In a stark assessment of the economy’s deepening woes, CZR president Denford Mutashu said “structural rigidities” and fiscal pressures have eroded business confidence, leaving formal operations increasingly unsustainable.
ZIMBABWE’S formal industries are teetering on the edge of collapse, crippled by policy inconsistency, rising transaction costs and chronic power shortages, the Confederation of Zimbabwe Retailers (CZR) has warned.
In a stark assessment of the economy’s deepening woes, CZR president Denford Mutashu said “structural rigidities” and fiscal pressures have eroded business confidence, leaving formal operations increasingly unsustainable.
“Shifts in fiscal and monetary policy, particularly concerning taxes, currency reforms and regulations, have in the past eroded business confidence and increased compliance costs,” Mutashu said.
Over the past year, a growing number of companies have either shut down, scaled back operations or sought corporate rescue amid worsening economic headwinds.
Firms such as Beta Bricks, Khayah Cement, Truworths and Food World Supermarket are among those affected.
Mutashu outlined how rising operational costs and inefficiencies are suffocating businesses.
“High bank charges, compounded by the 2% Intermediated Money Transfer Tax, have also inflated transaction costs and reduced operational liquidity. Compounding these issues is unreliable electricity supply which raises production costs and diminishes competitiveness.”
His remarks come amid what analysts describe as one of Zimbabwe’s most severe structural economic crises in decades.
According to the Confederation of Zimbabwe Industries, industrial output declined by 0,9 percentage points to 52,3% in 2024, with most firms operating at just about 60% capacity.
Mutashu said runaway inflation and currency instability remain key drivers of the crisis.
“High inflation weakens consumer purchasing power and erodes working capital, leaving firms unable to maintain profitability as costs surge faster than revenues,” he explained.
“Currency volatility, particularly in recent years, has made financial planning and importation of raw materials unpredictable.”
However, the CZR president offered cautious praise for recent government measures aimed at stabilising the economy.
“However, we commend the Government of Zimbabwe for the decisive policy measures implemented this year to stabilise the currency, notably through the tight liquidity stance adopted by the monetary authorities. This approach has helped slow exchange rate depreciation and bring price stability in recent months,” Mutashu said.
The Reserve Bank of Zimbabwe’s restrictive monetary policy has been central to the government’s strategy to contain inflation and strengthen the local currency.