AB InBev Wins Promise That Zimbabwe Will Struggle to Keep

(Bloomberg) -- In the midst of a cash shortage that’s idled gold mines and left motorists queuing for gasoline Zimbabwe’s government has now been forced by the country’s biggest company to make a promise it will struggle to keep.

With the government already unable to pay for adequate fuel and wheat imports Delta Corp., 40 percent owned by companies held by Anheuser-Busch InBev SA/NV according to its annual report, has now won a pledge from the central bank that it will get the foreign currency it needs to keep its business running. In return the brewer has scrapped a plan to only accept hard currency for its products from Friday.

Delta’s plan would have put into jeopardy the government’s workaround for its currency crisis, the roots of which lie in its decision to abandon the Zimbabwe dollar favor of major currencies including the dollar in 2009. The central bank created electronic money, known as as Real Time Gross Settlement dollars, or RTGS$, to lend to the government and introduced bond notes that it says are valued at par with the U.S. currency. A black market has seen both instruments trade at a discount to the American currency.

“They did promise to allocate foreign exchange to Delta before but they didn’t manage to keep their promise,” said Jee-A van der Linde, an economist at NKC African Economics in Paarl, South Africa. “The simple truth is that there is no hard currency.”

Delta is not alone. Some airlines operating in the country will already only accept hard currency and in December Simbisa Brands Ltd., a home-grown fast-food company that serves 4.5 million customers a month, offered patrons a discount if they pay in dollars.

Many retailers are charging about 4.5 times as much for goods paid for electronically as those paid for in paper dollars. Shelves have emptied as companies don’t have the cash available for imports.

Still, Delta’s move does smack of brinkmanship as it sells its beer and soft drinks to Zimbabweans who are mainly paid in bond notes and RTGS$ and therefore would not be able to buy its goods.

Businesses must “immediately stop” dual-pricing, Nqobizitha Ndlovu, the country’s industry minister, said in an interview before Delta met with the central bank in a meeting brokered by Constantino Chiwenga, the country’s deputy president. “The practice is unacceptable and against the spirit of fairness. It’s also illegal.”

Still, as long as the currency shortage persists there may not be an alternative.

“It’s not complicated,” Harare-based economist John Robertson said in an interview. “Any available dollars go to importing fuel and essential food, because we no longer produce sufficient food. There aren’t enough dollars to go around and government debt swallows the balance.”

©2019 Bloomberg L.P.