WHEN the Reserve Bank of Zimbabwe (RBZ) announced in August 2025 that financial institutions would soon be expected to submit quarterly reports on their financial literacy and inclusion outreach, the policy gesture carried the familiar ring of technocratic optimism.
Reserve Bank of Zimbabwe (RBZ) governor John Mushayavanhu presented the directive as a practical cornerstone in the long project of building an informed and empowered citizenry, one capable of navigating digital payments, understanding credit and making decisions that strengthen both household resilience and the broader economy.
On its face, the policy seemed to signal a country preparing itself for a more modern financial future: rural communities gaining the tools to engage with the formal system, banks and non-bank financial institutions demonstrating measurable impact and a regulatory climate finally able to match the rhetoric of inclusion with the practice of accountability.
Yet, in Zimbabwe, policies do not exist in sterile isolation. No sooner had the ink dried on the RBZ pronouncement than the 2026 National Budget stepped onto the stage, carrying with it a fiscal script that unsettled the very ecosystem the central bank seeks to cultivate.
Rather than abolish the much-disputed Intermediated Money Transfer Tax (IMTT), the ministry of Finance, Economic Development and Investment Promotion (finance ministry) opted for a partial trimming: the tax on ZiG transactions would drop from 2% to 1,5%, but foreign-currency transfers would remain pegged at 2%.
A narrow doorway of tax deductibility was added, but only for the fully-compliant: registered taxpayers, fiscalised businesses, VAT-aligned traders and timely filers.
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In essence, the advertised relief came wrapped in red tape, while the core burden, particularly for formal businesses, remained firmly intact. The contrast between the RBZ’s ambitions and Treasury’s posture could not be sharper.
One arm of the state encourages Zimbabweans to step confidently into the formal economy, the other raises the price of entry.
Tax born of necessity, now barrier
To understand the discomfort swirling around Intermediated Money Transfer Tax (IMTT), one must revisit its birth moment in October 2018. Introduced as a revenue-expansion mechanism, the tax was initially defended as a necessary bridge: a way to widen the tax base and shore up public finances in an environment where informality dominated and traditional tax instruments were faltering.
For a state struggling with fiscal leakages and a shrinking formal economy, it appeared an expedient solution.
But tools crafted for short-term relief often develop long-term consequences. Over time, IMTT, meant to be a pragmatic intervention, hardened into a structural barrier within the formal economy.
Business associations, from wholesale traders to transport operators, now describe it as a frictional cost that quietly erodes margins and discourages transparency. Instead of encouraging compliance, IMTT has come to perform the opposite function: pushing traders, small enterprises and even medium-sized firms toward informal tactics that help them bypass both bank channels and tax scrutiny.
The finance minsitry attempted to soften this perception by extending IMTT deductibility to Corporate Income Tax and redefining “financial institutions” in ways that rope microfinance entities into the regime.
But the conditions attached, full registration, fiscalisation and VAT adherence, all amount to a compliance gauntlet that many small businesses simply cannot navigate. Add to this the finance ministry’s own admission that roughly US$89 million in tax revenue will be forgone due to adjustments effective January 2026 and the contradiction becomes sharper: The state acknowledges the burden but stops short of removing it.
The message, however unintended, is unmistakable: “We want you formal, but at a cost you may not survive”.
When policy sends mixed signals
Zimbabwe’s financial landscape has long operated in a delicate equilibrium, a see-saw between aspirations for digitisation and the reality of an economy still anchored in cash, informality and survivalist enterprise.
The RBZ’s literacy and inclusion agenda rests on the belief that if citizens are educated about financial systems, they will willingly migrate into the formal sector. In theory, this migration should generate stronger credit markets, deepen savings pools and expand tax compliance.
But the 2026 budget logic behind IMTT is out of rhythm with that aspiration. Every percentage point of IMTT added to a digital payment silently discourages the very behavioural change policymakers hope to nurture.
The levy does not simply nibble at transactions, it reshapes decision-making. If you are a rural agro-dealer operating on a wafer-thin markup, why would you channel payments through formal platforms when each swipe chips into your earnings? If you are a small retailer trying to stretch every dollar, why volunteer for tax exposure when informal methods offer lower costs, fewer hoops and better liquidity?
This is the paradox at the heart of Zimbabwe’s financial ecosystem: the RBZ promotes inclusion rhetorically, yet its fiscal instruments via Treasury reward withdrawal from formality.
The RBZ wants citizens inside the tent, the IMTT’s architecture keeps the entrance fee high, in essence, barricading entrance for the majority.
Informal sector: Reluctant safety net
For years, the informal sector has operated as the pressure valve of Zimbabwe’s economy — a sprawling, improvisational marketplace where livelihoods are secured one transaction at a time, outside the glare of formal regulation.
Estimates regularly place informality at more than 70% of economic activity. In such a landscape, any measure that increases the cost of formal transactions inevitably accelerates the drift toward unregistered, cash-based operations.
The 2026 budget, despite its veneer of reform, inadvertently amplifies this drift. By retaining the IMTT for foreign currency transactions at 2%, the government ensures that dollar-based payments, which dominate Zimbabwe’s economic life, remain expensive within the formal system. Traders and consumers respond rationally: they move toward lower-cost alternatives.
The more this happens, the more the formal economy shrinks, not necessarily because businesses fail, but because they quietly retreat into the shadows. This is not merely a taxation problem, it is a structural problem.
The state depends on the formal economy for revenue, yet its policies nudge that very sector toward contraction. The goose is expected to lay golden eggs while simultaneously being deprived of feed. What a paradox!
Non-ease of doing business
Behind Zimbabwe’s formality crisis lies a deeper issue: compliance is not simply a legal obligation, it is a financial decision. To comply, by registering for VAT, adopting fiscal devices, preparing audited financials, maintaining records and submitting returns, costs money.
For large corporations, such obligations are manageable. For small businesses, they are suffocating. Add the IMTT to that list and the calculus becomes clearer: formalisation is expensive and informality is rational.
The Finance ministry might argue that deductibility offsets this burden, but deductibility itself is not the relief it appears to be. Taxes are deductible only if profits exist to deduct them from. Many small companies operate near break-even. For them, deductibility is a distant theoretical benefit, not a real-time cushion.
Meanwhile, their informal counterparts roam freely, no IMTT, no VAT, no digital footprint, no regulatory drag. Consumers, too, gravitate toward them because their goods are cheaper.
Zimbabwe’s policy architecture, therefore, creates a peculiar dynamic which says, the more compliant you are, the more expensive it becomes to operate.
Why lessons from elsewhere matter
No one person nor jurisdiction has a monopoly on great ideas. There is no shame for Zimbabwe to learn from its peers. Kenya, Nigeria and even smaller economies such as Rwanda have demonstrated that when digital payments are made cheap, or entirely tax-free, usage skyrockets.
Mobile-money ecosystems flourish. Tax authorities, instead of taxing each transaction, leverage the expanded digital footprint to improve compliance through smarter monitoring and broader economic growth.
In Zimbabwe, however, the instinct has been the reverse: tax the digital rails first and hope everything else will follow. But taxation without trust is a brittle instrument. There is a reason citizens in other countries embrace digital finance: the infrastructure is affordable, the rules are predictable and the benefits tangible.
Until Zimbabwe meaningfully recalibrates its incentives, financial inclusion will remain an aspirational slogan rather than a lived reality.
Roadmap for realignment
There are solutions that are practical, immediate and within reach, if policymakers are willing to rethink the architecture rather than merely tweak its edges. Here is a summary of six below:
l Simplify and harmonise compliance — A fragmented compliance ecosystem suffocates businesses. A single digital portal, integrating tax filings, licences, VAT, IMTT reporting and RBZ inclusion metrics, would drastically reduce friction. Simplification is not a luxury, it is an economic growth strategy;
l Calibrate IMTT in practice — A one-size-fits-all tax rarely fits anyone. Tiered IMTT rates linked to business size, turnover, digital adoption or registration status could soften the burden on micro-enterprises while preserving revenue. Sunset periods would provide breathing room for transition;
l Incentivise formalisation through tangible benefits — Financial inclusion cannot be achieved through compliance threats alone. Micro-grants for digital-payment adoption, tax credits for newly formalised traders and targeted rebates tied to literacy outcomes would inject momentum into the inclusion agenda;
l Facilitate access to finance for informal-to-formal transitions — Many informal players are not resisting the formal sector, they are priced out of it. Credit lines, guarantees and alternative data-driven credit scoring (leveraging mobile-wallet histories or supplier payments) could pull them into the formal fold without punitive burdens;
l Invest in rural digital infrastructure — Financial literacy achieves little if connectivity is patchy and devices unaffordable. Digital inclusion must be underpinned by broadband expansion, interoperability across payment platforms and affordable entry-level devices; and
l Build a metrics-driven feedback loop — The quarterly literacy reports the RBZ demands should serve not merely as administrative obligations but as policy dashboards. They should inform adjustments in IMTT implementation, credit programmes, payment-rail design and tax compliance strategies.
Conclusion
Zimbabwe stands at a crossroads where two policy impulses collide: the aspiration to build an inclusive, digitally-enabled financial ecosystem and the instinct to preserve short-term tax revenue through instruments that undermine that very ecosystem.
The RBZ’s literacy drive is earnest and necessary. But without a complementary fiscal philosophy, one that lowers barriers, rewards transparency and nurtures formal economic participation, the drive risks becoming another technocratic ritual whose outcomes fall short of its intentions.
If policymakers succeed in aligning incentives, by reducing the cost of being formal, easing compliance, reconfiguring IMTT and strengthening digital infrastructure, Zimbabwe could unlock a new era of financial participation that lifts productivity, deepens savings and expands the tax base sustainably.
If they do not, the paradox will sharpen as follows: the formal sector, the economy’s golden goose, will continue to shrink under the weight of a tax regime that punishes participation and rewards retreat.
Financial inclusion will remain a laudable phrase in policy documents while ordinary Zimbabweans vote with their feet, choosing informality because it is cheaper, simpler and more forgiving.
The question, then, is not whether Zimbabwe can build an inclusive financial ecosystem — it certainly can. The question is whether it will recalibrate its fiscal architecture to make such an ecosystem possible?
Ndoro-Mkombachoto is a former academic and banker. She is the chairperson of NetOne Financial Services, a subsidiary of NetOne Telecomms. She has consulted widely in strategy, entrepreneurship, private sector development, financial literacy/inclusion for firms that include Seed Co Africa, Hwange Colliery, RBZ/CGC, Standard Bank of South Africa Home Loans, International Finance Corporation/World Bank, United Nations Development Programme, United States Agency for International Development, Danish International Development Agency, Canadian International Development Agency, Kellogg Foundation. Gloria is a writer, property investor, manufacturer and keen gardener. Her podcast on YouTube is @HeartfeltWithGloria. — Cell: +263 7713362177/ gloria@sustainwisestrategies.co.za