Business Writer
The country’s retail sector might be sitting on a knife edge.
Talking of the retail sector in Zimbabwe today what comes out first is latest developments at OK Zimbabwe and N Richard Wholesalers – difficulties in restocking, employees retrenchment threats, closure of branches and management challenges.
Regional supermarket chain, Choppies, has already closed shop in Zimbabwe raising viability issues among other things.
But the most intriguing issue is the Reserve Bank of Zimbabwe recently dismissed claims by some of these registered retailers that the economic environment is the source of their challenges, arguing that gross mismanagement might be at the heart of constraints weighing down their businesses.
Last week RBZ Governor, Dr John Mushayavanu, revealed this while presenting the 2025 Monetary Policy Statement, during which he announced the extension of the Traded Finance Facility (TFF) to cushion struggling retailers from working capital challenges.
The facility was previously earmarked for productive sectors only.
Dr Mushayavanhu said although he had extended the TFF to retailers, the challenges facing retailers and wholesalers would not go away as long as they continue mismanaging their enterprises.
His remarks come as several retailers, including the country’s largest store chain, OK Zimbabwe, have indicated plans to close some outlets across the country citing a tough trading environment.
N Richards and Mahomed Mussa wholesalers have either scaled down operations or reduced trading space while Choppies Zimbabwe has exited the domestic market.
Well-placed retail industry sources have alleged that the challenges facing some of Zimbabwe’s biggest retailers included bloated management that drives expensive cars and draws huge perks monthly.
Concerns have also been raised about certain decisions taken by some of the retailers’ management, including multiple land acquisitions and dividends declared, which reportedly misallocated cash over the past few years.
Some industry players, however, claimed the inability to price competitively as being at the centre of challenges faced by most operators in the formal retail sector, which also faces stiff and growing competition from informal traders.
The informal traders trade exclusively in foreign currency while they do not pay any statutory obligations, giving them a huge price advantage as their goods become cheaper.
The industry insiders say manufacturers who prefer to supply informal traders because they pay US dollar cash, have also reduced trading terms, insisting on supplying stock on credit for a maximum of seven days or to be paid cash or in US dollars.
Dr Mushayavanhu, however, said challenges in the retail sector went deeper than constraints presented by the environment.
“In order to address working capital challenges recently experienced by some wholesalers and retailers, the TFF has been extended to these critical sectors to enable them to restock.
“Previously, we had said TFF was only for the productive sector, but we have heard the plea and we are saying those struggling retailers can also access the TFF, even though we know that their problem has nothing to do with the environment.
“We know it — these are management issues and even if they (retailers and wholesalers) access that TFF and continue with those management gaps, they will fold,” he said.
Towards the end of last year, RBZ announced the introduction of the TFF with interest rates set at 20 percent for banks borrowing from the central bank and a maximum of 30 percent for on-lending to clients.
The initiative, which was meant to provide cheap funding to the productive sectors, was established following the realisation that commercial banks were lacking capacity to adequately finance productive sectors, a situation that could hinder economic growth.
“Why is it that some retailers are having challenges. . .so, we urge retailers to review their internal systems, structures, expenses and even undo certain strategic decisions that they made that would have placed them in the problems that they are facing,” said Dr Mushayavanhu.
Meanwhile, to guarantee continued stability in the interbank foreign exchange market through augmenting the supply of foreign currency as well as building the critical foreign currency reserves needed to anchor the ZiG, the monetary authority has reduced foreign currency retention level for exporters to 70 percent from 75 percent.
This, Dr Mushayavanhu said, implied that the effective surrender portion of export proceeds has been increased to 30 percent from 25 percent before the latest policy measure.
“This review is consistent with the increased use of ZiG in the economy. The additional 5 percent will ensure that exporters mobilise sufficient ZiG to meet local currency obligations and other expenses, including tax payments, going forward,” he said.
In order to ensure preservation of value, exporters with no immediate use of the ZiG equivalent of the additional 5 percent of the export surrender proceeds will have an option to invest the funds in a United States Dollar Denominated Deposit Facility (USDDDF) at the Reserve Bank — and the invested funds can be withdrawn in ZiG on demand, at the prevailing interbank exchange rate on the settlement date.
