By Business Reporter-Zimbabwe’s largest retail chain, OK Zimbabwe, is grappling with severe financial constraints that have forced it to shut down several outlets across the country and triggered an urgent effort to raise US$30 million in fresh capital.
The company, which once prided itself on a widespread national footprint, is now fighting for survival amid a crippling liquidity crunch, mounting supplier debts, and the fallout from the underperforming Zimbabwe Gold (ZiG) currency. The retailer has cited its inability to restock shelves as a key factor behind the recent closure of six stores, with the situation compounded by suppliers demanding hard currency and refusing to accept the newly introduced ZiG.
“The ZiG is failing, and that is affecting restocking,” a company insider said, adding that some suppliers had even intercepted partial payments meant to unlock new stock and declined to dispatch fresh deliveries.
In a strategic shift aimed at revitalising operations, the OK Zimbabwe board last month approved a recapitalisation plan designed to stabilise the business, settle debts, and restore supplier confidence. The plan includes a rights issue, private placement, and new debt instruments.
Chief executive officer Mr Willard Zireva, who was recently brought back to steer the turnaround effort after an eight-year hiatus, confirmed that fundraising efforts are progressing well and are expected to be finalised by June 2025.
“Currently, we are finalising discussions with potential underwriters, and we are targeting to have the whole process completed and cash received before the end of June,” Zireva said in an interview.
The financial woes come at a time when Zimbabwe’s broader retail sector is under intense pressure due to currency volatility, high inflation, power shortages, and declining consumer spending power. Many retailers have been unable to hedge against these shocks, and OK Zimbabwe’s predicament illustrates the broader crisis gripping the formal retail sector.
OK Zimbabwe is saddled with US$17 million and ZWG537 million in outstanding supplier payments. The debt burden has become unsustainable, prompting suppliers to cut ties or demand prepayments in US dollars, further exacerbating the retailer’s liquidity problems.
In response to the crisis, the company initially decided to close six stores by March 31, 2025, and retrench affected employees. However, following Zireva’s return and a broader operations review, the company has reversed the closure of its Mbare and Entumbane branches, signalling a more cautious and strategic approach to store rationalisation.
“The capital raise is aimed at strengthening our balance sheet and improving our liquidity position to support our working capital needs and ensure uninterrupted operations,” the company said in a statement.
In a recent cautionary announcement to investors, OK Zimbabwe said it would soon issue a circular to shareholders with details of an Extraordinary General Meeting to approve the recapitalisation plan.
“Shareholders and the investing public are advised to continue exercising caution when dealing in the company’s shares. Further announcements will be made as and when there are material developments,” the company stated.
OK Zimbabwe’s struggle to navigate the current economic storm underscores the challenges facing Zimbabwe’s private sector, where access to capital, exchange rate instability, and policy uncertainty continue to undermine recovery efforts.