By Business Reporter
LEADING retailer, OK Zimbabwe has criticized the tight policy put in place by monetary authorities for choking market liquidity in the name of preserving exchange rate stability.
Presenting performance for the half year’s period ended September 30 2024, OK Zimbabwe group chairman, Herbert Nkala said while the move by the central bank to devalue the local unit by 43% triggered positives, some negative impacts also came along.
“The devaluation of the ZWG towards the end of the financial period in September 2024 managed to reset the market, minimizing the differential in exchange rates. However, the measures introduced to preserve the value of the ZWG which include the revision of the standard and statutory reserve requirements tightened liquidity and have adversely impacted access to funding,” he said.
Nkala said the move to suspend the Foreign Exchange Auction System which was superseded by an interbank foreign exchange market under a willing-buyer-willing-seller (WBWS) trading arrangement did not help matters at hand after the shortage of foreign currency in the formal banking sector persisted with pressure on the exchange rate resulting in an increased insistence on US$ settlement.
Despite the challenges in the trading environment during the half-year period, the Group realised growth in both sales volumes and revenues.
Sales volumes went up by 27.69% as compared to the prior period while the gross profit margin improved from 16.83% in the prior period to 19.64% in the current period.
The growth in volume was bolstered by a successful OK Grand Challenge promotion which included the OK Mart stores for the first time which resulted in growth in the contribution of bulk sales compared to the prior period.
Other expenses went up by 16,29% from US$17,3 million in the prior period to US$20,17 million in the current period largely due to the increased cost of energy supply which went up from US$5 million in the prior year to US$8,2 million.
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