adminthat foreigners are forcing up commercial rents by offering landlords a better deal; the result, say those who are looking for premises, is that some Zimbabwean businesspeople cannot afford to rent the shops they would like to rent.
For a start we think some of the facts are wrong.
Easily the three largest retailers in central Harare are Zimbabwean.
The oldest is OK Bazaars, which has been around for decades and the number of foreign shareholders is minimal. Admittedly it has a good set of title deeds but some of its stores are in rented premises.
Second oldest is Innscor which, unlike OK, tends to rent rather than buy premises although it has some title deeds.
The newest is TN Holdings, which has exploded across the city centre over the last two years and now probably has more branches than OK.
Again this company has few foreign shareholders and most of its premises are rented.
Since all shares of these three giant retailers are quoted on the Zimbabwe Stock Exchange it is easy to see who owns them.
Any foreigner wanting these shares has to buy them in Zimbabwe and give the correct foreign address if they ever want to have dividends sent outside the country.
So we know that the three are largely Zimbabwean owned.
So it seems that Zimbabweans are not being forced out of the retail market.
In fact, they seem to dominate it.
Even in the CBD we find new small Zimbabwean businesses, smart retailers who use their intimate and specialised knowledge of their customers, people they were at school with and people they have lived next to, to carve out niche markets as they get started.
These businesses are giving the giant chain stores a run for their money.
Even in the take-away business, they use their skills in traditional dishes to block foreigners and since often the cook and the owner are the same person they undercut the large chains.
In any large city foreigners will tend to do better in the exotic restaurants since they are maximising their knowledge of foreign dishes.
Customers like variety.
There has been discussion in the past about immigrants being allowed in to set up small shops. But this is not a matter for rent controls, but rather a problem of immigration control.
Very few countries let in immigrants to “invest” in a tiny shop.
Normally large sums, at least six figures, are required before even the most welcoming and immigrant-friendly country lets in an “investor”.
At the very least, the immigrant investor needs to create enough wealth to pay more in tax than the benefits they receive from the state.
And a small shopkeeper does not meet even that lowest of thresholds.
Zimbabwe has similar rules which fairly obviously have not been enforced.
It is time they were.
A second problem with rent controls is that they prevent new investment.
No one is going to build new shops and new offices unless they can get a decent return.
We saw this with destruction of the investment market for new blocks of flats.
A liberalisation of policy in the 1990s saw hundreds of new flats built.
And then over-tight rent controls saw major insurance companies and pension funds bailing out of the market and, in the end, the objecting tenants displaced and far higher rents being charged informally.
And fairly obviously Harare does need more shops, especially the smaller shops for the start-up business. Someone needs to build these and they must be assured of a return on their investment.
A couple more Gulf markets would quickly stabilise rents, especially if backed by enforcement of immigration controls.
Landlords cannot be blamed for taking the highest rent offer; they are in business too.
And these days many landlords are indigenous Zimbabweans, or are companies most of whose shareholders are indigenous Zimbabweans, if only through pension funds.
So we believe the solution is three-fold: Zimbabwean businesses must be efficient, with owners postponing status symbols until they are making money; immigration controls do need to be enforced so that small traders who pay trivial taxes are not let in to be an extra burden on the State; and planning and investment laws are examined to encourage as many Zimbabweans as possible to invest in property by building new shops and offices.
Peter Tanyanyiwa
Online Reporter