Growing informal sector riles CFI Holdings

Published: 2 hours ago

LISTED agro-industrial group, CFI Holdings, has raised concern over the rapid expansion of Zimbabwe's informal sector, warning that unregulated players are undermining the viability of formal businesses and eroding tax revenues.

Zimbabwe remains one of the world's five most informalised economies, a status that continues to squeeze government revenues while putting established firms under intense strain. Informal traders, who often bypass tax obligations, have flooded the market with cheaper goods, leaving formal businesses battling to protect market share.

Presenting its trading update for the third quarter ended June 30, 2025, CFI said the shadow economy was weighing heavily on operations.

"Notwithstanding the economic positives, major businesses continued to grapple with the growing influence of informal retailers, who operate outside the compliance with statutory obligations, lowering their costs of doing business," the group said.

"These largely unregulated competitors created additional pressure on margins and customer retention. Management is hopeful the Authorities will continue to intervene in this matter to promote fair competition in the operating environment," it added.

Despite these challenges, CFI recorded positive volume growth in some key units. Farm & City Centre (FCC) posted a 9% sales volume increase compared to the prior year, buoyed by a rebound in the agricultural sector following the 2024 drought. The business credited strong supplier partnerships and product diversification strategies for sustaining growth.

Agrifoods also registered solid performance, with sales volumes rising 13.9% year-on-year, supported by increased demand for animal feeds. Management said it would remain focused on defending and expanding market share through adaptive strategies and closer customer engagement.

However, Victoria Foods reported a 3% decline in sales volumes during the quarter, largely due to grain shortages caused by last year's drought and delayed maize harvesting.

Looking ahead, CFI warned that the operating environment remains fragile.

"Going forward, the Group anticipates the FY2025 economic outturn to remain challenging, influenced by liquidity constraints and reduced aggregate demand. Ongoing cost containment measures will continue to be implemented," the group said.
- NewZimbabwe

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