By Alois Vinga
FINANCE Ministry’s secretary, George Guvamatanga has ignored the impact of tuck shops on formal retailers, instead hinting that most businesses are being run by managers who lack adequate knowledge on how to respond to economic dynamics.
He made the remarks at the Zimbabwe Economic Development Conference (ZEDCON) currently underway in the resort town of Victoria Falls where clarity was sought on the government’s plan of action in the wake of the rising informal sector.
“Let me come back to another very controversial issue about these tuck shops versus formal retail. There was a retailer who went out last week complaining about the influx of tuckshops.
“But how do you complain about a tuckshop which is paying five times more per square meter rent?
“It does not have access to credit so buys all the goods for cash. Possibly they do not have a better system than what you have. They do not have access to the cheaper foreign currency that is available in the market, they have to go to source for it from the parallel market,” he said.
The Finance Ministry’s permanent secretary quizzed the rationale behind big retailers who complain that they are not able to compete because they have been taken out of business by those tuckshops.
He said if he was running such businesses management boards he would fire such managers because they “will be useless management.”
In comparison, Guvamatanga said the neighboring South Africa Spaza market has a size of almost US$10 billion but such trends have never triggered complaints from big players like Shoprite, Pick ‘n Pay complaining that they are out of business.
“As new economies re-emerge things change but the challenge is that you are dealing with management who only knows one thing. They are used to exchange rate hikes and adjusting prices every Monday.
“That’s what they are used to. So we have lots of Finance Directors and Managing Directors running these companies today who are just accustomed to exchange rate hikes and price adjustments.
“I have always told my colleagues that if by chance you walk into most Treasuries today and you ask these guys whether they know what a stop loss is all about. They will tell you that they don’t know about that. All they know is that the exchange rate will go up and you sit and reprice every day,” added Guvamatanga.
However, the remarks fly in the face of retail groups like the Confederation of Zimbabwe Retailers (CZR) who have since raised concerns over the informal traders.
The association has since argued that its members are forced to pay multiple licenses like the butchery, bottle store, bakery over and above industry-pegged salaries as compared to their informal counterparts who evade such costs.
The Treasury secretary’s remarks have also been criticized for ignoring the fact that most informal traders sell smuggled and cheaper imports whereas the formal sector relies on strictly stipulated manufacturers.
“Guvamatanga needs to take full responsibility as a government official and desist from making such highly generalised comparisons which ignore how catastrophic the informal sector has been to this economy.
“Comparing the local setup to South Africa is quite remote because we don’t share the same economic similarities,” one player in the retail sector said.