More Zimbabwean companies and retailers are closing shop, citing economic and currency complexities that are inhibiting profitability and viability.
Retail shelves are quickly running out of stock as manufacturers and producers stop supplies to supermarkets. The struggles that Zimbabwean retailers are facing have coincided with mounting company closures, all blamed on the obtaining economic environment.
The Confederation of Zimbabwe Retailers said this week that “the recent closure of several (retail and wholesale) outlets” was worrying.
While OK Zimbabwe, which competes against Pick n Pay branded outlets in that country, has been left with empty shop shelves, other retail operators such as Choppies and Spar have been shutting down stores.
Wholesalers such as N Richards Group have also had to close some outlets while Mahommed Mussa Wholesalers has reduced shop space by 60%.
All this, said Denford Mutashu, president of the Confederation of Zimbabwe retailers, “highlights the growing crisis” in Zimbabwe’s commerce and industry sectors.
Zimbabwe enforces an official exchange rate that retailers have to trade in while suppliers use the much popular parallel exchange rate. This has been occasioning distortions and challenges for retailers to trade, culminating in manufacturers adopting informal route to market channels.
Moreover, Zimbabwe’s inflation has rampaged over the past few weeks. Zimbabwe Statistics Agency (Zimstat) data on Tuesday showed inflation quickening to 14.6% for this month in US dollar terms compared to a rate of 2.5% last month, while the official local currency inflation rate for January 2025 was calculated at 10.5% after a 3.7% rise in December.
Analysts said the higher inflation would worsen the situation for Zimbabwean companies while others ascribed the steep increase in January inflation to a raft of taxes, including new levies on fast foods and sugar introduced by Finance Minister, Mthuli Ncube, recently.
“The fiscal, monetary, regulatory, and statutory frameworks have remained unforgiving to formal retail and wholesale operators. Formal businesses are compelled to accept the ZiG in a predominantly dollarized supply chain,” said Mutashu.
“This is exacerbated by key operational costs, such as fuel for generators, which must be paid for in US dollar.”
In response to the company closures, Ncube said the government was encouraging investments into the economy. He also said local investors were ready to step into the place of companies that were divesting.
“We cannot stop companies disinvesting. For some of these disinvestments, we do have local investors who are ready to take over those companies - we saw it with audit firms and with Choppies, a local investor is taking over,” he told a media briefing recently.
Zimbabwean beer and soft drinks maker, Delta Corporation has flagged the prohibitive operating environment and currency instability obtaining in South Africa’s northern neighbour, arguing that policy changes are occasioning challenges that are rendering operators uncompetitive and rendering supply chains ineffective.
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