Firms buckle under cost pressures

LIVINGSTONE MARUFU

Local companies are buckling under intensifying cost pressures triggered by the Middle East conflict, as surging fuel prices and fractured global supply chains cascade through the economy, laying bare Zimbabwe’s deep vulnerability to external shocks, business lobby groups have warned.

Executives across key sectors are scrambling to contain spiralling operational expenses after the escalating conflict involving Iran, Israel and the United States jolted global energy markets, driving up oil prices and sharply increasing transportation and logistics costs.

What began as a distant geopolitical flashpoint has rapidly morphed into a full-blown corporate nightmare at home.

Fuel prices have surged sharply, basic commodity costs are rising, and transport fares have spiked by at least 20%, eroding consumer purchasing power and tightening the noose on already fragile business margins.

Inside boardrooms, the mood has turned defensive.

Executives are scrambling to preserve cash, cutting costs, restructuring operations and, in some cases, scaling down physical office presence as firms rotate staff or shift to remote working models to contain overheads. The crisis has exposed the limits of corporate resilience in an economy heavily exposed to imported inflation and external shocks.

In more stable conditions, companies might have cushioned workers through higher allowances to offset rising fuel costs. But with revenues under pressure, many firms simply cannot afford that buffer.

Fresh data from the Confederation of Zimbabwe Industries (CZI) paints a stark picture of an economy under siege.

“The Iran-Israel-USA conflict has created significant disruptions for businesses worldwide, highlighting the deep interconnection between geopolitics and the global economy,” CZI said.

“These energy shocks are increasing production and transportation costs for firms across industries, from manufacturing to transportation, while also introducing inflationary pressures.”

The industry body warned that supply chains are fracturing as insecurity in key global trade routes chokes the movement of goods and critical inputs.

“At the same time, supply chains have been disrupted due to insecurity in major trade routes and shortages of critical inputs, forcing businesses to delay operations and rethink sourcing strategies,” CZI noted.

At the heart of the turmoil lies the Strait of Hormuz, a critical artery through which roughly a fifth of the world’s oil flows. Disruptions in this corridor have driven global oil prices sharply higher, injecting volatility into energy markets and cascading costs into import-dependent economies like Zimbabwe.

The impact locally has been swift and severe.

The price of petrol has jumped from US$1.56 per litre in February to about US$2.17 by mid-March, amplifying cost pressures across the economy.

CZI’s findings reveal near-universal distress across the corporate sector.

“Nearly all firms reported that the conflict is affecting their businesses, with only 1% indicating no impact,” the survey found.

About 60% of firms reported a significant impact, 31% a moderate impact and 8% a slight effect, underscoring the breadth and depth of the shock.

The disruption cuts across sectors.

Wholesale and retail, transport, healthcare and construction are among the hardest hit, reflecting their heavy reliance on logistics, fuel and imported inputs. While sectors such as manufacturing, ICT and finance show some resilience, they too remain under sustained pressure.

Fuel costs have emerged as the dominant pain point.

“Most firms have experienced substantial fuel cost increases since the conflict, with a dominant 62% reporting rises of over 20%,” CZI said.

An additional 21% reported increases between 11% and 20%, while only a marginal 3% experienced minimal cost growth.

But the pressure extends far beyond fuel.

Businesses are grappling with rising costs of raw materials, imported inputs, insurance, shipping and logistics, a combination that is steadily eroding profitability.

Supply chains are also buckling under strain.

“Over half of the firms, 56.1%, report experiencing supply chain disruptions mainly due to delays in delivery of raw materials,” CZI said.

“These disruptions are likely to affect the availability and timely delivery of raw materials and finished goods, leading to production delays and increased operational uncertainty.”

As reliability weakens, firms are being forced to seek alternative suppliers, increase inventory holdings or absorb higher costs, all of which undermine efficiency and competitiveness.

The cumulative effect is a broad-based squeeze on business viability.

Zimbabwe National Chamber of Commerce (ZNCC) chief executive Christopher Mugaga said the shock is already cutting into corporate revenues and destabilising financial planning.

“We are in a quandary as the effects of the conflict are being felt across the economy,” Mugaga said.

“The cost pressures are not only felt at the pump but on workers’ benefits where companies have to spend more than 27% above their fuel budgets. The costs are seriously affecting our operations.”

He warned that the conflict is also triggering wider macroeconomic risks, including rising inflation, exchange rate volatility and mounting fiscal pressure.

Fuel, as a universal input, sits at the centre of this storm.

Rising diesel and petrol prices quickly cascade into higher transport costs, food prices, electricity generation and manufacturing expenses — creating a multiplier effect that touches every sector.

For consumers, the consequences are immediate and painful.

The Consumer Council of Zimbabwe (CCZ) has also raised alarm over the rapid escalation in fuel prices, warning of severe implications for already strained household budgets.

Chief executive Rosemary Mpofu said the increases are translating directly into a higher cost of living.

“On 4 March 2026, diesel was at US$1.77 per litre and rose to US$2.05 by 18 March, while petrol climbed from US$1.71 to US$2.17, reflecting sharp increases within a very short period,” she said.

Cumulatively, fuel prices have risen by nearly 35% for diesel and over 39% for petrol since early March, intensifying pressure across the economy.

“For consumers, this is not just an energy issue; it is a cost-of-living issue,” Mpofu said.

“Fuel feeds directly into transport fares, food distribution, informal trading, manufacturing and the delivery of essential services.”

The first-round effects are already visible, higher commuter fares, rising food prices and increased costs of basic goods such as milk, bread and fresh produce.

The low-income urban family is bearing the brunt.

In February, the cost of the consumer basket for a family of six stood at ZWG20,450.90 (US$600.48), with key items already trending upwards. With fuel costs climbing further, that burden is set to intensify.

“For low-income households, every extra dollar spent on transport reduces what is available for food, rent, school needs and healthcare,” Mpofu said.

As the crisis deepens, pressure is mounting on Government to intervene with targeted measures to cushion both businesses and consumers.