Top retailer gets permission to expand – on condition it sources locally

By Agencies

One of Zimbabwe’s largest food retailers – OK Zimbabwe – has been given the go-ahead by the competition watchdog to expand, but on condition it sources fruit and vegetables locally.

The board of OK Zimbabwe Limited announced plans to acquire three stores belonging to Food Lovers Market Zimbabwe in Harare in January.

Zimbabwe’s Competition and Tariff Commission (CTC) has now approved the purchase on condition that OK Zimbabwe buys at least 85% of its produce from local farmers, the state-owned Chronicle newspaper reported.

The supermarket chain must also maintain or improve existing trading agreements governing payment and deliveries with wholesalers and farmers.

The CTC had expressed fear that the purchase could lead to exploitation of suppliers.

Max Karombo, OK Zimbabwe Limited group CEO, said: “With this acquisition, OK Zimbabwe Limited will enhance its participation in the premium retailing of gourmet food as well as fruit and vegetables categories.

“The group also welcomes access to promising supply chain synergies within the Food Lovers Market ecosystem and the rest of the OK Zimbabwe Limited Group.

“Our expectation is to build economies of scale in supporting local farmers and food processors to serve a wider range of stores.”

The store purchases, from three local franchises of South African chain Food Lovers Market, will bring OK Zimbabwe’s total outlets to 71.

In December OK Zimbabwe reported it had “witnessed a very volatile trading environment” which was “aggravated by suppliers’ shortened trading terms or in extreme cases demand for prepayments for products sourced in local currency”.

“The period also saw manufacturers increasing product supply to channels offering hard currency competitiveness rather than formal retail chains where mandatory use of the legal exchange rates led to significant price premiums,” chairman Herbert Nkala said.

The company said inflation had slowed in the short term but remains unsustainably high and strongly welcomed government action to deal with over-pricing of goods and services by “contractors of major national projects”.