HARARE – Leading Zimbabwean retailer OK Zimbabwe has announced that it has begun restocking its shops following weeks of severe shortages that led to the closure of several outlets. The crisis was triggered by a combination of macroeconomic challenges, chief among them the volatility of the exchange rate.
The announcement comes after OK Zimbabwe, along with other retailers, presented their concerns to the Parliamentary Portfolio of Industry and Commerce last week, highlighting the crippling effects of high taxation, exchange rate instability, power cuts, and the growing informalisation of the economy on their businesses.
In a trading update released on Monday, OK Zimbabwe stated: “The business has begun restocking the operating units with support from supplier partners as well as financial institutions that continue to assist with short-term funding structures.”
The retailer also revealed that it has developed “new alternative procurement models” to ensure a more consistent supply of goods. These models “include, but are not limited to, a structured stock supply arrangement with a third party for supplier assurance purposes as the business works to restore critical supply relationships with both local and foreign suppliers.” OK Zimbabwe expressed confidence that it would restore normal stocking levels before the end of the current financial year.
The company emphasised the critical link between the health of the formal retail sector and the stability of the country’s exchange rate regime. “The fortunes of the country’s formal retail sector are hinged on the stability of our exchange rate regime,” OK Zimbabwe stated.
The retailer welcomed the measures announced in the recently released 2025 Monetary Policy Statement, which “removed several limitations and introduced some level of flexibility within the foreign exchange market.” However, OK Zimbabwe stressed the need for further clarity and decisive action. “There is a need for absolute clarity on the roadmap towards a fully market-determined exchange rate system,” the company said. “Such a liberalised system will go a long way in restoring the competitiveness of the formal retail sector.”
OK Zimbabwe has been particularly vocal in its call for authorities to adopt a free-floating exchange rate to revive the struggling formal retail sector. The industry has been severely impacted by government measures aimed at supporting the ZiG (Zimbabwe Gold), the country’s sixth attempt since 2009 to create a viable local currency.
These measures, which include a 43% devaluation of the ZiG in September to align it with the parallel market rate, restrictions on money supply, and mandates for companies to price goods in the local currency, have inadvertently benefited the informal sector, which operates using the higher, unofficial exchange rate.
OK Zimbabwe’s woes have been compounded by the Reserve Bank of Zimbabwe’s (RBZ) decision to devalue the ZiG, which effectively doubled the entity’s US$-denominated loans and credits. The supermarket chain is currently struggling to maintain adequate stock levels, with many shelves remaining empty due to supplier reluctance to accept local currency payments. This has led many suppliers to divert their goods to the informal market, where access to foreign currency is easier.
Presenting a trading update for the third quarter period, OK Zimbabwe’s group company secretary, Margaret Munyuru, highlighted the impact of the central bank’s decisions. “The local currency unit (ZWG) experienced a sharp devaluation at the end of September 2024 as monetary authorities sought to improve the viability of the exchange rate system for the broader economy. Invariably, the devaluation had the net effect of nearly doubling existing US Dollar denominated obligations in loans and creditors’ balances,” she said.
Munyuru explained that the group had outstanding and overdue creditors’ balances which were predominantly denominated in US$ sales collection. She attributed the low stocking levels to “the direct manifestation of sub-economic pricing arising out of exchange rate distortions and suppliers’ need for foreign currency invoicing to cover their operational and raw material needs.” As a result, volumes during the period decreased by 36% compared to the same period last year, translating to a 36% revenue decline.
In response to the crisis, OK Zimbabwe has closed four stores in Harare and is reviewing the viability of other branches. The company has also engaged in discussions with the National Treasury and central bank officials, which resulted in “a relaxation” of the strict rule requiring formal retailers to use the official exchange rate in pricing their goods, the company said.
However, the challenges facing the formal retail sector extend beyond OK Zimbabwe. IH Securities, a Harare-based brokerage, has advised investors to reduce their exposure to formal retail stocks, citing currency issues and pricing dynamics that are depressing performance. The brokerage also warned that tight liquidity is likely to affect other sectors.
“The dollarised environment continues to apply pressure to margins as costs begin to right-size, particularly human capital costs and utilities, amidst higher imported supply-side costs,” IH Securities wrote in a client note this month.
Several other listed companies, including Truworths Zimbabwe and Khayah Cement (formerly Lafarge Cement Zimbabwe), are in corporate rescue, while CBZ Holdings, First Capital Bank, Zimasco, and the local units of South Africa’s Impala Platinum Holdings and Tongaat Hulett have implemented job cuts. “We are likely to see the tax base remain under pressure with these ongoing developments,” IH Securities warned.
