INDUSTRY leaders have called on the government to move away from overtaxation and instead focus on broadening the tax base and formalising the informal sector, it has emerged.
This came out during a panel discussion held under the World Bank’s release of its sixth edition of the Zimbabwe Economic Update in Harare on Tuesday.
During the event, the World Bank noted in its The Zimbabwe Economic Update: Fostering a Business-Enabling Regulatory Environment for Private Sector Growth report that the regulatory environment was choking private sector-led growth.
The report comes as only 23,9% of the economy is formal, while 76,1% remains informal, for a combined economic valuation of US$52,4 billion, according to Treasury.
“The recent announcement of the fiscal policy for the 2026 budget has introduced several commendable measures aimed at enhancing the economy. While there are always negatives to consider, the overall impression is positive, particularly regarding revenue collection strategies,” NedBank Zimbabwe, executive head of treasury, marketing, and corporate affairs, Latifa Kassim said.
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“The budget highlights efforts to increase certain taxes, such as those on digital services and mining royalties, which promise to improve revenue streams.
“However, it is essential for policymakers to maintain a balance that considers the impact on industries.”
Added Kassim: “A key focus should be on broadening the tax base by formalising the informal sector, rather than relying solely on current taxpayers who are already struggling.
“To achieve a more comprehensive revenue collection system, it is crucial to implement measures that reduce the cost of doing business and make formalisation easier.”
She said policymakers need to refrain from imposing punitive taxes that may discourage individuals and businesses from entering the formal economy.
Zimbabwe Association of Abattoirs former chairperson Dumisani Murindagomo shifted the focus to the beef sector, highlighting recent reforms aimed at reducing operational costs.
“The role of industry in driving reforms is crucial, particularly as efforts to reduce operational costs continue to fall short. The main challenge lies in the enforcement of harmonised regulations, which are essential for creating a sustainable environment,” he said.
“Currently, the industry grapples with a significant value-added tax gap, exacerbated by a high level of informal trading; over 70% of participants operate outside the formal sector. This informalisation undermines the effectiveness of existing regulations and hinders the industry’s overall progress.”
He added: “If these regulations are enforced effectively, we can expect a positive shift toward inclusivity, where small players transition into the formal sector and invest in industry standards.
“Currently, the lack of enforcement creates disincentives for focusing on quality, hygiene and justifiable practices.”
Tourism Business Council of Zimbabwe president Clive Chinwada said international hoteliers faced significant burdens related to political and regulatory hurdles.
“The tourism sector contributes approximately 10% to global GDP [gross domestic product], and in Zimbabwe, it accounts for 8,5% of employment, according to a recent World Bank study. Despite this positive outlook, international hotel groups face persistent challenges related to political and regulatory hurdles,” he said.
“Fragmentation across various licensing bodies complicates the investment landscape, making it crucial for the government to work towards harmonising these processes to improve efficiency.
“Addressing transparency and the slow pace of licensing is also vital. Many businesses operate without licences due to prolonged approval times, which can extend to six months or more.”
He said this inefficiency particularly impacted small and medium enterprises, which struggle with high regulatory costs.
“To ensure sustainability, these businesses need to formalise but complex compliance requirements often deter them from doing so,” Chinwada said.
“The hope is that the government’s reform initiatives will simplify regulatory processes, bolster transparency and create a more conducive environment for growth in the tourism sector.”
