Traders find going tough at auction floors

Business
Traders at the tobacco auction floors in Harare are feeling the pinch of the cash crisis which is compounded by a shortage of alternative transaction methods such as point of sale (POS) machines.

Traders at the tobacco auction floors in Harare are feeling the pinch of the cash crisis which is compounded by a shortage of alternative transaction methods such as point of sale (POS) machines.

BY FIDELITY MHLANGA

It’s a hub of activity at the tobacco sales floors
It’s a hub of activity at the tobacco sales floors

Despite an order by the Reserve Bank of Zimbabwe (RBZ) for banks to pay farmers $1 000 at first sale, banks are failing to do this because of the huge cash demands and limited supply.

As a result, some banks at the auction floors are paying out as little as $50.

Informal traders who seasonally mushroom at auction floors chasing the elusive dollar during every tobacco marketing season are this year conspicuous by their absence. The reason is the cash shortage.

“This year business is very low as compared to last year. Last year was better because there was cash. For the two weeks I have been here it has been tough. Nothing has been moving,” a scotch cart trader Isaac Muredzo told Standardbusiness on Thursday.

A grocery dealer who identified herself as Mai Mpebvu said trying to push business by accepting plastic money was problematic in that accessing the cash for restocking was a tough call.

“There are now many people who are doing business at the auction floors, so competition is stiff,” she said.

“The other thing is that farmers are struggling to get cash. I cannot accept mobile money because I have nowhere to get cash from without paying some premium.”

Joseph Mhindu who sells furniture items such as wardrobes and sofas said business was very low and his situation was made worse because he did not have a POS machine.

“Banks demand that my company must be registered before I can be allocated a swiping machine,” he said.

“The situation was better last year as we could take farmers to the bank and do a direct bank transfer while we could also withdraw cash from the bank.

“I could withdraw $300 per day at my bank. But this year I can’t even do the transfer.”

Mhindu said people that had POS machines were hiring them out at interest.

“There are people with POS machines who are moving around charging 10% for us to use their machines,” he said.

“They are treating that as their fulltime business but their premiums are just too high for us. We can’t afford it.”

Knowledge Chuma who sells diesel grinding mills said he had pegged the price of his products at $1 200 for cash transactions and $1400 for electronic transactions because his suppliers also had different prices for cash and electronic payments.

Economist John Robertson said the rise in informal trade seen at auction floors was a result of the prevailing tough economic environment which had seen company closures and retrenchments.

“These people are looking for income. If there were job opportunities, they would be employed elsewhere,” he said.

“If there were alternatives, people would not be depending on auction floors and the streets.

“The reality is that there are no jobs in this country and a good many Zimbabweans have left the country to look for jobs.”

Cash shortages have given rise to multiple pricing where there are prices for dollars, bond notes and electronic transactions.

Two weeks ago, RBZ deputy governor Kupukile Mlambo warned retailers against using a three-tier pricing system, saying the apex bank would punish culprits.