The baking industry has raised concern over the capture of the market by street vending cartels engaging in money-spinning schemes by hoarding bread using electronic payments then resale it at cheaper price in cash before trading the cash at high premiums at a time authorities are grappling to plug illicit money activities.
The illicit money activities are believed to be exerting pressure on the exchange rate as well as creating a massive disparity in value between electronic money and hard cash.
The syndicates are mainly operating in high density areas such as Mbare, Mabvuku, Highfields and Chitungwiza.
Sources said the cartels are closely linked with distributors who prioritize these vendors before they deliver at major retail centers.
Popular brands such as Bakers Inn, Lobels, Natbake and Proton are sold in the streets at as low as $ 9 in hard cash against recommended retail prices of around $ 14.
But bakers say they have no control over what happens with their products once they sell it to customers.
“The bread market is a bit tricky because of people selling cash. We sell our bread using all forms of payments. Mostly this is happening with vendors who are selling in cash. We are selling them bread at maybe $ 12 and they are selling it even less than that. Its advantage to the consumer who is buying it using cash but then it has far reaching consequences because that cash is then sold at a higher price which then affects everybody because we know cash is scarce,” Natbake general manager, Annie Nhongo told 263Chat Business.
Earlier this year, when wheat shortages hit the country the same syndicates were monopolizing the little bread available while selling it at exorbitant prices.
The scourge has also seen an influx of other basic commodities being sold for cash in the streets such as rice, soaps, cooking oil and lotions.
Authorities have since issued caution on illicit money traders who are pushing inflation on electronic money but there has been little interventions made so far to mitigate the challenge.
Cash premiums on Ecocash and other electronic money are now averaged above 40 percent, pushing the costs of electronic transactions higher.
Recently, the country’s leading mobile money company, Ecocash expressed concern over abuse of its platform by illicit money traders who are manipulating the exchange rate.
“There is no way that we can be behind this as a company because we are not the ones benefitting. Actually the unscrupulous agents are the biggest winners. We only provide the platform for customers to convert their hard cash into electronic money and vice versa and of course with a commission for our agents who facilitates the process for us,” an insider told this publication.
