Retailers’ last stand

PHILLIMON MHLANGA

Formal retailers starve. Street vendors feast. Government intervenes.

At a nearly empty OK Zimbabwe outlet in central Harare, the silence is loud.

Empty aisles. Idle cashiers. Shelves running dry.

Few foot traffic. Low sales.

Across the road, street vendors thrive in the shadows- stalls packed with eager buyers, goods flying off makeshift shelves, transactions happening in hurried whispers and quick handshakes.

Wads of untaxed United States dollars change hands as traders wave down a steady stream of customers.

Imported goods, dirty cheap. No oversight. Just fast, untraceable cash. No receipts. No tax. Just pure, untouchable profit.

This is Zimbabwe’s retail paradox, formal businesses collapse under the weight of high costs, taxes and regulation, unregistered vendors flourish, unburdened by licences or receipts.

The irony is brutal, the more Zimbabwe’s licenced retailers struggle, the higher these informal traders soar.

This isn’t just market competition. It’s a full-blown economic war.

And now, the government has finally sounded the alarm. Most big supermarkets chains are shutting down, wholesalers are scaling back, and informal traders—unregulated, untaxed, and unchecked—are swallowing market share.

The crisis has reached a breaking point, forcing the government to intervene with sweeping measures to prevent total sector collapse.

President Emmerson Mnangagwa wasn’t supposed to be in office last week. He was on annual leave.

But, the crisis couldn’t wait.

Recognising the severity of the situation, President Mnangagwa abruptly cut his break to tackle the unravelling retail sector.

In a rare display of urgency, he convened a high-level economic strategy meeting at State House. Flanked by  Vice Presidents Constantino Chiwenga and Kembo Mohadi, along with key economic ministers, President Mnangagwa set a clear objective: rescue the formal retail sector, crackdown on tax evasion, and rein in the informal economy.

The message was blunt- the fire had raged unchecked for too long.

It was time to douse the flames.

The numbers were brutal.

Spar Zimbabwe is shutting multiple outlets.

Choppies Zimbabwe is eyeing an exit from the market.

Wholesale giant Mohammed Mussa drastically reduced operations.

1. Richards Group is closing several stores in Harare.

Even dominant players like OK Zimbabwe and TM Pick n Pay struggle to keep shelves stocked, squeezed by cash flow shortages and volatile exchange rate policies.

And yet, outside these failing businesses, the informal sector is booming- unregistered traders making millions while dodging taxes.

That stops now.

The cause?

A booming informal sector that had taken advantage of tax loopholes, smuggling, and direct-from-manufacturer supplies—crippling legitimate businesses that played by the rules.

At the heart of government’s rescue mission is game-changing directive-the compulsory installation of Point-of-Sale (POS) machines across all businesses—including informal traders. The goal is clear: eliminate cash-based tax evasion, enforce financial transparency, and expand the tax net.

“We are taking bold steps to ensure that all businesses, big or small, comply with taxation laws,” said Finance Minister Professor Mthuli Ncube.

“Formalisation is essential for fair competition and economic stability.”

By mandating electronic payment systems, authorities aim to create a digital audit trail that allows for better tax monitoring and enforcement.

The measure is expected to curb illicit cash transactions that have allowed informal businesses to thrive at the expense of compliant retailers. This means that every dollar that changes hands will be traceable, every transaction recorded, every loophole tightened.

It’s a move designed not just to capture lost tax revenue but force the informal sector into the daylight.

But, tax evasion isn’t the only monster lurking in the market’s shadows.

A hidden artery has been feeding the informal sector, manufacturers selling direct to unregistered traders.

This underground pipeline has been flooding the streets with untaxed goods, starving formal retailers of customers and fuelling the very crisis the government is now trying to contain.

No longer. Under the new rules, manufacturers will no longer be permitted to sell directly to informal traders.

Instead, they must distribute goods through registered wholesalers and retailers, ensuring tax compliance at every stage.

The move is designed to dismantle an underground distribution network that has enabled informal traders to flood the market with untaxed goods, undercutting legitimate businesses.

“This will restore order to the market and prevent manufacturers from fuelling tax evasion,” said Prof. Ncube.

To enforce these new rules, the Government has unleashed a Domestic Interagency Enforcement Team- a financial watchdog squad tasked with hunting down tax evaders, shutting down non-compliant businesses and slapping penalties on those who defy the new order.

According to Professor Ncube, the Reserve Bank of Zimbabwe (RBZ) is now preparing to complement these measures with targeted monetary policies. The forthcoming Monetary Policy Statement, according to him, will introduce new financial instruments that incentivise formal business operations while making it harder for informal trade to thrive.

Additionally, the government has tightened the noose around smuggling. A new classification system will deem certain imported goods—including beverages, detergents, dairy products, and sugar—as “smuggled” unless sellers can provide official duty payment documentation. This initiative aims to protect local manufacturers and ensure fair competition.

The government isn’t just wielding the a hammer-it’s also extending a helping hand .

Recognising that many formal businesses are drowning under financial pressure, Government has expanded the

Industrialisation Fund and the Targeted Finance Facility (TFF) through the RBZ. These funding programs will provide struggling retailers and wholesalers with working capital, helping them transition into a more regulated business environment.

Authorities believe these interventions will not only rescue Zimbabwe’s formal retail sector but also boost government revenue and strengthen economic stability.

“These reforms are not just about tax collection,” Prof. Ncube emphasized.

“They are about building a modern, competitive economy.”

The hope is that, with access to capital, struggling retailers will not only survive but thrive in this new business landscape.

The Confederation of Zimbabwe Retailers (CZR) has welcomed the government’s bold stance, saying it was long overdue.

“The dominance of unregulated trade has put compliant businesses at risk,” said CZR President Denford Mutashu.

“We fully support the mandatory use of POS machines and the regulation of supply chains. These measures will help restore balance to the sector.”

But while the authorities have been well received, retailers are demanding immediate enforcement.

“The formal retail sector cannot afford further deterioration. We call for immediate enforcement and structured engagement with stakeholders to ensure the success of these reforms,” Mutashu said.

The government’s aggressive intervention marks a turning point in Zimbabwe’s retail sector.

By enforcing tax compliance, regulating supply chains, and cracking down on smuggling, authorities are setting the stage for a more transparent and competitive business environment.

Yet, challenges remain. The informal economy is deeply entrenched, and resistance from non-compliant traders is inevitable. The success of these reforms will depend on strict enforcement, industry cooperation, and the ability of formal businesses to adapt.

As retailers brace for change, one thing is clear: Zimbabwe’s retail sector stands at a crossroads.

For years, the informal economy has operated like an unchecked wildfire- consuming market share, dodging taxes, and pushing legitimate businesses to the edge.

Now the Government has drawn a line in the sand.

The battle for Zimbabwe’s retail sector has begun.

But, will these measures be enough?

Will POS machines, supply chain regulations, and financial support be the lifeboats that can save the  sinking retailers?

Or will the resilient, deeply entrenched and fiercely adaptive informal economy find new ways to evade the system?

The coming months will provide the answer.

For formal traders, the stakes couldn’t be higher.