News / National
Zimbabwe's retail sector crisis worsens as shops continue closing
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Zimbabwe's retail sector is facing an unprecedented crisis, with several major retailers and wholesalers forced to close branches amid a series of economic challenges. This Thursday, President Emmerson Mnangagwa interrupted his annual leave to chair an urgent meeting with senior government officials to address the deteriorating situation in the formal retail and wholesale sector.
The meeting, held at the highest levels of government, saw the participation of Vice Presidents Constantino Chiwenga and Kembo Mohadi, as well as representatives from various Economic Ministries. In a statement released after the meeting, Finance Minister Mthuli Ncube expressed deep concern over the increasing informalisation of Zimbabwe's economy, particularly its effect on formal businesses in the retail subsector.
"His Excellency, the President, Dr. E.D. Mnangagwa, took time off his annual leave to chair a session on developments in the economy, designed to map the way forward," Ncube said. "The session, which also included the two Vice Presidents and all Economic Ministries, deliberated on measures government has taken on the economy, and developments in specific economic sectors, including the retail subsector. This culminated in additional measures being proposed."
Zimbabwe's economy had been experiencing growth averaging 5.5% annually since 2021, but a slowdown of 2% in 2024, largely attributed to an El Niño-induced drought, has disrupted agriculture, electricity generation, and broader economic activities. Ncube acknowledged that this economic strain has worsened the challenges faced by the retail and wholesale sectors.
Research and consultations highlighted several factors contributing to the distress of formal businesses, including the rapid expansion of the informal sector, poor corporate governance, and the proliferation of smuggled imports that are often sold exclusively in USD. The high cost of doing business, especially in the face of competing informal market practices, has further strained the formal retail sector.
"Formal businesses are experiencing distress due to competition from the informal sector, poor management, and poor corporate governance which have resulted in business failure in some instances," Ncube said. "The proliferation of smuggled imports—mostly in reserved sectors—sold exclusively in USD, and the high cost of doing business, among others, also contribute to the formal sector challenges."
In an effort to address the situation, Ncube outlined a series of government measures aimed at stabilising the retail sector. These include the mandatory use of point-of-sale machines by informal traders, discouraging manufacturers from directly supplying the informal market, and the establishment of a Domestic Interagency Enforcement Team to ensure compliance with existing regulations. The government is also aiming to streamline regulatory processes, reduce fees and charges, and eliminate duplication of work by government agencies in order to lower the cost of doing business.
Further initiatives include enforcing compliance with the Indigenisation and Economic Empowerment Act, promoting industrialisation through additional incentives, and encouraging the procurement of goods and services from local producers to support the domestic economy.
"The government is committed to improving the business environment to curb the informalisation of the economy as we move towards Vision 2030," Ncube concluded.
The crisis in Zimbabwe's formal retail sector has been exacerbated by the dual currency system, which has contributed to rising operational costs and an unstable business environment. The Confederation of Zimbabwe Retailers (CZR) recently raised alarm over the impact of punitive taxes, regulatory burdens, and the challenges posed by the informal sector. CZR President Denford Mutashu noted that these factors have pushed consumers toward informal trading channels, further undermining the viability of formal businesses.
Meanwhile, major retailers such as Spar, OK Supermarkets, Choppies Zimbabwe, and Surrey have been forced to scale back operations, close branches, or face severe liquidity challenges. The N. Richards Group has also shuttered several outlets, and OK Zimbabwe has struggled with empty shelves due to an inability to pay suppliers under the official exchange rate mandated by the Reserve Bank of Zimbabwe. TM Pick n Pay is reportedly owing over US$40 million to suppliers.
OK Zimbabwe, however, appears poised for a recovery after the government allowed the company to adjust its pricing to mid-market rates. This move is expected to help OK Zimbabwe settle supplier debts and replenish stock.
In Chinhoyi, the closure of a Surrey branch this Friday led to the redundancy of at least 15 employees, underscoring the growing human cost of the crisis in the retail sector.
As the government scrambles to address the challenges facing formal businesses, it remains to be seen whether the proposed measures will be enough to stem the tide of closures and restore stability to Zimbabwe's retail sector. The ongoing crisis poses a significant threat to the country's economic stability, highlighting the urgent need for reform and long-term solutions.
The meeting, held at the highest levels of government, saw the participation of Vice Presidents Constantino Chiwenga and Kembo Mohadi, as well as representatives from various Economic Ministries. In a statement released after the meeting, Finance Minister Mthuli Ncube expressed deep concern over the increasing informalisation of Zimbabwe's economy, particularly its effect on formal businesses in the retail subsector.
"His Excellency, the President, Dr. E.D. Mnangagwa, took time off his annual leave to chair a session on developments in the economy, designed to map the way forward," Ncube said. "The session, which also included the two Vice Presidents and all Economic Ministries, deliberated on measures government has taken on the economy, and developments in specific economic sectors, including the retail subsector. This culminated in additional measures being proposed."
Zimbabwe's economy had been experiencing growth averaging 5.5% annually since 2021, but a slowdown of 2% in 2024, largely attributed to an El Niño-induced drought, has disrupted agriculture, electricity generation, and broader economic activities. Ncube acknowledged that this economic strain has worsened the challenges faced by the retail and wholesale sectors.
Research and consultations highlighted several factors contributing to the distress of formal businesses, including the rapid expansion of the informal sector, poor corporate governance, and the proliferation of smuggled imports that are often sold exclusively in USD. The high cost of doing business, especially in the face of competing informal market practices, has further strained the formal retail sector.
"Formal businesses are experiencing distress due to competition from the informal sector, poor management, and poor corporate governance which have resulted in business failure in some instances," Ncube said. "The proliferation of smuggled imports—mostly in reserved sectors—sold exclusively in USD, and the high cost of doing business, among others, also contribute to the formal sector challenges."
In an effort to address the situation, Ncube outlined a series of government measures aimed at stabilising the retail sector. These include the mandatory use of point-of-sale machines by informal traders, discouraging manufacturers from directly supplying the informal market, and the establishment of a Domestic Interagency Enforcement Team to ensure compliance with existing regulations. The government is also aiming to streamline regulatory processes, reduce fees and charges, and eliminate duplication of work by government agencies in order to lower the cost of doing business.
Further initiatives include enforcing compliance with the Indigenisation and Economic Empowerment Act, promoting industrialisation through additional incentives, and encouraging the procurement of goods and services from local producers to support the domestic economy.
"The government is committed to improving the business environment to curb the informalisation of the economy as we move towards Vision 2030," Ncube concluded.
The crisis in Zimbabwe's formal retail sector has been exacerbated by the dual currency system, which has contributed to rising operational costs and an unstable business environment. The Confederation of Zimbabwe Retailers (CZR) recently raised alarm over the impact of punitive taxes, regulatory burdens, and the challenges posed by the informal sector. CZR President Denford Mutashu noted that these factors have pushed consumers toward informal trading channels, further undermining the viability of formal businesses.
Meanwhile, major retailers such as Spar, OK Supermarkets, Choppies Zimbabwe, and Surrey have been forced to scale back operations, close branches, or face severe liquidity challenges. The N. Richards Group has also shuttered several outlets, and OK Zimbabwe has struggled with empty shelves due to an inability to pay suppliers under the official exchange rate mandated by the Reserve Bank of Zimbabwe. TM Pick n Pay is reportedly owing over US$40 million to suppliers.
OK Zimbabwe, however, appears poised for a recovery after the government allowed the company to adjust its pricing to mid-market rates. This move is expected to help OK Zimbabwe settle supplier debts and replenish stock.
In Chinhoyi, the closure of a Surrey branch this Friday led to the redundancy of at least 15 employees, underscoring the growing human cost of the crisis in the retail sector.
As the government scrambles to address the challenges facing formal businesses, it remains to be seen whether the proposed measures will be enough to stem the tide of closures and restore stability to Zimbabwe's retail sector. The ongoing crisis poses a significant threat to the country's economic stability, highlighting the urgent need for reform and long-term solutions.
Source - newzimbabwe
