SA businesses feel impact of Zim controls

JOHANNESBURG – South African companies with operations in Zimbabwe are struggling to comply with the government’s new price freeze, a move many said made the crisis-hit country an even less attractive place to do business.

President Robert Mugabe’s government has imposed tight profit margins for businesses, stepping up a price rollback drive that has led to empty store shelves, long petrol queues and renewed fears of a total economic collapse. The controls, which required many businesses to halve prices, are seen as a last-ditch effort to fight soaring inflation, which is now closing in on the 5 000 per cent mark and is the highest in the world.Zimbabwe officials say hundreds of shop owners and businessmen have been arrested for defying the price freeze, and the dragnet has also netted employees of South African firms.On Wednesday, an assistant manager at a Makro wholesale store owned by listed South African retailer Massmart was arrested and the store closed for ignoring the freeze.Massmart chief executive officer Grant Pattison told Reuters the store’s assistant manager had since been released.”We (Massmart) complied with the decree as we understood it, but there was some difference of interpretation between the authorities and ourselves,” he said.Mugabe, already under fire by critics of its human rights policies, has accusing businesses of raising prices as part of an effort by Western opponents to overthrow his 27-year-old government.Massmart has two stores in Zimbabwe, but Pattison said they had not contributed to the group’s profit for several years as Zimbabwe’s economic problems mounted.”Because of the economic conditions in Zimbabwe, in rand terms the business has not made any money.The viability of our Zimbabwean operations is not so much a financial concern, but concern over our two stores and over 500 staff,” Pattison said.Pattison said the price controls had not pushed the company out of business in Zimbabwe – yet.”The prices are down, but the volumes are up.We still have stock but the levels are low,” he added.meltdown Lobby group Business Leadership SA said on Wednesday, Zimbabwe was heading for a “systematic meltdown”.”By all accounts, the country is faced with a systematic meltdown.We believe that decisive leadership at both political and economic level is required to steer Zimbabwe towards a comprehensive economic recovery,” the lobby group said in a statement.Other businesses based in South Africa, the region’s economic powerhouse, have also experienced headaches with Zimbabwe’s crumbling economy.South African fast food company Famous Brands – which has eight franchise stores in the country – said sourcing supplies was very difficult.”The discussion we have had with our licencee is that the stores are abiding with government’s new laws,” financial director Paris Papageorgiou said.”At this stage, it is not a great economy to run a business,” Papageorgiou added.South African grocer Spar – which has a small shareholding in a wholesale and supplies operation in Zimbabwe – would not comment on developments in the country.Nampa-ReutersThe controls, which required many businesses to halve prices, are seen as a last-ditch effort to fight soaring inflation, which is now closing in on the 5 000 per cent mark and is the highest in the world.Zimbabwe officials say hundreds of shop owners and businessmen have been arrested for defying the price freeze, and the dragnet has also netted employees of South African firms.On Wednesday, an assistant manager at a Makro wholesale store owned by listed South African retailer Massmart was arrested and the store closed for ignoring the freeze.Massmart chief executive officer Grant Pattison told Reuters the store’s assistant manager had since been released.”We (Massmart) complied with the decree as we understood it, but there was some difference of interpretation between the authorities and ourselves,” he said.Mugabe, already under fire by critics of its human rights policies, has accusing businesses of raising prices as part of an effort by Western opponents to overthrow his 27-year-old government.Massmart has two stores in Zimbabwe, but Pattison said they had not contributed to the group’s profit for several years as Zimbabwe’s economic problems mounted.”Because of the economic conditions in Zimbabwe, in rand terms the business has not made any money.The viability of our Zimbabwean operations is not so much a financial concern, but concern over our two stores and over 500 staff,” Pattison said.Pattison said the price controls had not pushed the company out of business in Zimbabwe – yet.”The prices are down, but the volumes are up.We still have stock but the levels are low,” he added.meltdown Lobby group Business Leadership SA said on Wednesday, Zimbabwe was heading for a “systematic meltdown”.”By all accounts, the country is faced with a systematic meltdown.We believe that decisive leadership at both political and economic level is required to steer Zimbabwe towards a comprehensive economic recovery,” the lobby group said in a statement.Other businesses based in South Africa, the region’s economic powerhouse, have also experienced headaches with Zimbabwe’s crumbling economy.South African fast food company Famous Brands – which has eight franchise stores in the country – said sourcing supplies was very difficult.”The discussion we have had with our licencee is that the stores are abiding with government’s new laws,” financial director Paris Papageorgiou said.”At this stage, it is not a great economy to run a business,” Papageorgiou added.South African grocer Spar – which has a small shareholding in a wholesale and supplies operation in Zimbabwe – would not comment on developments in the country.Nampa-Reuters