The Reserve Bank of Zimbabwe (RBZ) has refuted claims from registered retailers that the tough economic environment is the root cause of their challenges, asserting that mismanagement within the sector is the primary issue affecting their operations. This mismanagement, the RBZ argues, has left some businesses unable to restock their shelves.
RBZ Governor Dr. John Mushayavanhu made these remarks while presenting the 2025 Monetary Policy Statement. During his address, he announced an expansion of the Traded Finance Facility (TFF) to include struggling retailers. Previously, the facility was restricted to productive sectors.
Despite extending the TFF, Dr. Mushayavanhu stressed that poor management practices were at the core of the problems faced by retailers and wholesalers. He noted that unless these enterprises addressed their internal inefficiencies, the financial assistance would not be a sustainable solution.
His comments come amid reports that several retailers, including major chains like OK Zimbabwe, have either closed or plan to shut down outlets across the country, citing a challenging business environment. Other key players, such as N. Richards and Mahomed Mussa wholesalers, have scaled back operations, while Choppies Zimbabwe has exited the market entirely.
Insiders within the retail industry point to bloated management structures, lavish spending on perks and luxury vehicles, and questionable financial decisions—such as acquiring multiple properties and declaring high dividends—as contributing factors to their financial woes.
Meanwhile, formal retailers are also struggling to compete with the informal sector, which operates exclusively in foreign currency and avoids statutory obligations, enabling them to offer lower prices. Manufacturers increasingly prefer supplying informal traders due to their ability to pay in US dollars upfront or within short credit terms, leaving formal retailers at a disadvantage.
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Dr. Mushayavanhu, however, reiterated that the sector’s struggles went beyond external challenges.
“To address working capital challenges recently experienced by wholesalers and retailers, we have extended the TFF to help them restock,” he said. “However, we are aware their problems are not caused by the economic environment alone. Management gaps within these organizations are a significant factor, and without addressing those, the financial support will not prevent further failures.”
The RBZ initially introduced the TFF at the end of 2024 to provide affordable funding to productive sectors, with interest rates capped at 30 percent for borrowers. The facility aimed to address the lack of financing capacity in commercial banks, which could otherwise hinder economic growth.
In addition to addressing retail sector issues, the RBZ also adjusted foreign currency retention levels for exporters, reducing them from 75 percent to 70 percent. This move increases the portion of export proceeds surrendered to the central bank from 25 percent to 30 percent, a change aimed at supporting the increased use of Zimbabwe’s local currency, the ZiG.
Exporters without immediate use for their local currency allocations now have the option to invest the funds in a United States Dollar Denominated Deposit Facility (USDDDF) at the RBZ. These funds can later be withdrawn in ZiG at the prevailing interbank exchange rate.
Dr. Mushayavanhu explained that this measure is designed to strengthen foreign currency reserves while ensuring exporters have sufficient local currency for their obligations, such as tax payments, to support economic stability.
