OK Zimbabwe in Turmoil as Asset Values Fall Short of Debt Obligations

Retail giant OK Zimbabwe Limited is facing a mounting financial storm after it emerged that properties worth US$19.58 million, pledged as security, are insufficient to cover loans totaling US$23 million.

The shortfall highlights the depth of the liquidity crisis at the Zimbabwe Stock Exchange-listed supermarket group, which is battling to avoid collapse after reporting a staggering US$29.6 million loss for the year ended March 31, 2025.

To stay afloat, the company is rolling out a recovery programme that includes asset sales, leaseback arrangements, and efforts to raise US$10.5 million to settle debts and re-establish credit lines with key suppliers.

Property Sales and Collateral Gap

According to unaudited financial statements, supermarket buildings and other immovable assets valued at about US$10.5 million have been earmarked for disposal. By August 2025, offers worth US$7.3 million were on the table, with potential buyers open to long-term leaseback deals.

Other properties were pledged as collateral, including:

OK Mbuya Nehanda, Harare – US$3.21m

OK Glen View, Harare – US$1.83m

Birmingham Warehouse, Harare – US$3.7m

OK Gweru – US$2.7m

OK Malvern, Harare – US$1.42m

Harare Stand (Odar Township) – US$720,000

Harare Stand (Salisbury Township) – US$4.84m

Borrowdale Stand, Harare – US$6m

The combined value of these assets, US$19.58 million, falls short of the US$23 million debt they are tied to, underscoring the group’s precarious position.

Revenue Collapse and Cost Pressures

Revenue plunged 53% to US$240 million in 2025, driven by supply chain breakdowns, exchange rate volatility, and intensifying competition from the informal sector. Suppliers increasingly demanded hard currency payments or reduced credit terms, leaving shelves understocked.

Frequent power outages inflated operating costs, while currency controls distorted pricing structures. Despite cutting overheads by 51%, the savings were wiped out by the revenue collapse, leaving OK unable to meet its financial obligations.

The company also exited the Food Lovers Market franchise, writing off US$4 million linked to its Fresh & Green City branch. Several loss-making outlets, including stores in Banket and Marondera, were closed, with more shutdowns likely.

Additional Strains

Labour disputes have added to the turmoil, with a US$500,000 claim for alleged wrongful dismissals still unresolved. At the same time, ZIMRA has slapped the group with a US$2.05 million penalty over non-compliance with fiscal till integration rules, a charge the company is contesting.

Recovery Attempts

In August 2025, OK Zimbabwe raised US$20 million through a rights issue, part of a broader turnaround strategy that also involves property disposals and new credit facilities. Management believes these measures will stabilise the balance sheet, improve liquidity, and rebuild confidence among suppliers.

Chairman Herbert Nkala admitted the road to recovery would be long, but remained optimistic.

> “The recovery of the Group has started, but it will take some time to return to normal operations. Cost optimisation, in-store improvements and online sales growth remain at the centre of our strategy. With focus and discipline, we are confident of delivering sustainable returns to shareholders in the medium term,” Nkala said.