been worsened by the 2 percent tax whose compounding effect on the final prices facing the consumer.”