The formal retail and wholesale industries have been hit hard, with many businesses shutting down as manufacturers and suppliers prioritise the informal sector.  

Denford Mutashu, President of the CZR, painted a bleak picture of the retail landscape, noting that many formal outlets are struggling with stock shortages as suppliers refuse to accept local currency payments.

The informal sector, on the other hand, thrives due to its ability to trade primarily in US Dollars, unlike formal retailers who are mandated to accept Zimbabwean Dollars at the official exchange rate.  

“Formal retail stores generate around 80% of their revenue in local currency, while most suppliers demand payment in US Dollars,” Mutashu explained.

“This imbalance has created an unfair trading environment, where formal businesses face heavy regulations while informal traders operate with minimal oversight.”  

One of the major challenges facing formal retailers is the burdensome regulatory framework. Mutashu revealed that businesses require over 32 licences to operate legally, significantly increasing operational costs.

Additionally, a surge in smuggled goods entering the market has further disadvantaged formal retailers, as consumers opt for cheaper, unregulated alternatives available in informal markets.  

In response, the CZR has proposed several policy changes to stabilise the sector. These include allowing formal retailers to trade at a market-related exchange rate, reducing regulatory requirements, and implementing a nationwide programme to formalise informal traders.  

“We are not advocating for the eradication of the informal sector,” Mutashu clarified. “Rather, we urge the government to integrate informal traders into the formal economy by introducing fair taxation and licensing structures.”  

He also highlighted the need for a balanced supply chain where manufacturers and suppliers distribute goods equally between formal and informal retailers to prevent further market distortions.  

--ChannelAfrica--