We Zimbabweans are accomplished at handling unusual currency problems. After all, we are the people who somehow managed our lives with 500 billion percent inflation not so long ago. So here is our take on this matter. We do not in any way claim to be experts, but it is part of our everyday life, and of great interest to our customers, suppliers and employees. It is central to the effective running of our business.
There seems to be three currencies in use at the moment. These are US dollar notes, Bond notes and Electronic money. For us, the first two are pretty rare and we end up transacting mainly in electronic money. We pay most of our bills by electronic transfer, and receive our payments in that way too. Electronic money and “ swiping” appears to have become, de facto, the new Zim Dollar !
Many busineses quote a price in US dollar, plus a premium paid electronically. We followed two LOCALLY MADE products this week . One was a solar geyser and the other a double bed mattress. The premium for the geyser was about an extra 50% in transfer money, and for the mattress it was 40%. We are all feeling the pressure of price rises from many directions. Inflation has reared its head again, albeit in a much more modest way compared to the old days!!
We at Teakland, like everyone, have serious pressure on our costs. WE RESIST THEM AS MUCH AS POSSIBLE, IN ANY WAY WE CAN. We innovate, substitute, direct import where possible etc. not forgetting also to “haggle like crazy” with our poor suppliers. Fortunately, we are able to source a major percentage of our inputs locally, so this helps. It is also a great advantage that we do our own deliveries direct to customers, and have no middlemen between us and our clients. We are factory direct. Against this, our imported components have doubled or more in recent months. Glue, paint, abrasives, spares, brass fittings etc. Fortunately, these are not the majority of our inputs.
OUR DETERMINED AIM IS TO CONTAIN THE PRICE OF OUR PRODUCTS WITH A PASSION. We have succeeded in that, to a great extent. Everyone is under financial pressure. Our clients tell us they appreciate our obvious efforts and very modest price increases. Many are surprised that there is no premium on our quoted price for transfer payments. We strive to strike the balance between remaining viable, giving good value, and remaining competitive.
About thirty years ago a classic business management book called “In Search of Excellence” was all the rage. The primary message in that book was – “above all else … take exceptional care of the customer.” That is our main mantra. It was very good advice 30 years ago and will forever be. Price is a huge concern for all customers.
There was a time when we were major exporters. In some months over 50% of our production was exported. That was before we were dollarized in 2009. From that time, our exports steadily decreased to zero. With a falling Rand and a strong dollar, our prices to our SA customers more than doubled. It reached a point eventually where SA manufacturers were sending their goods to Zimbabwe in competition with us. Fortunately, they did not do well enough to dislodge us, but it was a trying time. Things are better now.
We are amongst those who look forward to Zimbabwe having a proper Zim dollar again. Once, long ago, we were allowed to have two bank accounts, a Zim Dollar one and a Forex one ( Called FCA account for Foreign Currency Account. ) One could sell and buy forex through one’s bank at a market rate. We believe that type of arrangement may be the way to go in the future. It will certainly help local manufacturers and exporters, as well as moderate imports. Our new Zim Dollar would be very much like our present Electronic money and would trade at a discount as it does at the moment. That can have great advantages.
We look forward to the future. It may take some time to transit to what Winston Churchill called “those bright, happy, sunlit lands”, and it will certainly take some Churchillian fortitude to get there. By then we would have learned how to grow our economy, and that rising tide will lift all of the boats. India is hoping for 7.5% growth for the next several years. We can do better than that!
One way or another, as we write this blog, we are aware that many Zimbabweans have had to become amateur economists in order to try and figure out the way forward. This is going to be more of a Roller Coaster ride for a while, but we believe it will be well worth it.
NEWS FLASH : The Government has just announced a significant fuel price decrease. That should be a great help! AND we hear that the premiums for Forex have eased slightly. That is also good news.