HARARE – Zimbabwe’s formal retail sector is facing a severe downturn, as evidenced by the imminent closure of two Food Lovers Market branches and major financial difficulties for OK Zimbabwe, both stemming from the country’s volatile exchange rate and broader economic challenges, a situation that critics argue reflects the wider collapse of the national economy.
Food Lovers Avondale branch is set to cease operations on June 22, 2025, and the Borrowdale outlet on June 8, 2025.
These closures come after OK Zimbabwe, a major retailer, acquired the franchises for these stores in 2023 as part of its strategy to enter the premium retail segment.
The impact of Zimbabwe’s volatile exchange rate policy and other macroeconomic pressures have, however, severely impacted formal businesses.
OK Zimbabwe itself announced in April a restructuring plan, including efforts to raise up to US$30 million through a rights issue, private placement, and debt instruments, to address low stock levels and substantial debts to suppliers and banks.
The company said it anticipated reporting a “significant loss” for the financial year ending March 31, 2025, citing macroeconomic volatility, inflationary pressures, liquidity constraints, and working capital challenges.
The challenging operating environment has created an uneven playing field, with informal players often having a competitive advantage due to less stringent regulatory and exchange rate constraints.
Major retailers like N Richards Group, Spar, Pick n Pay and Food World have been detrimentally impacted by the resulting uneven playing field, leading to the closure of numerous stores nationwide.
This has led to a decline in consumer spending power and disruptions in supply chains, forcing some businesses, like Choppies, to exit the market entirely.
Interestingly, in February this year, OK Zimbabwe fired its key executive, Chief Executive Officer Maxen Karombo, Chief Financial Officer Phillimon Mushosho and Supply Chain Director Knox Mupaya after having a public dispute with Finance Ministry Permanent Secretary George Guvamatanga.
Karombo and his team boldly told the Zimbabwean government that the informal sector had negatively dominated the economy.
But Guvamatanga publicly criticised Karombo, asserting that his lack of innovation warranted his dismissal.
Guvamatanga contended that formal retailers ought to be capable of competing effectively with the informal sector. He drew a parallel to the resilience demonstrated by South African retailers when faced with competition from spaza shops.
The core of Guvamatanga’s critique was that formal retailers were not adapting adequately to the prevailing economic conditions, especially concerning the growth of the informal sector.
He advocated for businesses to discover inventive methods of competition instead of depending on a stable exchange rate.
But since the departure of Karombo and his team, things have gotten worse at the country’s largest supermarket retailer.
In a stunning admission of what OK Zimbabwe management has always been saying, in April 2025, the Zimbabwean government repealed Statutory Instrument 81A of 2024 by enacting Statutory Instrument 34 of 2025.
This significant move granted businesses the freedom to set their own exchange rates for pricing goods and services, a departure from the previous mandate that forced formal retailers to use the official interbank exchange rate.
The now-revoked SI 81A had created an uneven playing field, disadvantaged formal retailers, who struggled against informal traders operating with more favorable parallel market rates and often outside the tax system, leading to numerous store closures.
But the general operating environment has remained difficult as evidenced by the frequent closure of big supermarkets like Food Lovers.
Commenting on the issue, prominent journalist Hopewell Chin’ono stated, “It is sad to see Food Lovers Avondale and Borrowdale shut down due to the collapse of the national economy in Zimbabwe.
“Behind these tragic closures, the real human story is of the hundreds of Zimbabwean workers who will now join the 95% unemployed. Also affected are the farmers who had been supplying these shops and who will now suffer economically.”
Chin’ono highlighted the interconnectedness of these issues, drawing on the concept of “Relatedness of things” by the late Professor George Kahari.
“The ripple effects of these closures extend beyond the immediate loss of jobs for the workers directly affected; they also impact suppliers, farmers, and the local economy as a whole,” he observed.
“Nobody closes a profitable business, and nobody stops shopping when they have money. When there is failed economic governance leading to the collapse of businesses because people do not have spending power due to unemployment, it defines the Relatedness of things.”
Chin’ono mentioned the “failed economic governance by Zanu-PF, rampant unemployment, and the collapse of businesses are not isolated issues but are intimately connected and exacerbate one another.
“The closure of these stores is an indicator of the broader economic struggles in Zimbabwe, as unemployment rates soar, and spending power diminishes.
“The government can play propaganda with the ignorant and the uninformed, but the truth is that the closure of Food Lovers Avondale and Borrowdale reflects the harsh economic realities that Zimbabweans are currently facing.”
