Business

New Edgars boss dreams big – The Zimbabwe Independent – NewsDay

Mushosho is the new group chief executive officer (CEO) of Edgars Stores Limited.

CLOTHING maker and retailer Edgars Stores Limited recently appointed Sevious Mushosho (SM) as its chief executive officer, taking over from Tjeludo Ndlovu, who quit after three years at the helm. Our business editor Mthandazo Nyoni (MN) sat down with Mushosho who faces mission impossible to make Edgars relevant in Zimbabwe again. Find below excerpts of the interview:

MN: What is your vision for Edgars Stores Limited? How do you intend to turnaround the fortunes of the company?

SM: My vision is to make Edgars the top departmental store in Zimbabwe. We will get there by going back to the foundation upon which Edgars was build, which is offering our customers exclusive high-quality fashion consistently. We will need to expand the range offerings to include household goods.

MN: What are your short, medium- and long-term goals?

SM: In the short term, we must stabilise our supply chain and improve our merchandise offering to our customers. The focus will be on improving quality of our garment offerings, expanding our product ranges through acquisition of new suppliers. Medium term, we intend to identify new retail sites and revamp existing stores to give our customers a modern store with great layouts and lighting. In the long term, we are planning to expand manufacturing operations in Bulawayo through acquisition of modern plant and machinery as well as partnerships with other local manufacturing companies to boost our capacity.

MN: The company has relocated its headquarters from Bulawayo to Harare. What necessitated this move?

SM: The move was necessary as we have 15 stores to manage in Harare than four in Bulawayo. With competition increasing each day, management are able to respond faster and more effectively in Harare where most stakeholders and partners are located. Speed of response is everything in our industry.

MN: Are you also going to relocate the Carousel Manufacturing division?

SM: No. Bulawayo is the perfect location for our manufacturing, and we have several of our local suppliers based there. We have invested heavily in Bulawayo, and we will be putting more investment to increase capacity and assist other local manufacturers there to grow too.

MN: For you to achieve your vision you need money. How much are you planning to invest into the business?

SM: We are planning to invest at least US$5 million to fund new plant and machinery, new retail sites, new ERP (enterprise resource planning) system and stores revamp in the next one year.

MN: What is your current staff complement? Any plans to increase this figure?

SM: We have over 900 employees, and we expect them to grow to over 1 500 by end of December 2024 as we expand our manufacturing operations to service local and export markets.

MN: As a business, do you feel threatened by the emergence of pavement or car boutiques or second-hand clothes(mabhero) trade?

SM: Our offering is targeted at customers who value exclusive high-quality fashionable garments sold in a world class departmental store at flexible payment terms. Such customers may not buy from those car boutiques and ‘mabhero’.

MN: Is there a future for the clothing sector in Zimbabwe given the prevalence of cheap imports as well?

SM: Yes, the future is bright for the clothing sector. We must prioritise what our customers want and give them. Our people deserve decent healthy clothing and accessories. Millions of Zimbabweans will be so proud to have a world class departmental store near their homes offering decent quality clothing. We must dignify the retail sector and run away from the mushrooming ‘mukoto’ lane boutiques, car boots boutiques and street runners, who have no standards and do not contribute to the fiscus.

The growth of the clothing retail sector also brings growth opportunities for downstream industries of clothing manufacturers, fabrics, and trims manufacturers in the country. If government can further protect the industry and incentivise local manufacturers to compete with the rest of the world, we will see a massive resurgence of the entire clothing sector.

MN: How do you intend to empower the locals?

SM: As already mentioned above, we will be partnering with other local manufacturers to boost our capacity and range offering. More work for manufacturers means more people are employed and contribute to our nation’s productivity.

Recently, we have identified local upcoming designers to show case their talent during our fashion extravaganza show and we gave them an opportunity to sell their merchandise through our selected stores. We intend to continue empowering the young designers. We will also be running a clothing mechanist training programme at Carousel in Bulawayo to give our local young people clothing sewing skills and to maintain the clothing manufacturing skills in the country.

MN: Apart from high inflation and currency volatility, what other major challenges are you facing as a player in the clothing industry?

SM: Main challenge apart from what you mentioned above is duty on imported fabrics that cannot be manufactured in the country, which makes us less competitive. Another challenge is that of the mushrooming of boutiques, who are selling smuggled merchandise, do not pay tax and have small overhead structures making it easy for them to sell cheaper. The government can do more in this area to create sanity.

MN: Are there any plans to venture into the export business in the near future? If so, which countries are you targeting?

SM: Yes, mainly targeting exports into South Africa where we have existing partnerships.

MN: According to the group’s results for the 26 weeks ended July 9, 2023, total units sold dropped 14,8% to 1,09 million compared to the same period last year. Again, profit before tax plummeted 70% to ZW$4 billion. What do you attribute this performance to?

SM: This was mainly because of currency instability experienced during the second quarter, which saw most of our customers losing their disposable incomes.

MN: Nearly 80% of local transactions are in United States dollars (USD). As a company, have you recorded an uptick in greenback business? If so, what is the ratio compared to the Zimbabwe dollar business?

SM: Our current ratio is 80:20 in favour of USD.

MN: You have said that the group seeks to expand its geographic footprint through the opening of new stores in strategic locations. How many stores are you targeting to open and what is the quantum of investment?

SM: We are planning to open at least six new stores during the first half of 2024 for an investment of US$1,5million.

MN: Any plans to expand to foreign markets?

SM: Apart from exports into South Africa planned for next year, we have no plans to expand into foreign markets.

Business

Mthuli squeezes consumers, businesses – NewsDay

In his 2024 national budget presentation in Parliament, Finance minister Mthuli Ncube increased taxes to raise an additional ZWL$10 trillion to meet the new revenue targets.

GOVERNMENT yesterday announced a cocktail of tax increases, pushing up the cost of living and ease of doing business after reviewing its 2024 revenue projection upwards by 22,22% to ZWL$53,9 trillion.

In his 2024 national budget presentation in Parliament, Finance minister Mthuli Ncube increased taxes to raise an additional ZWL$10 trillion to meet the new revenue targets.

Treasury initially projected revenue collections to total ZWL$44,1 trillion for the 2024 fiscal year.

“Mr Speaker Sir, in line with the projected economic growth of 3,5%, total revenue collections in 2024 are estimated at ZWL$53,9 trillion, (18,3% of GDP), broken down as ZWL$51,2 trillion tax revenue and ZWL$2,7 trillion non-tax revenue,” Ncube said.

“Guided by the expected revenue envelope and the desired fiscal path, expenditures in 2024 are projected at ZWL$58,2 trillion (19,8% of GDP).”

Ncube announced an upward review on the Strategic Reserve Levy by US$0,03 and US$0,05 per litre of diesel and petrol, respectively, with effect from January 1, 2024, pushing up the cost of fuel.

Ncube also raised tollgate and passport fees beginning next year.

“I, therefore, propose an upward review of toll fees on premium roads, that is, Harare-Beitbridge and Plumtree-Mutare and other roads, with effect from January 1, 2024. Revenue derived from the increased fees will be remitted to the Consolidated Revenue Fund,” Ncube said.

“I, further, propose that passport and selected fees charged by the Central Vehicle Registry be increased, with effect from January 1, 2024. Additional revenue generated from the above measures will be ring-fenced towards road infrastructure development.”

Ncube also introduced a US$0,02 levy per gramme of sugar contained in beverages, a development that will push up the prices of beverages.

He said the move was in response to growing concerns on the adverse effects of the consumption of sugar contained in beverages. Tax on beverages has also been implemented in a number of countries, including in the Southern African Development Community.

Ncube also introduced a new wealth tax to ensure that high-income earners pay taxes.

“In order to ensure that every person contributes to the fiscus in line with their levels of income. I propose to introduce a wealth tax levied at a rate of 1% of market values of residential properties with a minimum value of US$100 000,” he said.

“Resources derived from the levy will be ring-fenced towards urban infrastructure development, in particular roads, water, sewer and community health centres. Principal private residential properties owned by elderly persons above 70 years will, however, be exempt from the tax.”

While the minister reviewed the tax-free threshold on incomes to ZWL$750 000, from the previous ZWL$500 000, inflation has rendered the move mute because of the rising cost of living.

Ncube also targeted foreign companies by introducing the domestic minimum top-up tax (DMTT).

The tax ensures that qualifying entities located in Zimbabwe with an aggregate effective tax rate below 15% be charged a top-up amount, raising the cost of doing business.

“Under the GloBE Tax Rules, where a tax incentive results in an effective rate of less than 15%, the tax jurisdiction where the multinational is headquartered collects the difference between the effective tax under the tax incentive and the minimum effective rate of 15% (the top-up tax),” Ncube said.

“The DMTT allows the country where the low tax profits arise from the tax incentive to collect the top-up tax rather than ceding taxing rights to the headquarter jurisdiction.”

He said the calculation of the DMTT would be based on the effective tax rate charged on the jurisdictional profits, not the jurisdictions’ statutory corporate income tax.

“I, therefore, propose to enact DMTT rules to guard against ceding taxing rights to foreign jurisdictions on top-up tax arising from tax incentives that are provided to those investments,” Ncube said. The corporate tax rate was also reviewed upwards to 25% from 24%.

Ncube, however, reduced the mandatory value added tax (Vat) registration threshold to US$25 000 from US$40 000, starting next year.

Operators with a minimum annual turnover of US$25 000, or local currency equivalent thereof, are now required to register for Vat.

Failure to register will see applicable penalties invoked, Ncube said.

He said traders registered for Vat purposes and in possession of valid tax clearance certificates would be eligible to procure goods from manufacturers.

“The tax deferred will, however, be fixed at the foreign currency amount payable at the time of importation, albeit, payable in local currency at the prevailing exchange rate at the time of importation, albeit, payable in local currency at the prevailing exchange rate at the time of payment.”

Business

Mthuli squeezes consumers, businesses – NewsDay