Mishma Chakanyuka, Staff Writer 
FOSSIL Group has called upon Zimbabwean companies to shift their focus from arbitrage-based profit-making to more fundamental business practices, given the currency risk environment.
In a conversation with The Financial Gazette at the 2024 Young CEO’s Business Forum (YBF), Fossil Group’s chief executive, Obey Chimuka, highlighted the primary challenges businesses are grappling with, including currency risk, access to funding, and environmental perception.
“Zimbabwean businesses need to acknowledge the competitive reality and shift away from arbitrage profits to concentrate on core business principles. We have been assured that the currency risk is being addressed.”
He added, “From my perspective, nearly 70 to 80 percent of business transactions are conducted in US dollars, as opposed to the local currency. I believe there should be less concern about the remaining 20 percent. We also need to reduce our margins, which are currently high and deter business.”
Chimuka also pointed out that the cost of capital is decreasing, and if businesses are well-organised and have clear business plans, they can navigate these challenges effectively.
Arbitrage opportunities have been a by-product of Zimbabwe’s currency discrepancies for some time.
M & J Consultants chief executive, Jerrymore Nyazungu, also commented on the issue, stating that while the exchange rate has made business scaling difficult, it has also presented opportunities.
“For instance, when someone has borrowed money from the bank, they are now returning that loan at half value or even 25 percent value after a year. So, there are pros and cons. I believe the situation is creating more opportunities than disadvantages for most businesses,” Nyazungu said.
“In other countries, like Zambia, the rate does not change, if it changes by two points, the whole economy will be shivering. But here, if it changes by 10 000, people will not even look at it because we are now used to trade and exchange in US dollars. Almost 90 to 95 percent of trade is being done in US dollars.”
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