Shareholders’ gamble saves OK Zimbabwe

PHILLIMON MHLANGA

Cash. Debt. A gamble. A fight for oxygen.

That is the rhythm of Zimbabwe’s bruised retail sector. And for OK Zimbabwe Limited, the country’s largest supermarket chain, it has been a fight for oxygen.

Shareholders of OK Zimbabwe have put down US$20m to save their company from the brink.

They dipped into their pockets, subscribed to new shares, and backed management’s plea for a rescue.

The money was raised in just two weeks, between July 21 and August 4. Almost fully subscribed. And fully underwritten.

Not through a bailout. Not through state intervention. But through its own shareholders, who rallied behind a rights offer.  Almost fully subscribed. Fully underwritten. A rare vote of confidence in a sector that has been bleeding for years.

The raise is phase one of a US$30.5m rescue plan. Phase two will see  property disposals with the view to raise US$10.5m to come from selling real estate the retailer no longer considers strategic.

But for now, the money is survival cash. Not expansion capital. Not a springboard to immediate profits. Just enough to keep the light on, pay suppliers, restock shelves and buy time.

Without it? Collapse was not unthinkable.

The rights issue was simple in form, complicated  in implication.

Shareholders were invited to buy more shares.

They did so willingly, taking up more than three-quarters of the issue, worth US$15.38m, representing almost 77% of the total.

Underwriters  covered the balance , about worth US$4.61m, ensuring the full US$20m target was reched.

“The Rights Offer was fully subscribed through a combination of shareholder take-up and shares taken up by the underwriters in accordance with the underwriting agreement. The Board expresses its appreciation to shareholders for their continued support and to the underwriters for their commitment to the success of the capital raising exercise. Proceeds from the Rights Offer will be applied towards partial settlement of legacy creditors, supporting the Company’s working capital and capital expenditure requirements and unlocking fresh supplier support,”  OK Zimbabwe company  secretary, “ Margaret Munyuru said.

Zimbabwe’s retail story this year is not one of growth. It is one of endurance.

The sector is under siege. Consumers’ pockets are empty. Inflation eats through salaries. The new ZiG currency has stabilised somewhat, but liquidity remains tight.

Imported goods dominate shelves, but forex scarcity makes stocking them difficult.

And then there is competition, from small nimble operators who thrive in niches.

Even informal tuckshops, powered by cross-border traders and remittances, bite chunks out of formal retail.

Power cuts force retailers to run costly generators. Fuel bills balloon. Staff costs rise. Yet consumers resist price increases.

The result? Thin margins. Mounting debts. Shaky supply chains.

For OK Zimbabwe, the warning lights have been flashing for years.

The chain, once the market leader with near unrivalled presence across towns, saw its dominance chipped away.

Poor restocking. Late payments to suppliers. Outdated stores. Customers drifted elsewhere.

By early 2025, the situation was dire. Shelves were patchy. Suppliers, unpaid, withheld goods. Debt ballooned. Confidence evaporated.

Rival TM Pick n Pay managed better. Backed by South African parent Pick n Pay, it sustained supply lines and refurbished stores, even amid foreign currency shortages.

OK Zimbabwe lacked such cushions.

This is why the rights issue mattered. It was not merely about raising money. It was about faith. Would shareholders put in more cash into a company many thought might not make it?

They did.

The full subscription is telling. It suggests shareholders see a turnaround possibility. Or at least, a recovery strong enough to protect their stakes.

Analysts call it a short-term reprieve. Not a solution. Debt may be settled. Shelves may refill. But structural headwinds remain.

Beyond the US$20m, OK Zimbabwe is eyeing property disposals worth US$10.5m. Negotiations are ongoing.

Management says deals will be struck carefully, “in the best interests of shareholders and consistent with strategic objectives.”

This phase will be delicate. Properties are not just assets. They are strategic locations. Lose the wrong one, and the chain may weaken further.

OK is not alone in the storm.

Other retailers have also battled debt, restructuring their balance sheet to stay afloat.

Clothing retailers has been hit harder also, as consumers cut non-essential spending.

Pick n Pay TM Supermarkets has fared better but faces its own issues, rising overheads, foreign exchange mismatches, and stiffer competition from informal traders.

Spar Zimbabwe has struggled with fragmented operations and a shrinking footprint, particularly in smaller towns.

Across the board, the story is the same, costs up, revenues down, competition fierce.

The crisis starts in the pocket. Disposable incomes have collapsed.

Formal retailers sell groceries at prices beyond many households.

Informal traders, unburdened by overheads and often sourcing goods through cheaper parallel channels, lure shoppers away.

OK Zimbabwe has lost significant market share to tuckshops. Many now see OK as a place for bulk or emergency shopping, not everyday groceries.

The new capital must reverse this perception.

Perhaps the most immediate challenge is restoring supplier trust.

By February this year, OK owed over US$30m. Suppliers withheld goods. Stock-outs worsened.

Now, with fresh cash, OK promises to settle dues and rebuild ties.

But suppliers, once burnt, will not rush back easily. They demand evidence of stability.

This trust deficit is as costly as debt.

So, what does US$20m buy? Time. Time to pay down critical debts. Time to restock shelves. Time to rebuild supplier confidence. Time to refurbish stores.

But, it does not guarantee profitability.

Structural reform is needed. New strategies. Smarter operations. Better customer targeting.

 “This is not victory. It’s survival. The sector remains under pressure. For OK, the challenge is execution. They’ve raised the money. Now they must use it wisely,” retail analyst Chenai Mashoko told Business Times, a market leader in business, financial and economic reportage.

A former supplier to OK, who requested not to be named echoed that caution: “We want to supply again. But we need guarantees. We can’t afford to extend credit if payments are uncertain.”

Shoppers, too, remain skeptical.

 “We love OK, but prices are high. Sometimes shelves are empty. We hope this money brings change,” said a shopper in Harare’s central business district.

The OK story is a microcosm of Zimbabwean business this year.

 Companies are caught in the same vice,  high costs, weak demand, volatile currency, and unrelenting competition from the informal sector.

Survival hinges on adaptability.

Some, like Pick n Pay, leverage regional support. Others, like OK, must rely on shareholder faith.

The lesson is simple, resilience requires capital, strategy, and trust. Lose one, and collapse looms.

Yes, US$20m has been raised. Debts set to be trimmed. Shelves to be restocked.

But, this is not the end  of the crisis.

It is the beginning of a fightback.

Shareholders have spoken. They believe survival is possible.

Now, execution is everything.