Formal retailers call for urgent intervention

THE Confederation of Zimbabwe Retailers (CZR) has called for urgent and strategic interventions to abate a gradual demise of the formal retail sector to protect jobs and ensure a stable economic environment.

Of late, major supermarkets such as OK Zimbabwe and Food World have shut-down operations in some of their branches across the country while a regional retail chain — Choppies Enterprises, which had operated in the country since 2013, has exited Zimbabwe.

Choppies has faced challenges adapted to shifting consumer trends in Zimbabwe and over the past two years, the country has experienced a significant migration of shoppers to the informal retail sector, leading to a decline in foot traffic at formal retail outlets by as much as 30 percent.

Due to the existing operating environment, major wholesalers like N Richards and Mahommed Mussa have scaled down operations.

In a post-budget review presentation in Mutare yesterday, CZR president Dr Denford Mutashu, bemoaned the state of the retail industry saying the sector is in distress.

“From the perspective of the retail and wholesale sector, the budget falls short in tackling the structural and operational challenges that continue to threaten the sustainability of formal businesses.

“With major retailers such as Choppies and Food World closing operations, and industry giants like Mahommed Mussa and N Richards scaling down, the retail sector is in a state of distress.

“Urgent and strategic interventions are required to prevent further industry decline, protect jobs and ensure a stable economic environment,” he said.

Among others, Dr Mutashu said, the increasing dollarisation of supply chains, with suppliers demanding up to 85 percent of payments in United States dollars, has placed significant strain on retailers operating in a dual-currency economy.

He said many businesses hold large stocks of Zimbabwe Gold (ZiG), which cannot be easily converted into foreign currency for restocking purposes, and this imbalance threatens the viability of formal retailers and wholesalers.

“CZR urges the Government to introduce policies that stabilise the ZiG long-term, incentivise its use, and enforce dual-currency regulations in the supply chain.

“Addressing this issue is critical to maintaining supply chain stability and ensuring businesses remain operational,” said Dr Mutashu.

The unchecked growth of the informal sector, he said, has had devastating effects on formal businesses as informal traders who largely evade taxes and regulatory compliance, enjoy a competitive advantage over compliant businesses.

“This imbalance has led to shop closures, revenue losses and an overall decline in the retail sector’s contribution to the economy.

“The 2025 National Budget does not introduce substantive measures to regulate and formalise the informal sector.

“CZR recommends the implementation of a simplified tax regime for small businesses, tax incentives for formalisation and stronger enforcement mechanisms to ensure compliance.

“Adopting a presumptive tax model similar to that of Tanzania could facilitate a more structured approach to integrating informal traders into the formal economy,” said the CZR boss.

He added that the introduction of new taxes, particularly the 0,50 percent tax on fast foods, places an additional financial burden on a sector already facing high operating costs and declining consumer spending.

Fast food businesses play a critical role in employment creation and tax revenue generation.

“Instead of introducing more taxes on compliant businesses, the Government should explore strategies to expand the tax base by formalising the informal sector, which continues to operate outside the tax net.

“Additionally, while the exemption of employment income up to US$100 and ZiG$2,800 is a step towards supporting workers, it remains insufficient given the rising cost of living.

“The Government should align the tax-free threshold with inflation rates to enhance disposable income, which in turn would boost consumer spending and benefit the retail industry,” he said.

“The high cost of digital transactions, driven by the current Intermediated Money Transfer Tax (IMTT) rate, continues to discourage formal financial transactions.

“Many businesses and consumers are reverting to cash-based transactions, undermining efforts to promote financial inclusion and tax compliance.”

It is in this context that CZR reiterates the call for the Government to reduce the IMTT rate to 1 percent to encourage digital transactions, reduce the cost of doing business, and modernise the economy.

Smuggling and counterfeit goods, and unregulated online marketplaces as well as power supply challenges and the high cost of renewable energy investment were also contributory factors to the unsustainability of the retail and wholesale sector.-ebsinessweklt