Retail giant OK Zimbabwe Limited has turned to supplier-finance schemes, wherein third-party financiers pay suppliers when the company misses its due dates, as a stop-gap measure to keep its shelves stocked.
Since last year, the group has contended with a severe revenue decline driven by supply chain disruption, volatile exchange rates, a liquidity crunch, falling consumer spending, and intensified competition from the informal sector.
These pressures resulted in trade payables of US$25,55 million, plus a further US$2,73 million in accruals and other payables.
This brought total supplier debt to US$28,29 million as of March 31, 2025, accounting for 37% of the group’s total liabilities.
Consequently, many of OK’s suppliers and service providers began demanding payment in US dollars or shorter payment terms for invoices in Zimbabwe Gold (ZiG), leading to chronic understocking in stores. The retailer’s annual report for the year ended March 31, 2025 notes that this challenge compelled the group to enter supplier-finance arrangements to settle creditors and ensure merchandise remained available.
“The group endeavours to settle its obligations to suppliers in accordance with agreed terms,” it stated.
“However, during the reporting period, the group did not have sufficient liquidity to settle all obligations as they fell due, resulting in delays in payments to creditors. The group has supplier finance arrangements with third-party financial institutions (the finance providers).
“Under this programme, when the group is unable to settle invoices with suppliers on the contractual due date, certain suppliers elect to receive early payment from the finance provider. The finance provider pays the supplier the invoiced amounts on or shortly after the due date, and the group subsequently settles the amounts directly with the finance provider at a later agreed date.”
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OK clarified that the suppliers themselves bear the financing costs for obtaining early settlement from the financier.
“The group incurs incremental interest expense under the arrangement should it fail to meet the finance provider settlement date,” OK added.
In a market update published just prior to the annual report, OK disclosed that its interim management team had engaged all suppliers to agree on amounts owed as of the end of February and established a settlement plan funded by the company’s capital raise and operational income.
Suppliers agreed to a partial settlement, after which they would resume deliveries.
“Unfortunately, trading terms that are in place have not allowed adequate stock build-up to support the required level of activity,” OK explained.
Therefore, negotiations with suppliers are ongoing to extend credit periods and broaden the range of available stock.
As part of its cost-cutting strategy to return to profitability, OK significantly reduced its supplier base during the year to 1 526 from 4 181 the previous year. Spending on suppliers consequently fell to US$253,49 million from US$309,39 million in 2024. To bolster its financial position, the company concluded a rights issue in July 2025, receiving US$20 million in proceeds the following month. It has also identified property valued at US$10,5 million for disposal.
Sale and purchase agreements for assets worth US$7,3 million have been drafted and were scheduled for signing before October 31, 2025.
“All prospective buyers are prepared to enter long-term sale-and-leaseback agreements. The group has additional owned properties worth US$17,2 million and these may be disposed to fund working capital requirements, should it be necessary, and subject to board approval,” OK said.
The group has further secured debt refinancing facilities amounting to US$19,6 million, with US$12,3 million undrawn at approval. While some facilities expire on December 31, 2025, renewal negotiations have commenced, with OK expressing confidence in their extension.
“Four key relationship banks have provided formal letters of support (subject to normal conditions), reinforcing confidence in continued financial backing,” the retailer noted.
These severe challenges culminated in a US$25,03 million loss for the audited financial year ended March 31, 2025—a dramatic downturn nearly forty times worse than the previous year’s result.
As part of its turnaround strategy, OK closed 11 stores in a sweeping consolidation drive aimed at stemming losses and easing liquidity pressures, leaving it with 62 stores.
The group’s balance sheet weakened considerably, with total assets standing at US$101,83 million as of March, a sharp decline from US$136,39 million reported for the same period in 2024.
