'Promote rule of law, protect businesses'

HARARE - Mbudzi People’s Market, situated on the outskirts of the capital along the Harare–Beitbridge highway is a teeming mall serving communities from the sprawling south western high density suburbs and recently was a subject of mobs who tried but in vain to disrupt business. 

Reporter Blessings Mashaya speaks with Felix Ormachea, the manager of the mall and below are the excerpts of the interview.

Q: What inspired the establishment of Mbudzi People’s Market?

A: Two things inspired the creation of the centre; the first being the Eastern European model where you have the informal sector trading in a centralised formal location bringing products directly to the customers, cutting out the middleman and thus giving the consumer a better pricing model.
Secondly, the opportunity for a formal covered large retail market centre which is lacking in the place where it is.

Q: At what cost was the market built? 

A: It cost around USD 4 million at the time of opening after construction was completed about two years ago.

Q: How many tenants do you have and which communities are you serving?

A: We have around 200 tenants. It is estimated that up to 500 000 residents are now living in the surrounding area that have access to the market.

Q: How much have you been affected by the current economic environment?

A: Since the introduction of the bond notes and RTGS monetary system compared to the US dollar the business has consistently declined, initially with our major tenant…closing down and not paying rent, then all rentals becoming almost half from what was initially expected and all resulting in us having to fund the market with 100 percent shareholder finance. 

Q: Does this sum up your three years into this project?

A: The last three years we’ve been in business have been extremely challenging and I will break them down into three parts.

Initially being a PPP (Private Public Partnership) joint venture between Augur and the city of Harare we had massive resistance from various individuals both within the city and ministry to get the necessary approvals, buy-in and support.

The second period of construction went more smoothly despite the unexpected large amounts of granite rocks that had to be blasted away we managed to finish the building in a record three months — from the time the concrete floor was poured and first brick laid until the market was ready to open. 

However, we had very little cooperation from the Department of Roads to move both the buses and vendors who were illegally stopping and parking in the middle of the road to the designated places that we intended building.

The third and final phase after opening the market was for the city officials to support the opening and vetting of reliable tenants which never happened and this resulted in us in having to build them up on our own slowly for the first 12 to 24 months. 

Q: But you have continued in that environment? 

A: We believe in giving an opportunity to the informal sector and the SME (Small to Medium Enterprise) retailers. This has a massive empowering and social impact in the community to create jobs and wealth for aspiring business people in the high density areas.

Q: How are you copying in this environment? 

A: It is extremely difficult because on the one hand you have the retailers who expect to pay very little rental and yet on the other hand as foreign investors we need to show a return on investment of at least five to 10 percent in real US dollars.
However, to date we have not yet been able to remit even one US dollar to the investors.

Q: Is that the reason you are now charging half your rentals in US Dollars? 

A: The reason why we had requested to have payment in US dollars and the other half in local currency was to help cushion the retailers from paying the full rental in 
US dollars which is the stipulated currency in the lease agreements and because of the non-availability of the US dollars in the market.

Q: Why then did some of them resist this?

A: Largely most of the retailers understood and accepted this position initially but were then incited to resist by others who were bent on not paying. 

Q: Recently you were attacked by Zanu PF mobs over that, how have you dealt with the incident?

A: The elements previously mentioned who were not willing to pay, then, instead of coming to us to negotiate better terms, went to Zanu PF to lodge a complaint and get 
the party to pressurise and intimidate our management.

This to us as foreign investors was most shocking and disturbing.

Since the incident we reported the matter to the police and lodged a complaint to higher offices, however, to date no action nor apology has been taken. 

We remain uncertain as to our investment being safe especially with the recent civil disturbances witnessed  in the country.

Government needs to immediately take responsibility and assure foreign investors like ourselves that such incidences will not be tolerated and that our investment is secure in getting a return in real US Dollar payment by making sure the economy is operating in US dollars or there would be no sense in anyone making an investment into Zimbabwe.

Q: So does this speak to the issues of rule of law and property rights?

A: It is critical that the government makes a stand in the right direction to protect property rights and in a clear transparent non-corrupt way makes sure that the rule of law works.


 

Comments (3)

It probably costs less than that....not sound financially and the standards are very poor. The whole country needs cbd infrastructure and property upgrades....grants of US$15k must be made available to shop owner and US$1500 to each vendor , to bring the whole system up to date.

Kaguvi House - 28 January 2019

This so called Eastern European investor is none other than Ken Sharpe and his shady Augur Investments from Ukraine. The same lot that defrauded us all on the airport road. The co-director of Augur is one Michael van blerk , who is currently on trial for defrauding he city of Harare of the land valued over $2 million. “Great “ bunch of people!!!! One can not help but wonder why the government still tolerates these crooks ? This so bad for the image of Zimbabwe.

Michael Patrick Reza - 28 January 2019

A pal of mine wish to do a similar project in the country though but standards would be higher...a mall that accommodates land cars + helicopter sales for well to do farmers , local produce eg Matopos Red wines...for tourists and toffs closeby tweeds , etc . If the cost is let's say us$250Mn...he must not expect a profit from tenants income , the business model does not add up . Businesses incl the builds must be a group to make sense.

Earl of Matopos - 29 January 2019

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