Retail sector continues to grow

The retail sector continues to develop, specially supermarkets and fast-food operations, but these offer services to a population whose buying-power is at best static, so the newer entrants will be able to achieve success only by capturing market share from existing traders.

Consumers might enjoy benefits from more keenly priced goods, but service sector activities will add little to employment and even less to Gross Domestic Product, simply because most of the traded goods will be imported.

Zimbabwe’s very unimpressive 2012 food crop harvests will ensure that imported foodstuffs will continue to dominate the retail market. Having seen further difficulties develop in the major western economies and the sharp increases in world commodity prices, Zimbabwe could soon experience higher inflationary pressures and higher import bills for basic foods that could have been grown at home.

The country’s interests would be best served by restoring its ability to feed itself and to take advantage of the higher world prices by offering surpluses to export markets. Without question, such volumes are within the country’s reach. However, the people who know how to produce the crops on the needed scale are not allowed to farm.

Instead, a few months away from what should be the start of the 2013 planting season, very few of the needed inputs are affordable or available where they could be put to use, but more seriously, those who could have met the food security challenges have been forced to remain inactive, while most of those to whom their confiscated farms were allocated are nowhere to be seen. The main exceptions have grown tobacco, and this year they have enjoyed the good fortune of an improvement in prices.

As was the case last year, the more efficient social structures in the communal lands might be expected to again support the mostly subsistence levels of cultivation, but most of the farmers who were offered land in the former commercial areas appear to have opted for non-food crops or to have abandoned their allocations. At the much higher world prices for grain, it seems likely that Zimbabwe will be spending more than ever before on food imports and all the purchases will reduce the amounts that can be spent on other necessities.

Increased urgency for service delivery can be expected to open up new business opportunities in the final quarter, but the level of activity will be held down by shortages of money, by the farmers’ very limited access to credit, the shrinkage of commercial services in the farming areas and the very bad condition of most of the rural road network.

Other problems include the eagerness of many to choose other income-earning options, such as gold-panning, and the fact that the emigration of able-bodied people has left many areas of the country with almost nobody but children and the elderly to do the farming.

Under these conditions, business prospects appear set to remain severely depressed until progress is made on removing the barriers to the inflows of working capital and investment funds.

Post published in: Business

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