Harare, — A string of Zimbabwe’s most recognised brands, including major retail chains, is reportedly on the brink of bankruptcy, pushed to the edge by a prolonged economic crisis. According to a recent report submitted to the government, the country’s business climate is facing significant fragilities that could lead to more closures in the coming months.
The Confederation of Zimbabwe Retailers (CZR), which regularly presents carefully-worded insights to the government, highlighted the dire situation facing the retail sector in a paper submitted ahead of the 2025 National Budget. The paper serves as a stark warning to the government, urging caution in the face of a fragile business environment.
In its report, according to a local weekly business publication The Zimbabwe Independent, CZR pointed to the recent divestment of multinational company Unilever from Zimbabwe and the financial difficulties of clothing giant Truworths Limited—once a prominent stock on the Zimbabwe Stock Exchange—as clear indicators of the sector’s precarious state. Both companies’ exits from the market have highlighted the mounting challenges facing Zimbabwe’s formal business sector.
Economic Pressures Mount
CZR President Denford Mutashu, in his warning to Finance Minister Mthuli Ncube, emphasized that the country is on the brink of more bankruptcies unless significant measures are taken to address the issues plaguing the economy. “Long-established companies in Zimbabwe, such as Truworths and Unilever, have recently shut operations, with many more businesses on the verge of shutdown,” Mutashu said.
He further noted that Zimbabwe’s economy is increasingly informal, with a rising number of businesses shifting away from formal operations. This informalisation of the economy is exacerbating the problems faced by formal retail businesses, which are struggling to compete with small-scale operators, such as tuck shops and informal traders. These small-scale operators often evade taxes, labour laws, and other statutory obligations, creating an uneven playing field that is challenging for larger, formal businesses to navigate.
Mutashu expressed concern that unless the government introduces measures to address these disparities, more businesses will be forced to shut down. He suggested several measures to alleviate the crisis, including the removal of import duties on essential goods, zero-rating value-added tax (VAT) on basic commodities, and eliminating the need for import permits and licenses for many products. These steps, he argued, would help level the playing field and give formal businesses a fighting chance.
The Informal Economy’s Impact on Banking
The challenges posed by Zimbabwe’s informal economy are also being felt in the banking sector. The Bankers Association of Zimbabwe (BAZ) recently echoed CZR’s concerns, noting that the expansion of the informal sector is making it increasingly difficult to trace transactions, which in turn poses risks for anti-money laundering efforts and financial regulation.
Zimbabwe’s cash-based economy, driven largely by informal transactions, limits the circulation of funds through formal banking channels, leaving approximately US$2.5 billion in cash circulating informally, according to the Reserve Bank of Zimbabwe. BAZ warned that this informal market also contributes to significant tax evasion, further straining government revenue and negatively impacting the broader economic environment.
As the informal sector continues to grow, BAZ has called for reforms to make it easier for informal businesses to transition into the formal economy. This would include simplifying the registration process for small businesses and encouraging them to join the formal financial system, which could help reduce some of the risks associated with the informal economy.
A Call for Action
With the retail sector in crisis and the informal economy on the rise, Zimbabwe’s business community is urging the government to act quickly. The country faces a critical juncture, where immediate intervention could prevent further bankruptcies and stabilize the economy. Business leaders are calling for policy reforms that will foster a more equitable and sustainable economic environment, where formal businesses can thrive alongside their informal counterparts.
As the government prepares to present the 2025 National Budget later this month, all eyes will be on the steps taken to address these mounting challenges and to secure the future of Zimbabwe’s embattled retail sector.