Economic challenges facing Zimbabwe have resulted in South African retail opting to pull out of the country.
Pepkor Holdings Limited opted to close down the PEP brand after making a loss in the 2019 financial year.
“A decision was made to exit operations in Zimbabwe as a result of the continued macroeconomic challenges in the country and ongoing devaluation of the local currency.”
“Discontinued operations, therefore, include the results from PEP Africa’s operations in Zimbabwe, amounting to a total loss for the year (after tax) of R70 million, which includes the full impairment of the disposal of the group’s assets.”
Zimbabwe’s economic sector, in general, suffered due to low consumer spending as inflation continues to rise eroding workers salaries. The local currency has also been losing value and consumers having been lacking buying power.
The introduction of load shedding to manages power shortages in Zimbabwe has resulted in the manufacturing sector having to either reduce production or use costly energy forms which negatively impacted profits.
Mother nature added more havoc to the southern African country’s agricultural sector which languished after drought and Cyclone Idai.
Foreign currency shortages persisted in Zimbabwe with companies failing to acquire raw materials. Investors into the southern African country also faced challenges in getting back their capital invested in businesses.
Zimbabwe’s economy will shrink by 7.1% in 2019, the country’s first contraction since 2008 according to the International Monetary Fund.
Authorities believe the country’s economy will bounce back by 4.6% in 2020.