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Business Reporter
CLOTHING retailer, Truworths, says the shortage of the Zimbabwean dollar on the market due to tight monetary policy by the Reserve Bank of Zimbabwe (RBZ) is adversely affecting its cash sales in local currency resulting in the suspension of all Zim-dollar credit sales.
As a part of a cocktail of policy measures to cushion the public from the negative impact of inflation in the economy, the Apex Bank in July this year increased the bank policy rate from 80 percent to 200 percent per annum.
While this was aimed at curbing speculative lending, which fuelled parallel market volatility, business leaders have said steep lending rates escalate the cost of doing business, as access to production finance is a cost factor.
The central bank policy rate is the rate that is used by the central bank to implement or signal its monetary policy stance and provides an indicator of the minimum level of lending rates for banks.
In a trading update for the quarter ended 9 October, Truworths chief executive, Mr Bekithemba Ndebele, said cash sales in local currency were negatively affected by the severe shortage of Zim dollar as a result of the tight monetary policy. The business is now offering lay byes only in United States dollars.
“The increase of the bank policy rate to 200 percent with effect from 1 July 2022 resulted in the business suspending all ZWL credit sales with a consequent reduction in units sold,” he said.
“ZWL cash sales were negatively affected by the severe shortage of ZWL as a result of the tight monetary policy,” said Mr Ndebele.
“In addition to US dollar cash sales, the business is selling in US dollars on a lay-by basis. US dollar credit is considered on a selective basis where there is assurance that the US dollar earnings are guaranteed and not an allowance.”
He noted that as of October 9, borrowings in local currency amounted to $56,35 million at a cost of 205 percent per annum.
In the same period, there were no United States dollar borrowings and debtors.
The clothing firm noted that sales and profitability continue to be adversely affected by the restrictive pricing framework, which negatively affects competitiveness against the unregulated sectors.
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