• Choppies Exits Zim: After 11 years in the market, it initiated talks to divest its operations
• Economic Challenges: Experienced footfall reductions of up to 30%, with a significant pricing disparity
• Choppies operates 30 outlets and employs around 1,000 workers in Zimbabwe

Harare- Choppies is exiting Zimbabwe and has initiated discussions to divest its business, citing the adverse effects of policies that favour informal traders over formal retail operations.

The company plans to exit the market after 11 years of presence.

In a pointed statement released over the weekend, the organisation indicated that it is departing Zimbabwe due to unfavorable conditions that disproportionately benefit informal traders, despite the significant contributions of formal retailers to the national revenue.

The company emphasized that it has invested heavily in Zimbabwe to support local livelihoods but now needs to reallocate resources to more conducive environments.

“The board of directors of Choppies hereby notifies all shareholders that the company has engaged in discussions regarding a potential sale of the business operations of Nanavc (Pty) Ltd, trading as Choppies Zimbabwe, for cash (Possible Sale), which, if successfully concluded, could impact the company’s share price.

“In Zimbabwe, over the past two years, there has been a marked transition towards the informal retail sector, leaving the formal retail sector grappling with footfall reductions of up to 30%, necessitating competition with the informal sector,” the group stated in a circular.

Choppies operates 30 outlets in the country, employing approximately 1,000 workers, and has been active in Zimbabwe since 2013.

In this context, Choppies' assertion regarding government policies indicates that the government is creating a landscape that favours the informal sector at the expense of formal retailers.

Formal market retailers are mandated by legislation to sell their products in both local and foreign currencies, adhering to the official market rates set by the government.

However, these formal rates are perceived as overvalued, as they do not account for actual market forces of supply and demand.

Consequently, products sold in the formal market become more expensive compared to those available in the informal sector.

At present, there exists a 60% premium between the formal market rate and the parallel market rate, meaning that prices based on the formal market rate are approximately 60% higher than those charged by informal traders.

This discrepancy is particularly pronounced in U.S. dollar pricing, where a significant variance exists between formal and parallel market rates. For example, Mazoe Orange Crush is priced around US$3.50 in the informal sector, as opposed to approximately US$4 plus in the formal sector.

The informal sector enjoys a competitive edge by evading tax obligations and importing products from neighboring countries, where these items are cheaper, albeit of lower quality.

In contrast, Zimbabwean manufacturers produce standardized products, such as vitamin A-fortified sugar, that meet higher quality benchmarks.

Currently, these low-standard imports, despite their inferior quality, are less expensive due to tax evasion and reduced duties.

Operating in a tax-free environment with streamlined employee structures grants informal traders a distinct competitive advantage.

Conversely, formal retailers bear the burden of various taxes, operate large businesses employing over 1,000 individuals, provide medical coverage, and contend with overvalued rates, while government support appears lacking.

In October of last year, Treasury Secretary George Guvamatanga criticized formal retailers, urging them to innovate to compete with informal traders, stating, “If I were your board, I’d fire you, because you are ineffective management.”

However, in his 2025 budget presentation, the government is now focusing on compelling the informal sector to comply with tax regulations.

Nonetheless, the competitive balance still tips in favour of informal retailers, as Choppies indicated.

Despite the government's efforts to allow currency valuation based on supply and demand metrics, the quality of imported products should be a priority for the Consumer Council of Zimbabwe.

Quality cannot be compromised for price, nor can profitability be prioritized over maintaining high standards.

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