Paul Nyakazeya, Group Digital Editor 
OK ZIMBABWE says the Treasury’s two percent intermediated money transfer tax (IMTT) is straining its profitability.
In its 2021 annual report that was released on Tuesday, the retail giant’s chairman, Hebert Nkala said the government should review the levy.
“The group continued to endure excessively during the year. The increase in the transaction thresholds had a dramatic impact on the competitiveness of the formal retail sector, drives inflation and undermines profitability and attractiveness of Zimbabwe as an investment destination,” he said.
The tax was introduced in October 2018 when the government launched its austerity programme the Transitional Stabilisation Programme (TSP) From the onset, the business community argued that the levy amounts to “double taxation”.
“The group continues to appeal to the authorities to reduce these transaction thresholds to create an even playing field for the retail trade which will benefit customers. An effective corporate tax rate of 34,3 percent is unsustainable. Capital expenditure for the year was $3,1 billion up from $2,1 billion in prior year. Most of the capital expenditure was channelled towards store refurbishments and new stores opening,” said Nkala.
He said overheads grew by 37 percent over prior year. Staff costs, electricity charges, rentals, bank charges and depreciation were said to be the cost lines that contributed most significantly to overheads growth.
“The increase in staff costs was driven by the imposition of salary and national pension fund increases,” he said.
During the year to December 31, 2021, sales volume grew by 22,7 percent over prior year. In inflation adjusted terms, revenue for the year grew by 34,7 percent to $79,9 billion from $59,3 billion in the prior year.
Profit before tax of $4,8 billion was 38,5 percent above prior year’s $3,5 billion while profit after tax grew by 48,9 percent to $2,8 billion from $1,9 billion in prior year. In the same annual report, Maxen Karombo, OK Zimbabwe’s CEO said the group operated a network of 68 stores that are spread across the country.
Two new stores namely OK Banket and OK Mart Chivhu, were opened in the second half of the financial year.
The two stores are expected to contribute meaningfully in the coming years. Refurbishment of stores remains a central part of the group’s strategy of regularly refreshing our facilities and ambience, which subsequently improves the equity of our store brands. Refurbishments were completed at OK Masvingo, OK Chinhoyi, Bon Marché Avondale, OK Mbare and OK Queensdale,” Karombo said.
He said capital expenditure for the year was $3,1 billion up from $2,1 billion in the prior year. The bulk of the capital expenditure was spent on refurbishments of stores, opening of new stores, replacement of equipment and the purchases of vehicles necessitated by operational requirements.
“Stock shrinkage was kept under control and below the industry average during the year under review. Management will continue implementing measures to control shrinkage, given the challenging economic environment.”
“Positive growth was sustained in value added services with forex earnings supported through the expansion of the domestic remittance service across stores.
“This was in spite of the negative impact on customer count due to tariff and premium increases on the back of declining disposable incomes,” Karombo said.
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