Choppies is leaving Zimbabwe and has opened talks to sell its business, citing the impact of policies that favour informal traders over formal retail.
The company says it has “entered into discussions regarding a possible sale of the business operations of Nanavac (Pty) Ltd trading as Choppies Zimbabwe for cash”. It has 30 outlets in the country and 1000 workers.
“In Zimbabwe, over the last two years, there has been a significant shift to the informal retail sector, leaving the formal retail sector to battle a reduction of up to 30% in footfall and having to compete with the informal sector,” Choppies said Friday.
The company said it has spent too much money keeping its Zimbabwe stores afloat, and needs to deploy capital elsewhere.
“While we believe in the country’s long-term viability, Choppies as a group needs more capital to support its Zimbabwean operations for extended periods and has already invested significant capital to support the operations,” says Choppies. “Due to the factors mentioned above we have decided to exit the country.”
Choppies has operated in Zimbabwe since 2013.
Retailers in Zimbabwe are suffering from government policies that make informal traders more attractive to shoppers. Because major supermarkets are forced to sell goods at the overvalued exchange rate, they are more expensive than informal traders, who use the street rate.
Informal traders dodge taxes and other regulations, giving them an advantage.
In its last financial results, Choppies complained that smaller retailers “are able to operate with lower overhead costs, which allows them to offer lower prices to consumers and better exchange rates not necessarily compliant with exchange laws”.
Despite evidence that its policies are hurting formal retail and depriving it of taxes, Government dismisses retailers’ concerns.
In October last year, Treasury Secretary George Guvamatanga should stop moaning and innovate to compete with informal traders. “If I was your board, I’d fire you, because you are a useless management”, he said at a business meeting.
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