Retail Sector Urges Review of FIU's Role Amid Ongo...

Retail Sector Urges Review of FIU's Role Amid Ongoing Exchange Rate Volatility

Nyashadzashe Ndoro

Chief Reporter

The Retailers Association of Zimbabwe, representing the country's formal retail sector, has highlighted the industry's significant contributions to the economy and its struggles with exchange rate dynamics.

The RAZ comprises prominent retailers, including Truworths, Edgars, OK Zimbabwe, Pick n Pay, SPAR, FoodWorld, Halsteds, Electrosales, Pelhams, Metro, Peech & Browne, and Farmbiz. The companies operate in compliance with local laws and regulations, accepting the Zimbabwean dollar in transactions.

RAZ indicated that the formal retail sector plays a vital role in Zimbabwe's economy, collecting key taxes, such as PAYE, VAT, and IMTT, for the Zimbabwe Revenue Authority.

The organisation noted that the sector invests in towns and cities, paying local government licenses and permits. It also employs nearly 20,000 Zimbabweans, providing benefits like medical aid, pension schemes, and education allowances. Furthermore, the sector supports human capital development through industrial attachments and career advancement opportunities.

However, suppliers face acute foreign currency shortages and excessive volatility in parallel market exchange rates. This has led to the creation of two-tier price lists for local and foreign currencies. As a result, formal retailers have had to implement steep USD price increases to maintain revenue at the official exchange rate. This has resulted in real USD inflation creep and social ills as consumers turn to informal channels, RAZ noted.

To address these challenges, the RAZ has proposed two alternatives. Firstly, implementing a market-determined exchange rate would allow retailers to reflect real-time market fluctuations and remain competitive. Secondly, introducing discounted pricing would keep the official exchange rate constant while offering differentiated discounts to reduce inflationary impacts.

"RAZ can periodically compile market statistics to help Fiscal Authorities shape policy, as well as self-regulation on market wide acceptable exchange rates," RAZ stated.

The RAZ also advocates for a review of the Financial Intelligence Unit's role, shifting from monitoring and punishment to monitoring and advisory.

"RAZ further proposes a review of the role of the Financial Intelligence Unit to now evolve from monitoring and punishment to purely monitoring and advisory. RAZ is available to share with the FIU, on either a monthly or quarterly basis, the exchange rate and inflation dynamics in the market for further policy refinement.

"We need to establish a more cordial and productive relationship between FIU and formal retailers which has now deteriorated into policing and punishment status," the union stated.