Harare, Zimbabwe – A year ago, the 16 chains were filled at the Ok Zimbabwe supermarket in Harare, one of the country’s main retailers. Customers have made the shoulder on the shoulder, their trolleys filled with zimbabwe pantry essentials. Today, only two tickets are open. They only serve a handful of customers who choose what is available on half -empty shelves.
In Zimbabwe, the situation is the same in many retail stores. While some still hold, their shelves are more and more empty, with branches closing one by one. Others have completely folded operations, unable to compete with informal merchants.
“It was never like that,” said Mercy, who has worked for Ok Zimbabwe for over 10 years and asked not to be referred by his full name for fear of losing his job. “People do not come to buy from us.”
The Zimbabwe formal retail sector is struggling to hang on due to a combination of factors that have gradually degenerated. At the heart of the question is the unstable monetary system of the country. In 2024, the government introduced Zimbabwean gold, or Zig, supposed to be a stable successor to the unreliable Zimbabwean dollar. Zig, which is linked to gold and foreign reserves, – the government hoped – slowing down inflation and restoring confidence in a local currency, which has long been in competition with the very preferred American dollar.
Zimbabwean gold has exceeded the expectations of many people, but it was not a magic healing for the economic bustle of the country. On the black market, whose unofficial exchange rates that most people use, the currency was in shortage and had trouble maintaining the value. Six months after its introduction, the reserve Bank of Zimbabwe reduces the official exchange rate by more than 40%, trying to bring it closer to the level of the black market.
Meanwhile, the government has also imposed restrictions on formal retailers. He forced them to assess their goods in the official exchange rate and the sale criminalized above the rate. This led to price increases.
Detail customers have turned to informal markets where they could pay in US dollars that they still preferred and at the more reasonable black market exchange rate.
Instability is likely to continue, as US dollars are becoming rare after removing the help of the United States, a large part of IT has sent by the American agency for international development, which was a key source of foreign currency in Zimbabwe.
Mirriam Masikati, who formerly preferred supermarkets for their quality of goods, says that it has more value in these informal markets. “It is worrying that I can buy false products without knowing it, but prices push us to these informal markets,” explains the mother of three children.
Although the government in April has repealed the requirement that official retailers assess their goods in the official exchange rate, after almost a year, the damage has already been caused. Large retailers like Spar Zimbabwe and N Richards Group have folded certain branches in certain parts of the capital. A declaration by the Zimbabwenese retailers Confederation in January said that some stores had reduced their space by 60%.
And in April, OK Zimbabwe issued a loss warning, setting the objective of collecting US $ 30 million and explaining the financial challenges it has encountered in the last six months, including the difficulty in maintaining the shares, the payment of suppliers and the satisfaction of other financial obligations.
On the other hand, companies are booming for informal merchants – which are part of the informal sector which represents around 65% of the Zimbabwe economy and contributed to around 72% to the country’s gross domestic product in 2024. They already had a good tranche on the market. They now capture a larger part.
This share could increase more. Informal merchants are often sold due to high demand, explains Admire Musa, a cashier in one of these stores in Harare. The success has attracted other Zimbabweans to open similar stores, he said.
Manufacturers, who have provided official retailers on credit, also turn to informal merchants, who pay in American cash, according to a report in 2024 of the Zimbabwe National Chamber of Commerce.
This also allows manufacturers to bypass the banking system and avoid taxes, explains Brains Muchwa, an economist. Such high levels of trade in the rear channel could be a problem for the country, he said. It considerably reduces government tax revenues, because informal traders do not comply with the regulations, he adds.
A 2022 Zimbabwe report returned Authority indicates that less than 0.5% of the money earned in the informal sector is collected as tax revenue.
“It is worrying that I can buy false products without knowing it, but prices are pushing us to these informal markets.”
The government has attempted to treat the growing levels of information. In February, he issued a monetary policy requiring that all companies use point of sale machines. This would lead to informal trade in regular banking channels.
But Muchmemwa is skeptical. The informal sector is prosperous because it can avoid the burden of regulations, he says. Without stable policies and an encouraging commercial environment, government efforts “will not give anything,” he said.
Prosper Chitambara, also an economist, says that the country needs tax reforms that facilitate and cheaper for companies to formalize. He underlines Brazil and Uruguay as successful examples where simplified tax regimes and favorable laws have reduced information.
For Muchemwa, the solution is simple. “As long as we challenge logic in terms of economics management, in particular the impression of money and the development of policies that are not reasonable, it will continue to present challenges for this economy,” he said.
The country’s economy in difficulty is a chance for retailers to adapt, explains Mthandazo Mlotshwa, head of the Zapalala supermarkets. Although Zapalala has closed some of its branches, Mlotshwa remains optimistic and does not see the informal market as a threat. However, stable regulations and rates of money are necessary, he adds, and the government takes measures in this direction.
Meanwhile, Mercy and other retail workers remain worried about their future. “Everyone is demotivated, some have lost their jobs, and for us who stay, wages are not on time and sometimes you get part of your salary,” she said, her voice is lowered in frustration.