Ashly DhaniMichael Tome
OK Zimbabwe Limited says it witnessed a notable decline in US Dollar transactions in the first quarter to June 2024, as consumers used the novel ZiG growingly.
This comes as the country is slowly migrating from the situation which characterised the greater part of last year and the beginning of 2024 where USD constituted about 80 percent of local transactions while the local currency depreciated immensely.
The introduction of the ZiG has brought a modicum of stability, therefore retailers and other formal players in the economy are growingly accepting the local currency for transactions. According to OK Zimbabwe Limited, the decline in USD transactions is putting the group under intense pressure as suppliers still prefer more USD payments.
This is leading to stringent supplier payment terms and credit limitations on foreign currency-denominated purchases, which has potential to affect stock availability and pricing dynamics.
This comes on the back of Finance, Economic Development and Investment Promotion Permanent Secretary George Guvamatanga’s sentiments that Zimbabwe has been witnessing a steady growth in the use of the local currency for transactions since the introduction of ZiG in April 2024.
According to Guvamatanga, the ratio of ZiG use in the economy now stands at 39 percent of total transactions while the remaining 61 percent is still in the US dollar.
From a government revenue collection perspective, there is also movement from the past 80-20 percent and now at 61-39 percent.
OK Limited’s trading in the period under review was also impacted negatively by liquidity constraints as ZiG slowly gained circulation into the market.
“USD collections, however, dropped significantly from the last quarter of the 2024 financial year and the first quarter of the 2025 financial year as most consumers were now using ZiG. Also, the shortage of foreign currency in the formal banking sector continued to put pressure on the exchange rate and some stakeholders began to insist on USD payments for products and services,” said OK Zimbabwe Limited Group company secretary Margaret Munyuru in the trading update for the first quarter to June 30, 2024.
However, OK Zimbabwe acknowledged efforts by the Reserve Bank of Zimbabwe (RBZ) to increase ZiG notes and coins in circulation, to ease change shortages.
RBZ has taken further steps post the quarter to curtail liquidity constraints and efforts are underway to increase the distribution of physical notes, particularly to outlying rural areas to improve the ZiG circulation across the economy.
Government has also turned to alternatives including the use of Homelink to distribute the notes and coins through public places to improve the circulation and availability of change.
Operationally, volume uptake increased by 20, 2 percent for the quarter to June 2024 compared to the same period in the previous year.
The growth was attributed to improvement in the performance of the OK Grand Challenge promotion, which marked the inaugural participation of the Group’s OK Mart stores.
Consequently, revenue increased by 2, 2 percent for the first quarter to June compared to the same period in the previous year.
OK, Zimbabwe indicated that the government’s fiscal and monetary measures are highly commendable.
Online Reporter