Powerspeed cries fouls over ‘punitive’ exchange controls

POWERSPEED Electrical (Powerspeed) says controls limiting pricing ratios between the local currency and the US dollar continue to make it expensive for customers with the greenback to purchase from formal retailers.
This comes as there is an evident increase in customers opting to buy on the informal markets using the US dollar, as it is cheaper considering that they use the parallel market rate, which is higher than the official exchange rate used by formal retailers.
As Zimbabwe’s economy continues to deteriorate, the industry has rapidly degenerated, giving rise to a burgeoning informal trade.
“Controls limiting pricing ratios between ZWL and US$ continue to make it expensive for customers with US$ to purchase from formal retailers such as ourselves.

“This is a further incentive which is driving business from the formal to informal trade, and this is having a negative effect on all formal retailers, and we are no exception,” the group said in a trading update for the first quarter that ended December 31, 2022.
The group highlighted that inflationary pressures also continued to push up the real cost of basic household expenses, resulting in reduced disposable incomes, leading to less expenditure generally, effectively shrinking the potential market.
“The resultant shrinking market has increased competitive pressures as we all fight for our share and this inevitably means shrinking margins,” Powerspeed said.
Powerspeed said shortages of locally made products in general, particularly cable, also negatively impacted its business during the quarter under review.
Despite all these difficulties, the group’s trading volumes during the quarter were up on the prior year, and profitability was steady.
“Trading recovered during the quarter under review compared with the previous quarter. The group traded profitably, resulting in an 8,7 percent growth in shareholders’ funds during the quarter,” the group said.
Meanwhile, the group opened its newest and most extensive branch in Avondale, Harare, in December 2022 and the throughput has been pleasing.
Powerspeed noted that it will continue to pursue new markets, expand its branch footprint, and develop its sourcing of products directly from the best manufacturers globally.
In its outlook, the group said it is confident that Zimbabwe’s economic future is positive, given the anticipated investment in mining, steel production and agriculture, among others.
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