By Business Reporter- The country’s largest supermarket chains, including OK Zimbabwe, Pick n Pay, SPAR, and Edgars, are warning of an impending shutdown, as the Zimbabwe Intermediated Government (ZiG) currency crisis threatens to cripple the formal retail sector.
The Retailers Association of Zimbabwe (RAZ), which represents these retail giants, has sounded the alarm, calling for immediate government intervention to prevent collapse.
The association argues that the government’s insistence on using the overvalued official exchange rate is drivinglegitimate businesses to the brink, making their goods significantly more expensive than those sold by unregulated tuckshops that operate using street exchange rates.
In a letter to the government, RAZ warned that unless urgent policy adjustments are made, the formal retail industry could crumble.
“The situation is clearly untenable and will lead to company closures if authorities do not intervene with measures to protect the formal sector,” RAZ stated.
Employing close to 20,000 people, the retail sector is a significant contributor to the Zimbabwe Revenue Authority (ZIMRA) through taxes like PAYE, VAT, IMTT, withholding taxes, and corporate tax. However, faced with skyrocketing supplier costs driven by street exchange rates, retailers have been forced to hike USD prices, further fueling inflation and driving consumers to the informal market.
RAZ has proposed two key measures to stabilize the sector:
- Market-Determined Exchange Rate: Retailers are pushing for a dynamic pricing model that reflects real-time exchange rates, allowing them to stay competitive without incurring significant losses.
- Discounted Pricing: The association has suggested retaining the official exchange rate but offering targeted discounts to lower inflation in USD terms and boost demand.
Additionally, RAZ is calling for the Financial Intelligence Unit (FIU) to adopt a more advisory role, instead of its current punitive approach. They propose a collaborative relationship where retailers and the FIU share market data to inform better economic policies.
Without swift action, Zimbabwe’s biggest retail brands risk disappearing, with devastating economic consequences and thousands of jobs at stake.