6 December 2008

Zimbabwe: Farm & City Centre Shuts Down Branches in Remote Areas

Harare — FARM & City Centre has closed five of its branches that were operating in remote parts of the country citing a raft of economic problems that have rendered them unviable.

The CFI Holdings subsidiary said the five outlets were made unprofitable by the National Incomes and Pricing Commission's price controls, escalating overheads and fuel shortages.

"Continued enforcement of price controls for the greater part of the year, while fuel and other costs escalated, rendered operation of most remote branches uneconomic," CFI said in a statement accompanying its annual results last week.

"As a result Farm & City Centre had to close five branches, which had become unviable, leaving 41 braches still open," the statement added.

Farm & City Centre is one of the three retail units operated by CFI. The others include Town & Country and Honeydew Farm.

CFI last week reported a 342 billion percent increase in revenues to $1,02 trillion for the year ending September 30 2008 but warned of dire economic problems in the outlook period.

With inflation topping 230 million percent as at July, and with most manufacturers failing to supply commodities to the market as a result of high production costs, Zimbabwe's retail sector has collapsed with most supermarkets shelves now empty.

Last week, another retail chain, OK Zimbabwe Limited, said the ongoing political uncertainty had affected business confidence and accelerated the economic recession as suppliers had tightened credit terms against the backdrop of diminished working capital.

OK Zimbabwe chairman, Eric Kahari also bemoaned the effects of the price controls on the business.

CFI said Town & Country had a better year but Honeydew Farm's productivity was affected by power shortages and labour problems, which are increasingly becoming a thorn in the flesh for corporate Zimbabwe as even unskilled people have joined the labour flight into the region and beyond.

Looking ahead, CFI said economic prospects remained bleak unless major changes to economic policies are implemented.

"Unless major changes to economic policies are adopted to address fundamental issues, the chronic hyperinflation levels reached by the economy will increase, making businesses survival extremely difficult," the group said.

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