A number of listed companies have raised concerns over the influx of vendors in the central business district, saying they have negatively affected sales.
BY TARISAI MANDIZHA
Vendors have set up “shop” outside major retailers to sell similar products, presenting competition for customers. Local authorities have failed to bring order in the CBD amid fears that more vendors are set to swarm the city centre, where chances of making a sale are high. The influx of vendors is a reflection of the deteriorating economic environment.
OK Zimbabwe chief executive officer Willard Zireva last month said the informal sector had come out very strong with vendors taking over pavements in the CBD.
Dairibord Zimbabwe group chief executive officer Antony Mandiwanza also said the business environment was being affected by the growth of the informal sector.
“If you walk around the city of Harare you see exactly what the informal sector is doing. It has affected our major channels of distribution such as the retail outlets,” Mandiwanza said.
Property owners in the CBD said would-be tenants had retreated to low and medium density suburbs to run away from the congestion in town caused by “pavement stalls”.
Zimre Property Investments (ZPI) said recently it was mulling the disposal of its properties in the CBD, arguing they had good buildings in the wrong place.
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“We are seriously considering disposal. We are in talks with various funders. We need to reduce our CBD portfolio,” ZPI managing director Edison Muvingi told a recent analyst briefing.
Last month, Pearl Properties’ rental yield eased to 7,50% as compared to 7,80% in 2013, reflective of the decline in rental income.
“There has been stagnation and declining in occupancies across most sectors. The most affected is the central business district office sector but there is strong demand for retail space,” Christopher Manyowa, Pearl Properties general manager for developments said.
The vendors sell anything from vegetables, fruits to groceries, clothes and electrical accessories.
Analysts say the increase in vending was necessitated by the harsh economic environment that had spawned company closures and retrenchments. Statistics from the Retrenchment Board showed that 3 881 workers lost their jobs last year compared to 2 376 in 2013, underlying the worsening economic environment. The informal sector is credited with absorbing thousands of workers who were retrenched.
Economist John Robertson said if the influx of vendors persist, it would drive the employers out of business and at the same time government revenue will continue to shrink as these companies were tax payers.
“These companies are paying high rates to the city council and very high rentals to the owners of the buildings but they expect to be protected by the government. It’s actually in government’s interest to create the formal sector to make people purchase the consumer goods so that the retailers can be able to pay VAT [value added tax] so that the government can have revenue,” Robertson said.
The Finscope survey on financial inclusion estimated that the informal sector had as much as $7,4 billion circulating outside the formal financial system.
Robertson said as government’s revenue continued to shrink, it should protect the employer to continue to create jobs.
“Today the majority are people without jobs and the employers are now the small minority, but government needs to realise there is need to look after the employer in order to create jobs because the situation with vendors is affecting the employer. This is going to drive them out of the market and if we do not have the employer, the economy won’t grow,” he said.
A recent ultimatum to vendors to leave the streets by tomorrow is being resisted as vending has become a source of livelihood. Unions representing vendors have instead given government seven days to create jobs so they can leave the streets. The ruling Zanu PF promised to create 2,2 million jobs by 2018 but retrenchments and company closures have been the order of the day.
Vendors’ unions estimate that more than a million people in Harare are surviving directly from vending with more than 100 000 people occupying stalls in the city.
