The veteran leader was addressing a small enterprises expo in the capital when he declared that vendors who have flooded towns and cities across the country will be forcibly moved to designated trading places.
Thousands of people have besieged city centres across the country, selling all manner of bric-a-brac in a bid to survive an economic crisis that has seen industries collapse and unemployment reach over 85 percent.
The daring vendors trade on pavements and right at shop-fronts, sparking an outcry from the tax-paying high street retailers.
Alarmed by the mayhem, the government has ordered the traders to relocate to designated trading places but many have refused to move.
“If you were selling your wares at an illegal point but have now been discovered and offered a properly designated place to trader from, then you should move,” said Mugabe Wednesday speaking partly in Shona.
“We do not want chaos; the sort of mayhem in other countries where you see goats in the city centre like in First Street.
“That’s what I once witnessed in West Africa. No; we want to ensure that those who have shops are able to sell their wares freely, then goats must go kuMbudzi.”
Critics blame the government’s failure to address the country’s economic crisis for the problem with vendors.
While campaigning for the 2013 elections which he won, Mugabe promised to create two million new jobs through his Zanu PF party’s ZimAsset economic programme.
But two years after the vote, he has yet to deliver on the promise.
Instead, the economy continues to struggle with hundreds of companies shutting down, rendering thousands jobless.
The situation has been worsened by a recent Supreme Court ruling allowing employers to fire workers on notice and without benefits.
Mugabe said Thursday that nearly 9,000 workers have lost their jobs following the ruling.