Industry endures another bad year

LIVINGSTONE MARUFU / SAMANTHA MADE / ROBIN PHIRI

Industry limped through 2025 under the weight of rising costs, punitive transaction taxes, shrinking consumer demand and reforms that continue to promise relief but deliver little immediate respite.

For manufacturers and retailers alike, the year felt like déjà vu — another lost year spent battling simply to keep businesses alive.

Across industrial parks, shopping centres and trading floors, the story was painfully consistent, constrained cash flows, thinning margins and deepening uncertainty. From heavy industry to supermarkets, companies increasingly operated in survival mode, managing decline rather than planning growth.

What little optimism existed was steadily eroded by currency instability, escalating operating costs and a tax regime widely viewed by business as punishing formal enterprise while leaving the informal economy largely untouched.

At the centre of corporate frustration remains the electronic transactions tax, known as the Intermediated Money Transfer Tax (IMTT), whose effects continue to ripple through an economy heavily dependent on electronic payments.

In a country where digital transactions dominate daily commerce, every transfer carries a cost. Retailers, distributors and manufacturers say the cumulative impact has been higher prices, reduced transaction volumes and a steady drain on working capital at a time when consumer spending power is already under severe strain.

Formal retailers have been among the hardest hit. Supermarket chains — once the backbone of urban commerce and formal employment — have been squeezed from both sides: declining real incomes on the demand side and rising costs on the supply side. Retailers spent much of 2025 battling shrinking sales volumes, margin compression and liquidity stress in an environment increasingly hostile to tax-compliant, regulated businesses.

Executives argue that transaction taxes such as IMTT effectively penalise scale. Every supplier payment, every salary run and every customer transaction chips away at already thin margins. Unlike informal traders, formal businesses cannot bypass the tax net or regulatory scrutiny.

The result has been a steady erosion of competitiveness, with consumers gravitating towards informal outlets that undercut prices by avoiding statutory costs.

For some groups, the challenge went beyond margins. Slower inventory turnover, rising finance costs and constrained access to affordable capital forced aggressive cost containment, store rationalisation and cautious procurement. While management teams worked to stabilise operations, the broader environment left little room for recovery.

That pressure has raised alarms about jobs and supply chains. Analysts warn that without meaningful policy adjustments, sustained stress on large retailers could translate into further closures and job losses, deepening urban unemployment and weakening domestic production linkages.

Manufacturers tell a similar story. Capacity utilisation across key subsectors remained subdued, disrupted by power shortages, import bottlenecks and volatile input costs. Working capital constraints became chronic, forcing shorter production runs and deferred maintenance and expansion. Corporate rescue, once a last resort, is now an uneasy fixture of Zimbabwe’s industrial landscape.

The strain has spilled into capital markets.

In 2025, the Zimbabwe Stock Exchange recorded a notable wave of voluntary delistings, underlining the retreat of capital from public markets. Companies facing operational distress or strategic realignment increasingly opted to exit the bourse, citing currency distortions, misaligned valuations and the growing compliance burden of remaining listed.

The departures of Truworths and Khayah Cement, alongside the termination of the Old Mutual Top Ten ETF, sent a stark signal about the fragility of corporate Zimbabwe and the waning appeal of local equities. National Tyre Service (NTS) has announced plans to delist at the end of this year, while a shock exit was announced by Econet Wireless Zimbabwe this week.

Market watchers warn that as listings shrink, transparency declines and the exchange’s role as a capital-raising platform weakens — a worrying trend for an economy desperate for long-term investment.

Nowhere are policy tensions more visible than in taxation. Several blue-chip firms spent the year locked in high-stakes disputes with the Zimbabwe Revenue Authority (ZIMRA) under the rigid “pay now, argue later” regime.

Several companies across sectors were ensnared in ZIMRA’s tax dragnet, including Innscor Africa Limited. Board chairman Addington Chinake said the assessments relate to amounts already settled in Zimbabwe dollars but which the tax authority now insists should have been paid in foreign currency.

“In the last few years, ZIMRA assessed additional Income Taxes, penalties and interest amounting to US$11.749m for amounts that had already been settled in Zimbabwe dollars, but which ZIMRA deemed should have been paid exclusively in foreign currency,” Chinake said, adding that no credit had been given for payments already made in legal tender.

He said the company is contesting the assessments through the courts, warning that if refunds are eventually granted, inflation would erode their real value. Despite the dispute, Innscor has already paid US$9.262m under the pay-now-argue-later principle.

Delta Corporation, the country’s largest brewer, has also faced an even heavier burden. The group paid US$13.7m to ZIMRA by the end of September 2025 while contesting disputed assessments totalling US$73m for the 2019–2022 period.

“The group had paid a total of US$13.7m in line with the ‘pay now, argue later’ principle,” board chairman Todd Moyo said, noting that the underlying taxes had already been settled in legal tender at the relevant time. Delta’s legal challenge has travelled through the High Court and Supreme Court, with the Constitutional Court declining to hear the appeal, prolonging uncertainty for the business and investors.

The tax confrontations have fuelled broader unease across the corporate sector, with executives warning that ambiguous legislation and aggressive enforcement complicate planning in an already volatile environment.

Beyond taxation, policy uncertainty continues to cloud the outlook. Finance Minister Professor Mthuli Ncube has signalled that Zimbabwe’s transition to a mono-currency system will only proceed once strict condition precedents are met, stressing that the December 31, 2030 target is conditional.

“We don’t need a date. Just remove the date. We should just make sure the condition precedents are met,” Ncube said — a remark that unsettled markets still scarred by abrupt currency shifts in the past.

Mining, one of the economy’s key pillars, has not been spared. According to the Chamber of Mines’ State of the Mining Sector Survey, power outages are costing the industry up to 10% of potential output. Lead researcher Professor Albert Makochekanwa said mining executives remain pessimistic about electricity availability, high operating costs, fiscal pressures and access to foreign currency, even as commodity prices underpin cautious optimism about profitability in 2026.

The human cost of these pressures is increasingly visible. Formal employment remains under strain, wages lag inflation and consumer confidence is fragile. Every scaled-back factory shift and every rationalised retail outlet sends ripples through households already stretched by years of economic volatility.

By the close of 2025, the verdict from industry is blunt. Zimbabwe has endured another bad year — not because solutions are unknown, but because implementation remains slow and uneven. Transaction taxes continue to sap momentum, formal businesses struggle against an expanding informal sector, and capital markets shrink as companies retreat from public scrutiny.