The story is all too familiar now. Many businesses are employing different tactics to survive the harsh economic conditions which currently prevail in our country. The local bond note has lost considerable value against the US dollar and other major currencies over the past few months. Fuel prices have gone up. Prices of raw materials and basic commodities have followed suit. As a result, many companies have to adjust how they do business lest they go bust. According to New Zimbabwe, Zifm is the latest company to employ austerity measures. We look at how the economic challenges have forced businesses to go into survival mode across the board.
New Zimbabwe reports that staff salaries at local broadcaster Zifm have been cut by 50%. In addition, employees will have their month cut to only 11 days. According to those in the know, this is a way to avoid retrenchment of staff and to ensure survival in a tough economic environment. Zifm is one of AB Communications companies. The others are Mighty Movies and recently launched Business Times newspaper. While management is reported to have refused to accept that salaries have been cut, the fact that many companies are employing austerity measures is not in dispute. A number of employees receive their salaries late. Some are being sent on leave as companies downsize or shutdown. Olivine Industries sent employees on leave soon after the festive season as they struggled to get foreign currency to continue operating.
US dollar pricing
In the last two months, we have seen more businesses charging their goods in US dollars. Fast foods giants Simbisa Brands charge in both bond and US dollars. Their reason for doing this is to raise enough foreign currency to pay franchise fees and other obligations like ingredients which cannot be substituted locally. Delta Corporation tried to also price their products in US dollars but government intervened and persuaded them to charge only in bond notes in exchange for lenient foreign currency allocations from the Reserve Bank of Zimbabwe. Delta import certain raw materials like drink concentrates. They also have foreign shareholders who require dividends once in a while. The logic is that, the US dollar is a more stable currency then the local bond. Bond notes may be eroded by inflation but this is not so with US dollar. Also, banks do not have foreign currency and the parallel market is illegal. The only way to legally access forex is to charge in forex.
Delivery of goods
It is worthy noting that with the recent fuel shortages, many people were spending a lot of time in queues. Increases in fuel prices also meant that less people would afford to fill up their vehicles as before. In light of that, we have seen more companies offering to deliver their products at your doorstep. This is an example of the ability to re-align business with prevailing conditions in order to get the much-needed profits. If customers won’t come to you because they don’t have fuel and time, you have to go to them. Recently, Cassava Smartech’s Moovah car insurance business has introduced a product where they deliver your Zinara, ZBC and vehicle insurance discs for free if your buy through them. Fresh produce business Fresh in a Box also delivers vegetable boxes to their customers in Harare and Bulawayo. That increased convenience is what will make them survive in these tough times.
Times are tough. Businesses have to reorganise, rethink and realign themselves with prevailing conditions. It is no longer business as usual. Those who cannot think outside the box will not survive.