Company says more than half of its revenue is in local currency
Simbisa Brands Limited, the largest fast-food business operation in Zimbabwe which owns or runs a vast chain of outlets and franchises such as Chicken Inn, Pizza Inn, Baker’s Inn, Fish Inn, Nando’s, and Steers, with an extensive footprint across 11 African countries and over 600 restaurants, says it will now pay half of its obligations in local currency, ZiG, and the United States dollar (50/50) as it is receiving less than half of its revenues in forex amid renewed currency and exchange rate volatility.
Companies are struggling to cope as they are forced to trade at the official exchange rate when the parallel market has long moved, and differentials widened, creating distortions and arbitrage; catalysts for black market explosion.
Authorities have been battling black market currency traders amid threats and arrests in a bid to defend ZiG introduced on 5 April through law and order instruments and political intimidation in the markets.ZiG has lost over 49% of value since its introduction.
This has left it in sharp decline, facing real prospects of plunging into a freefall and eventual collapse.
The Zimbabwean dollar in its various manifestations has collapsed many times and gone through six versions amid severe bouts of economic instability, meltdown and implosion.
Foreign currency shortages are also hitting companies hard as money supply, inflation and interest rates run riot.
The fixed official exchange rate is US$1: ZiG13.8, while the parallel market rate is US$1: ZiG30.
The resultant distortions have left most businesses facing operational difficulties and in some cases closure.
Big retailers in Zimbabwe warned two days ago that they are facing closure unless government urgently intervenes in the market to restore stability and sanity.
Simbisa, an Innscor Africa spin-off company currently listed on the nascent Victoria Falls Stock Exchange, said,
“Given the current trading environment where we are receiving less than 50% of our sales in USD we find ourselves unable to settle our suppliers exclusively in USD on the current terms. We therefore writing this letter to request a change in payment terms effective immediately.
“The new terms will be as follows:Simbisa to settle 50% of the before VAT invoice amount in USD and the balance to be converted and settled in ZWG. VAT thereon will be settled 100% in USD in line with Zimra requirements.
“Other terms remain the same as agreed, supplier to continue invoicing in usd 100%. We also commit to settle our account as per the agreed terms. We take this opportunity to reiterate our commitment to the long standing relationship that isbeneficial to both parties. Hence the need tocommunicate on the current changes which have affected our business.”Simbisa, an Innscor Africa spin-off company, has an extensive footprint in Africa, with outlets in Zimbabwe and 10 other African countries, including Kenya, Ghana, Mauritius, Botswana, DRC, Malawi, Eswarini, Lesotho and Zambia.
