Official inflation is running at 4,500%, the highest in the world, though independent financial institutions estimate real inflation is closer to 9,000%. Last week South African Express, the subsidiary of South African Airways, the national airline carrier, began its advertising campaign offering flights to Victoria Falls, via Zimbabwe, describing the destination as one of the Seven Wonders of the World.
Grant Pattison, the chief executive of Massmart, which owns 85% of Makro in Zimbabwe, says they would continue trading as long as it was possible in the country to ensure the door was open. He believes Zimbabwe would recover from the current problems and become “a desirable place to trade”.
Elinor Sisulu, a spokesperson for the Zimbabwe Crisis Committee, believes the country's future prospects are good. “Even though things look bleak, politically and economically, I have come across, through my interaction on the committee, a number of young people who are committed and ready to lead the country forward into a brighter future,” she said.
Retailers have been worst hit by price controls and profit margins imposed by President Robert Mugabe's government this month in an attempt to halt runaway inflation. OK Zimbabwe Chief Executive Willard Zireva was arrested on 41 charges arising from accusations that two of the retail chain's supermarkets failed to freeze prices at 18 June levels. Police arrested 16 more business leaders in a crackdown on those suspected of violating the government's order to slash prices by 50%.
The directors of Edgars in Zimbabwe were also among those arrested, as well as the individuals owning a Nando's chicken franchise in the country.
A Nando's spokesman said the chicken outlet, which has branches in London and Pakistan, opened in Zimbabwe in March 1993 and is one of the largest restaurant groups in the country with restaurants from Bulawayo to Harare. “Zimbabwe is a peri-peri tourist mecca, and is home of the Great Zimbabwe [one of the oldest city settlements in Southern Africa], the enormous fish-full Kariba dam, and the world famous Victoria Falls…despite the problems, the company has no intention of quitting,” she said
Mark Bower, the chief executive of Edcon, the company which has a 42% stake in Edgars Zimbabwe, said the executives that were arrested are now out of jail. The company had reduced its prices by 50% and all stores were open and trading, however the business would not be sustainable in the long-term because the price of goods sold is now a lot less than what it will cost to replace them.
Edgars in Zimbabwe is an independent listed company on the Zimbabwean stock exchange and while Edcon did not receive any dividends it had to protect its people and its brand.
Shoprite group CEO Whitey Basson said the firm had only one outlet in Zimbabwe. The effect on Shoprite is immaterial. “We are a R38bn business and we see the problems there as political,” he said.
SA's Old Mutual, which also wrote off the value of its Zimbabwe operations years ago, had a similar response to the crisis. “While we continue to monitor the situation in Zimbabwe, Old Mutual's concern is the welfare of our staff and individual and corporate clients,” a spokesperson said. “We believe in the potential of the country.”
