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Caption here (Linda Mujuru, GPJ Zimbabwe)


Govt tightens screws on informal sector



TREASURY has proposed to tighten the screws on the informal sector after formal retailers raised alarm over growing competition and the existential threat posed by the small businesses largely operating outside the taxmen’s dragnet.


Presenting the 2024 National Budget, Finance minister Mthuli Ncube said the government will soon order manufacturers to supply goods to tax-compliant businesses only.

“In order to restore the supply chain from the manufacturer, wholesaler to retailer, I propose that only licensed and Tax Compliant Operators procure goods from manufacturers and wholesalers,” Ncube told Parliament on Thursday.

“In addition, I therefore, propose that only traders registered for VAT purposes and in possession of valid Tax Clearance Certificates be eligible to procure goods from manufacturers.”

High levels of unemployment and weak enforcement of by-laws by the authorities in most urban centres has resulted in most sidewalks full of wares being sold by informal traders at lower prices compared to formal retailers.

While the growth of the informal sector has eased unemployment pressures, experts say the traders are largely operating outside the taxmen’s eye,  thereby prejudicing Treasury of revenue.

According to the Finscope Survey, Zimbabwe could be losing millions of United States dollars in tax revenue after it emerged that 70% of micro, small and medium enterprises (MSMEs) do no keep accounting records.

OK Zimbabwe, one of the country’s largest supermarkets by geographical presence and revenue, this week flagged uncertainty surrounding government policies and the regulatory landscape as some of the major constraints creating an unpredictable business environment.

The retail group also highlighted high interest rates, limited access to funding affecting capital expenditure and investment plans and growing competition from informal retailers and traders.

Untamed hyperinflation and multi-tier exchange rate distortions are also affecting pricing strategies, OK Zimbabwe says. 

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