By Business Reporter
RESEARCH and stockbroking firm, IH Securities has ranked the ZWG currency as the worst factor blocking the smooth flow in Zimbabwe’s retail sector.
Introduced on April 5 2024 as the country’s lasting solution to currency problems, the central bank claimed the local unit was backed by gold and a pool of precious minerals.
The Reserve Bank of Zimbabwe (RBZ) governor Dr John Mushayavanhu who claimed the local currency would firm up in value agreed to a whopping 43% devaluation rate on the back of a cocktail of measures in the hope of attaining stability.
Presenting its latest findings in a report titled ‘Zimbabwe Equity Strategy November 2024’, IH Securities said, “Key factors affecting retail in 2024 included the introduction of the ZiG currency, stricter market regulations, and the removal of the 10% trading margin on the exchange rate. Policy volatility has created risks for businesses, especially in consumer-facing sectors. Fiscal changes in 2024, such as limiting VAT exemptions to certain categories, have increased costs.”The report also observed that National Foods reported a 3% cost hike for basics like maize and flour due to VAT changes, while Delta reported US$46.3 million in costs from the new sugar tax on beverages.
Despite expectations of a tighter consumer market stemming from the impact of the El Niño induced drought, IH Securities said recent earnings updates have shown resilience in the consumer sector, with several companies recording volume growth.
“Forward looking, ongoing investment in capacity upgrades within the sector is expected to underpin volumes performance,” the research firm added.
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