By Business Reporter-Zimbabwe’s Intermediated Government (ZiG) currency has thrown the country’s retail industry into chaos, with major chains like OK Zimbabwe, Pick n Pay, SPAR, and Edgars warning of an impending collapse.
The Retailers Association of Zimbabwe (RAZ) has sounded the alarm, calling for urgent government intervention.
RAZ, which represents these major retailers, argues that the forced use of the overvalued official exchange rate is driving businesses into the ground.
This policy is making their products more expensive than those sold by unregulated tuckshops, which are able to operate using street rates.
In a letter to the government, RAZ declared that without swift and effective policy changes, Zimbabwe’s formal retail sector is on the verge of collapse.
“The situation is clearly untenable and will lead to company closures if authorities do not intervene with policy measures to protect the formal retail sector,” RAZ stated.
Employing nearly 20,000 people, the retail industry is a major revenue generator for the Zimbabwe Revenue Authority (ZIMRA), contributing through key taxes such as PAYE, VAT, IMTT, withholding taxes, and corporate tax.
To keep up with skyrocketing supplier prices—who use street rates while retailers are bound by the official rate—supermarkets have been forced to raise their USD prices.
This has triggered real inflation, driving consumers away from formal shops and toward the informal market.
RAZ has proposed two key measures to stabilize the sector:
- Market-Determined Exchange Rate: Retailers want a dynamic pricing model that reflects real-time exchange rates, allowing them to remain competitive without incurring steep losses.
- Discounted Pricing: The association suggests keeping the official exchange rate but offering differentiated discounts to lower inflation in USD terms and stimulate demand.
In addition, RAZ is pushing for a more advisory role for the Financial Intelligence Unit (FIU), which they say has become overly punitive in its policing of retailers.
RAZ advocates for a collaborative approach, where they would share market data with the FIU to help refine economic policies, promoting a healthier relationship between the industry and regulators.
Without swift action, Zimbabwe’s biggest retail brands may soon disappear from the landscape, leaving a gaping hole in the economy and throwing thousands out of work.