By ETimes
Regional retailer Choppies says it is recovering some of the US$29,62 million in funds blocked in Zimbabwe.
The term blocked funds describes money that a foreign company or organisation earns in a country but that cannot be paid out right away due to government laws, capital flow constraints, or, in our instance, a lack of available foreign currency.
In 2021, the Government of Zimbabwe assumed the obligation to settle these blocked funds in terms of Part XIII of the Finance Act No. 7 of 2021.
The group proceeded to transfer the ZWL equivalent of the legacy debt at a rate of US$/ZWL1:1 to the RBZ as per the requirement of the Exchange Control Directive RU 28 of 2019, amounting to $29,62 million.
“In this regard, the group received communication from the RBZ dated 4 May 2022 to the effect that an amount of US$29,62 million had been successfully registered with the Bank’s Exchange Control division as blocked funds to be paid in instalments of US$125,000 per week until it has been paid in full, which is expected to be August 2027,” Choppies said in its 2023 annual report.
The country’s total public and publicly guaranteed debt is estimated at $2,2 trillion for domestic debt and US$14 billion for external debt (including blocked funds of US$3,1 billion) as at the end of September 2022.
Choppies is the largest retailer in southern Africa outside of South Africa, with over 161 stores across Botswana, Zimbabwe, Zambia and Namibia and eight distribution centres.
For the year ended June 30, 2023, Choppies said its Rest of Africa segment sales increased by 7,7 percent to BWP 1 974 million on the back of the addition of nine new stores, inflationary increases in Zimbabwe and Zambia and volume growth in Namibia and Zambia.
The group said the increase was offset by a very weak Zimbabwean dollar, resulting in Zimbabwe’s pula sales declining by 48,3 percent.
Choppies said Zimbabwean consumers are increasingly looking for more affordable and convenient shopping options.
“We are closely monitoring the exchange rate as it will impact both Zimbabwe’s and the group’s profitability and net asset value,” Choppies said in its financials.
Previously, the group introduced new products in Botswana and money transfer services to Zimbabwe through HelloPaisa and Malaicha, where customers pay for groceries in Botswana that are collected in Zimbabwe.