Africa-Press – Zimbabwe. A year ago, all 16 checkout lanes were packed at OK Zimbabwe supermarket in Harare, one of the major retailers in the country. Customers queued shoulder to shoulder, their carts filled with Zimbabwe’s pantry essentials. Today, just two tills are open. They serve only a handful of customers who pick from what’s available on half-empty shelves.
Across Zimbabwe, the situation is the same in many retail shops. While some are still holding on, their shelves are increasingly empty, with branches closing one by one. Others have folded operations entirely, unable to compete with informal traders.
“It never used to be like this,” says Mercy, who has worked for OK Zimbabwe for over 10 years and asked not to be referred to by her full name for fear of losing her job. “People are not coming to buy from us.”
Zimbabwe’s formal retail sector struggles to hang on due to a combination of factors that have been gradually escalating. At the heart of the issue is the country’s unstable currency system. In 2024, the government introduced Zimbabwean gold, or ZiG, meant to be a stable successor to the unreliable Zimbabwean dollar. The ZiG, which is tied to gold and foreign reserves, would — the government hoped — curb inflation and restore confidence in a local currency, which has long been in competition with the much-preferred United States dollar.
Zimbabwean gold surpassed many people’s expectations, but it was no magic cure for the country’s economic turmoil. In the black market, whose unofficial exchange rates most people use, the currency was in short supply and struggled to hold value. Six months after its introduction, the Reserve Bank of Zimbabwe slashed the official exchange rate by more than 40%, trying to bring it closer to the black market rate.
Meanwhile, the government also put restrictions on formal retailers. It required them to price their goods within the official exchange rate and criminalized selling above the rate. This led to price hikes.
Retail customers turned to informal markets where they could pay in the US dollars they still preferred, and at the more reasonable black market exchange rate.
Instability is likely to continue, as US dollars become scarce following the pullout of aid from the United States, much of it funnelled through the US Agency for International Development, which has been a key source of foreign currency inflows in Zimbabwe.
Mirriam Masikati, who once preferred supermarkets for their quality of goods, says she gets more value at these informal markets. “It is worrying that I might buy fake products without knowing, but the prices are pushing us to these informal markets,” says the mother of three.
Although the government in April repealed the requirement that formal retailers price their goods within the official exchange rate, after nearly one year the damage had already been done. Major retailers like Spar Zimbabwe and N Richards Group folded some branches in parts of the capital. A statement by the Confederation of Zimbabwean Retailers in January indicated that some shops had reduced their space by 60%.
And in April, OK Zimbabwe issued a loss warning, laying out a goal to raise US$30 million and explaining the financial challenges it has experienced in the last six months, including difficulty maintaining stock, paying suppliers and meeting other financial obligations.
In contrast, business is booming for informal traders — who are a significant part of the informal sector that makes up an estimated 65% of Zimbabwe’s economy and contributed about 72% to the country’s gross domestic product in 2024. They already had a good slice of the market. They now capture a larger share.
That share could grow further. Informal traders often sell out due to high demand, says Admire Musa, a cashier at one such shop in Harare. The success has attracted other Zimbabweans to open similar shops, he says.
Manufacturers, who once supplied formal retailers on credit, also are turning to informal traders, who pay in US cash, according to a 2024 report by the Zimbabwe National Chamber of Commerce.
This also allows manufacturers to bypass the banking system and avoid taxes, says Brains Muchemwa, an economist. Such high levels of back-channel commerce could be a problem for the country, he says. It significantly reduces the government’s tax revenue, as informal traders do not comply with regulations, he adds.
A 2022 report by the Zimbabwe Revenue Authority indicates that less than 0.5% of the money made in the informal sector is collected as tax revenue.
“It is worrying that I might buy fake products without knowing, but the prices are pushing us to these informal markets.”
Mirriam Masikati
The government has tried to address the growing levels of informalization. In February, it issued a monetary policy requiring that all businesses use point-of-sale machines. This would bring informal trade into regular banking channels.
But Muchemwa is skeptical. The informal sector thrives because it can avoid the burdens of regulations, he says. Without stable policies and an encouraging trading environment, the government’s efforts “will not yield anything,” he says.
Prosper Chitambara, also an economist, says the country needs tax reforms that make it easier and cheaper for businesses to formalize. He points to Brazil and Uruguay as successful examples where simplified tax regimes and supportive laws have reduced informality.
For Muchemwa, the solution is simple. “As long as we defy the logic in terms of managing the economy, in particular printing money and coming up with policies that are not sensible, it will continue to present challenges for this economy,” he says.
The country’s struggling economy is a chance for retailers to adapt, says Mthandazo Mlotshwa, chief operating officer for Zapalala Supermarkets. Though Zapalala closed some of its branches, Mlotshwa remains optimistic and doesn’t see the informal market as a threat. Still, regulation and stable currency rates are needed, he adds, and the government is taking steps in that direction.
Meanwhile, Mercy and other workers in retail remain anxious about their future. “Everyone is demotivated, some have lost their jobs, and for us who remain the salaries are not coming on time and sometimes you get a portion of your salary,” she says, her voice lowered in frustration.
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