Staff Reporter
OK Zimbabwe, once a dominant player in the retail industry, is now facing severe financial crisis. Analysts and insiders attribute the company’s decline to years of mismanagement and poor decision-making by its leadership.
The company is struggling to keep its shelves stocked, with many outlets now having empty shelves or being under-stocked with essential food products. Suppliers have stopped stock deliveries, citing unpaid debts, with OK Zimbabwe reportedly owing them US$17 million and ZW$537 million.
Market analysts are particularly concerned about OK Zimbabwe's decision to pay out large dividends in recent years, despite its worsening financial position.
“In March 2022, OK Zimbabwe declared a US dollar dividend of 0.13 US cents per share, totaling approximately US$1.7 million. This was followed by another dividend in March 2023, totaling around US$2 million, which included a 0.13 US cents interim dividend and a 0.02 US cents final dividend,” said Tendai Gore, an analyst.
“Just five months later, in August 2023, the company borrowed US$5 million at an interest rate of 7.5 percent per annum, with a three-year repayment term. From a resource allocation standpoint, this decision raised concerns.” Gore added.
Another analyst noted, “When factoring in the total dividend paid in ZWL (Zimbabwe dollars) in 2022 alongside the US$0.13 dividend, the total payout over these two years is roughly equivalent to the US$5 million borrowed in August 2023.”
The analyst suggested that a more prudent approach would have been to suspend dividends and utiliseinternally generated resources, which would have come at no cost and helped alleviate the company’s financial struggles.
In response to the mounting financial pressure, OK Zimbabwe skipped its 2024 dividend payout, citing the need to restore working capital. “The decision to skip the dividend in 2024 validates earlier concerns about the imprudence of declaring a dividend while increasing borrowing costs,” the analyst added.
Store managers have expressed frustration as they are unable to restock shelves due to suppliers’ refusal to deliver goods without payment of outstanding debts.
“We are not getting new stock. The shelves are practically empty. Suppliers are demanding cash up front, and they are refusing to deliver anything unless we pay the outstanding debts,” one store manager explained.
A political analyst Tendai Chitiga commented, “The company’s leadership seems completely disconnected from the reality of the situation. Businesses should prioritise resource preservation rather than splashing out on non-essential investments.” he said.
As OK Zimbabwe continues to struggle, analysts emphasise the need for urgent leadership changes and a focus on restoring operational efficiency to secure the company’s future.
