Dominant Informal Markets Attributed to Zimplow’...

Dominant Informal Markets Attributed to Zimplow’s Struggles

Oscar J Jeke – Zim Now Reporter

Zimbabwean farm and construction equipment supplier Zimplow is facing mounting pressure from the informal market, which the company blames for declining revenues across key divisions, despite growth in certain segments.

In a trading update, Zimplow said the infiltration of smuggled and underpriced products by cross-border informal traders continues to erode its market share and margins. “The volumes of smuggled spares and implements continue unabated despite authorities tightening border controls,” the company stated.

Zimplow’s flagship Mealie Brand division, which supplies ploughs and farm implements widely used by smallholder farmers, posted a loss following Zimbabwe’s worst drought in 40 years. Although the company responded by slashing prices by 21%, it noted that the market is being “flooded with illegal imports,” making recovery difficult.

The company’s tyre division, TrenTyre, also reported a 29% fall in revenue, prompting the closure of several branches. “Competition from cross-border informal traders has resulted in the fitment centres coming under increasing overhead pressure,” Zimplow said.

Its nail manufacturing unit, CT Bolts, was not spared either. Sales dipped by 4%, while operating costs rose sharply. “The impact of the informal market is also keenly felt by the business unit,” the company noted, adding that the rollout of a new nail production line was delayed by civil unrest in Mozambique.

Despite these setbacks, Zimplow recorded an 11% increase in tractor sales and a 34% rise in farm implement sales. However, the company warned that informal “runners” are helping customers bypass statutory charges, further undercutting its revenues.

In response, Zimplow said it is banking on more competitive pricing, enhanced service quality, and leaner operations. “The impact of the informal market will continue to be felt by TrenTyre and CT Bolts, but measures to be more price-competitive, offer best-in-class service, and lower overheads are expected to translate to profitability,” it said.

Beyond the informal market, Zimplow is also grappling with exclusion from the Chinese-dominated mining sector. Chinese-owned mines, which account for about 80% of Zimbabwe’s mining operations, prefer sourcing equipment exclusively from Chinese suppliers.

“Softer platinum and chrome prices have delayed several large projects,” Zimplow stated. “Chinese mines… generally buy exclusively from Chinese suppliers, reducing the rest of the mining equipment suppliers to 20% of the market, which leads to further pressure on margins.”