The Zimbabwean government has introduced additional measures to tackle the increasing informalisation of the economy, particularly in the retail and wholesale sectors.
This follows a high-level economic session chaired by President ED Mnangagwa, attended by the two Vice Presidents and economic ministries. The meeting reviewed ongoing interventions and proposed new strategies to strengthen formal businesses and enforce compliance.
Since 2021, Zimbabwe’s economy has grown at an average of 5.5% annually, but a 2% slowdown in 2024—largely due to the El Niño-induced drought—has had ripple effects across various sectors.
Despite this growth, a growing number of manufacturers have opted to supply their goods directly to customers and informal traders, bypassing formal wholesalers and retailers. This has created an uneven playing field, as informal traders operate outside tax and regulatory frameworks, posing significant challenges to the formal economy.
To address this, the government has already implemented several measures through the 2024 Mid-Term Budget and 2025 National Budget. These include a 5% withholding tax on unregistered Micro and Small Enterprises (MSMEs), a reduction in the VAT registration threshold from US$40,000 to US$25,000 to encourage compliance, and stricter regulations on certain goods—such as beverages, dairy products, detergents, and sugar—deemed smuggled unless proper import documentation is provided.
The government has also mandated the use of Point-of-Sale (POS) machines for small enterprises and introduced the Tax and Revenue Management System (TaRMS) to automate tax administration.
Additionally, the Targeted Finance Facility (TFF) has been launched through the Reserve Bank of Zimbabwe to support the retail and productive sectors with working capital.
Despite these efforts, further action is needed. The government is now proposing additional measures to level the playing field, including making the use of POS machines mandatory for all informal traders, enforcing international best practices in tax compliance, and discouraging manufacturers from supplying directly to informal markets.
A Domestic Interagency Enforcement Team will be established to improve regulation, and local authorities will work more closely with the central government on licensing and enforcement.
Furthermore, the Reserve Bank of Zimbabwe will introduce additional policies through the upcoming Monetary Policy Statement to reinforce market formalisation. Efforts will also be made to streamline regulatory processes, reduce the cost of doing business, and enforce provisions of the Indigenisation and Economic Empowerment Act, particularly in reserved sectors.
To further support local industry, the government plans to provide additional incentives through the Industrialisation Fund and prioritize local procurement for government projects.
With these measures, the government aims to create a more structured and sustainable economic environment, ensuring that formal businesses thrive while informal traders transition into compliance.
This approach aligns with Zimbabwe’s Vision 2030, which seeks to establish an inclusive and prosperous economy.
