The horses have bolted 

Government last week announced a raft of measures which include mandatory use of point-of-sale machines by all informal traders in a last ditch attempt to rescue the formal retail sector that is on the brink of collapse.

The measures also include adoption of international best practices on tax payment, which ensures every eligible taxpayer complies, a pledge to level  the playing field between formal and informal businesses by discouraging manufacturers from supplying directly to end users and the informal market.

 It also pledged to establish a domestic interagency enforcement team to enforce compliance in the informal sector and ensure collaboration between local authorities and central government in the licensing and enforcement processes.

 These measures, announced by Finance minister Mthuli Ncube on Friday, are expected to provide a fillip to the formal retail sector which has recorded branch closures as operators move to shed loss-making units.

 The country’s largest retailer by outlet, OK Zimbabwe, has to date shut down five branches in response to a tough environment that has seen increased stockouts.

 The retailer last month said it had been adversely impacted by a volatile operating environment like most of the formal retail sector.

 OK said it was actively engaged with suppliers and key stakeholders, including industry associations and regulators, to restore supplies to normal levels while working on solutions to stabilise the trading environment.

 The shutdown comes hard on the the heels of closure of branches by N Richards and Spar Queensdale as formal retailers choke from rising competition from the unregulated informal sector.

 It also comes amid declining footfall that has pushed Choppies out of Zimbabwe, although its stake was acquired by a local investor.

 That retailers would shut outlets was evident as they  had run out of stock. It was a question of when that would happen.

 Lobby group the Confederation of Zimbabwe Retailers (CZR) had pressed alarm bells, accusing the fiscal, monetary, regulatory and statutory frameworks of being unforgiving to formal retail and wholesale operators, creating “an uneven playing field” which has allowed the informal sector to dominate with little intervention to ensure equity.

 Government wheels have been moving slowly. When they eventually moved, hundreds of employees in the retail sector faced retrenchment following the closure of branches.

 It will take its time to enforce the new measures which will further hurt the formal retail and wholesale sector.

 CZR has called for immediate enforcement of the new measures, coupled with structured stakeholder engagement to ensure their effectiveness.

 There are several housekeeping issues the government must attend to such as loosening the licensing regime  where formal players encounter  over 30 separate licensing costs, creating a regulatory overload that often exceeds the profits these businesses generate thereby eroding their viability, according to CZR.

 The elephant in the room is the exchange rate disparity which has created arbitrage opportunities and made formal retail prices uncompetitive in United States dollar terms.

 We reckon the new measures are coming too little too late. Government is closing the stables when the horses have bolted.