The opening of SPAR’s latest outlet at Greenfield, a new shopping complex in Harare, was rare good news for Zimbabwe’s struggling retail sector. But, it also showed the mounting cost of doing business in retail.
SPAR spent US$2 million to launch the store—a hefty price tag that, according to the company, reflects the worsening burden of high taxes, licensing fees, and operational costs.
“Currently, there are no incentives to open a retail store. We recently opened a beautiful store. It cost us nearly US$2 million, just to open,” Moses Chihuri, a SPAR executive, told Parliament’s portfolio committee on Industry and Commerce on Tuesday.
In the last quarter, SPAR decided to shut down five outlets due to high costs. One has been closed so far.
To open a single supermarket in Zimbabwe, retailers must secure over 25 different permits. Says Chihuri: “Instead of me going to EMA, the local government, and to other agencies, how about me getting a single retail licence which encompasses all the different permits.”
Raising capital is getting harder, as banks now classify retail as high-risk, he says.
With public utilities collapsing, companies have to pick up the bill, adding to costs.
“We are running close to 180,000 litres of diesel per month for our stores. That is very dire,” says Chihuri. While solar energy could be an option, high licensing fees make it costly. He says: “Whilst we’re saying we’re coming in with an intervention to generate more power, we’re being asked to pay more money.
OK Zimbabwe, with close to 70 outlets, has to pay for its own refuse collection. OK’s Corporate Affairs Director Margaret Munyuru told the MPs: “We pay high rates to local authorities but we are unable to access the services.”
Mahomed Mussa, which has closed some of its trading space, says the economy needs formal retail, and fiscal reforms are needed to fix problems such as the transaction tax and “trade imbalances” that favour the untaxed informal sector.
“Zimbabwe’s retail sector is at a critical juncture,” says Mahomed Mussa. “The future of the economy depends on the resilience and vitality of its retail sector, making this a priority for policymakers.”
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