Confederation of Zimbabwe Industries statement on formal business closures

The Confederation of Zimbabwe Retailers (CZR) released a statement on Sunday, calling for urgent action as more formal retail and wholesale business have been closing shop.

We reproduce the communique, signed by the CZR President Dr Denford Mutashu, below:

The Confederation of Zimbabwe Retailers (CZR) is deeply concerned about the continued closure of formal retail and wholesale businesses, a direct consequence of the prevailing turbulent economic environment that has consistently failed to support formalized sector players.

The recent closure of several outlets under the N. Richards Group, coupled with Spar Zimbabwe’s painful decision to shut down Queensdale Spar, Choppies Zimbabwe’s exit from the market, and Mahommed Mussa’s significant reduction of shop space by 60%, highlights the growing crisis. As the representative association for these and other brands, CZR is alarmed that while formal businesses face enormous challenges, the authorities continue to present a different picture of the operating environment.

The fiscal, monetary, regulatory, and statutory frameworks have remained unforgiving to formal retail and wholesale operators. These challenges have created an uneven playing field, allowing the informal sector to dominate with little intervention to ensure equity. The growing levels of informalization have led to a significant loss of market share for formal businesses. The unregulated informal sector offers goods at much lower prices, largely because it operates outside compliance with statutory obligations such as taxes, licensing fees, and labor laws. This has made it increasingly difficult for formal businesses to compete effectively. CZR therefore calls for urgent intervention from His Excellency, President Dr. Emmerson Dambudzo Mnangagwa, to rescue what remains of the formalized retail and wholesale sector.

One of the most pressing challenges is the dual currency system, which disproportionately affects formal retailers and wholesalers. Formal businesses are compelled to accept the ZiG in a predominantly dollarized supply chain. This is exacerbated by key operational costs, such as fuel for generators, which must be paid for in USD while sales remain largely denominated in ZiG, with 80% of transactions in local currency. Additionally, punitive bank charges, including the Intermediated Money Transfer Tax (IMTT), have encouraged cash transactions, further shifting consumer activity to the informal sector and leaving formal businesses struggling to attract foot traffic.

Retailers and wholesalers are also burdened by excessive regulatory and compliance requirements, with over 30 separate licensing costs. This regulatory overload often exceeds the profits these businesses generate, effectively eroding their viability.

While CZR acknowledges the continued support from the Ministry of Industry and Commerce, it is clear that the root causes of these challenges are fiscal and monetary in nature. These require urgent and decisive action to ensure the survival of formal businesses.

CZR therefore appeals to the Presidium to prioritize interventions aimed at saving jobs and mitigating the ongoing wave of shop closures and retrenchments. The following measures are critical and CZR appeals to government for urgent addressed:

1. Formalization of the Informal Sector: CZR appeals to government to fast-track efforts to formalize the informal sector, ensuring equitable competition and tax compliance across all players.
2. Reduction of Regulatory Burden: Streamlining and rationalizing the current licensing and compliance requirements will alleviate the pressure on formal businesses.
3. Support for Formal Retailers and Wholesalers: Immediate steps are needed to cushion formal businesses against high operating costs, including the provision of affordable financing options and addressing the dual currency challenges.
4. Leveling the Playing Field: CZR also appeals to government for specific measures to be implemented to regulate and oversee the informal sector, ensuring fair competition and compliance with statutory obligations.

CZR remains committed to engaging with the government and other stakeholders to address these challenges and restore the stability of Zimbabwe’s retail and wholesale sector. Urgent action is needed to protect the livelihoods of millions of Zimbabweans who depend on these businesses and to ensure the survival of established retail and wholesale brands.

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