The free fall of the South African rand, which has slumped to a six-month low against the United States dollar in recent weeks, has been of little benefit to local cross-border traders.
The weakening of the rand, the traders said yesterday, has had a negative impact on an otherwise booming business, as local consumers have very little disposable income and have been forced to keep a hawk-like eye on their spending. Yesterday the rand was up 0,8% at R8,3685 to the dollar. Before the slump the rand averaged R7,5 to the dollar.
Moreblessing Vhuta, a trader at the popular Gulf Complex in downtown Harare, admitted to NewsDay business was very low. It had become hard to record significant profits.
“There is so much competition at Gulf Complex that most of our products are sold at very low prices and at times you have no choice but to end up discounting the actual price,” said Vhuta, who imports car batteries and satellite decoders from South Africa.
Most cross-border traders, she said, now prefer buying their merchandise from Botswana rather than South Africa.
They say this is a way of evade the Zimbabwe Revenue Authority (Zimra)’s predatory demands at the Beitbridge border post.
“One can buy a shoe hoping it will be sold at $25, but you end up selling at $20. You will make very little profit,” Vhuta said.
She observed that the low business was not necessarily due to the exchange rate, but customers having little disposable income. “People don’t have disposable income, so if you buy too many goods, no one will purchase them as customers have no money,” she said.
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Another trader at the complex, Munyaradzi Muchenje, concurred that business was very low because the customer base had shrunk.
“The situation is even worse with the weakening of the rand. You can go (to South Africa) and buy a lot of goods but no one will buy the goods,” he said.
Muchenje said he thought business at Gulf Complex depended on more movement of people and use of the rand.
“I think not many people are crossing the border. If they were, business would be booming,” Muchenje said.
He said he used to go to South Africa three times per month when business was good, but currently he was travelling once a month.
Another cross-border trader Edson Mabhiza said at the moment people could not tell that business was benefiting from the weakening of the rand.
“Our business is being determined by the demand on the market, but when the demand is low then supply decreases,” Mabhiza said.
He said many people were anticipating that the weakening of the rand was only temporary.
