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Mthuli Announces New Measures To Address Informalisation Of The Economy | Full Statement

1 month agoFri, 31 Jan 2025 11:36:45 GMT
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Mthuli Announces New Measures To Address Informalisation Of The Economy | Full Statement

MEASURES TO ADDRESS THE INFORMALISATION OF THE ECONOMY

Preamble

His Excellency, the President, Dr. E.D Mnangagwa, yesterday took time off his annual leave to chair a session on developments in the economy designed to map the way forward.

The session, which also included the two Vice Presidents and all Economic Ministries, deliberated on measures Government has taken on the Economy, and developments in specific economic sectors, including the retail subsector. This culminated in additional measures being proposed.
Introduction

Since 2021, the Zimbabwe economy has registered strong economic growth, averaging 5.5% annually, anchored by growth in almost all sectors of the economy.

Economic slowdown of 2% was, however, recorded in 2024, mainly attributable to the El-Nino induced drought which impacted agriculture production and electricity generation, with secondary effects on the rest of the economy.

Notwithstanding the positive growth trajectory, there is an emerging phenomenon with indications that the economy is informalizing, particularly the retail and the wholesale sectors, with serious ramifications on the overall economy.

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Since the beginning of 2023, some manufacturers have been opting to supply their goods directly to the customers and informal retailers, bypassing wholesalers and retailers.

This situation has compromised the operations of the formal wholesalers and retailers, as they are competing with informal traders, who are operating outside compliance with regulations such as taxes, licence fees and labour laws, among other formalities.

Current Measures

Through the 2024 Mid-Term Budget and Economic Review, and the 2025 National Budget, Government has implemented the following measures in order to improve the level of formalization:

  • Route to Market – to enforce tax compliance by unregistered Micro and Small Enterprises, Government introduced 5% withholding tax to non-registered MSMEs payable to wholesalers and manufacturers.
  • VAT Registration Threshold – Government reduced the VAT registration threshold from US$40 000 to US$25 000 to promote formalisation of the informal sectors.
  • Deemed Smuggled Products – Certain goods such as alcoholic and non- alcoholic beverages, dairy products, washing powder & detergents and sugar, among others, are now deemed as smuggled unless the seller provides documentary evidence that customs duty was paid for.
  • Taxation of the Emerging sector – Several emerging sectors were added to the list of companies required to register for tax payment.
  • Point-of-Sale Machines – Micro and Small Enterprises are required to transact through Point-of-Sale Machines and operate a bank account linked to the Zimbabwe Revenue Authority.
  • Tax Administration – The Tax Administration system is being automated through the introduction of the Tax and Revenue Management System (TaRMS) and the Fiscalisation Data Management System (FDMS).
  • Targeted Finance Facility-The Government, through the Reserve Bank of Zimbabwe Launched the Targeted Finance Facility (TFF) to support the productive and retail sectors with working capital requirements.

Additional Measures

The measures implemented so far need to be enhanced. Government, in consultation with business and industry, and the Ministry of Industry and Commerce, is therefore proposing additional measures to address the impact of the informalisation of the economy.

Research and consultations indicate that some of the reasons formal businesses are experiencing distress include competition from the informal sector, poor management and poor corporate governance which have resulted in business failure in some instances.

The proliferation of smuggled imports-mostly in reserved sectors-which are being sold exclusively in USD, and the high cost of doing business among others, also contribute to the formal sector challenges.

Government is therefore proposing additional measures to promote formalisation and tax compliance by the informal sector, as follows:

1. Mandatory use of point-of-sale machines by all informal traders.

2. Adoption of international best practise on tax payment, which ensures every eligible taxpayer complies.

3. Level the playing field between formal and informal businesses by discouraging manufacturers from supplying directly to end users and the informal market.

4. Establishment of a Domestic Interagency Enforcement Team to enforce compliance in the informal sector.

5. To enforce collaboration between Local Authorities and Central Government in the licencing and enforcement processes.

Furthermore;

6. The Reserve Bank of Zimbabwe will announce additional measures through the Monetary Policy Statement to enhance the formalisation of the market.

7. Government will embark on an exercise to streamline regulatory processes, fees and charges, as well as duplication of work by Government Agencies, in order to reduce the cost of doing business.

8. Enforcement of the provisions of the Indigenisation and Economic Empowerment Act which provides for Reserved Sectors.

9. Provision of additional incentives to support Industry through the Industrialisation Fund over and above the already existing incentives such as duty-free imports Special Economic Zones incentives.

10. Promotion of the procurement of goods and services from local producers and suppliers by Government, to support local industry.

In conclusion, Government is committed to improving the business environment, in order to curb the informalisation of the economy, as we move towards Vision 2030.

Thank you.

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47 Comments

vigilante · 1 month ago
famba nebhora son that's why I sent you to school proud of you
jojo · 1 month ago
this leading thief, musuri has no empathy with the suffering masses. ma doctorate aya ndeeshuwa here kana kuti its the magaya, nduna, grace style of doctorates?
Anonymous · 1 month ago
Ndo vision 2030 ava playing with Zimbabweans life ,mbava idzi dzino rarama nema strategy ana garwe kutu varambe vachi looter we need new leadera ava vanotonga ne propaganda
Scunkie · 1 month ago
for a nation to tax itself into prosperity is like a man standing in a bucket and trying to lift himself by the handle......we've seen a lot since 2017 but all is in vain,it will just chase away investors both local and foregn,in the beginning factories and industries were closing and most likely all of them closed they cant tax that ,secondly now the retailer is running away from thee grappling taxation ok ,nrichards,lucky 7 bhadhella to mention but a few now its as good as taxing every donyt burger pizza pie ,mtuli's ddonut budget will only see SME's suffering and surrendering bussinesses the environment they are creating is not favourable for business i bring my own thing and the gvnmt wants 51% of everything i worked hard for mtuli and mnanga have played with peoples minds for far too long ,where are our minerals as zimbabweans qhat as the money from diamonds used for that we do not have a proper heath care facility,for how long Jah graduates roaminbg the streets trying to make ends meet ,they only forcus on enriching themselves and they can never get enough look at how they were quick to announce the much touted free emergy vehicle as it they have desigbed it that is why it failed they are to quick to get more richies to invest in dubai,i rest my case dont take ne seriously i have had a blunt of scunk
KwaMeda kune Huchi · 1 month ago
Kkk makarohwa neskunky sure and you are emotional. Handisi teacher hangu but kana mawana nguva imbodzokororai zvidzidzo zvema punctuation marks. Ndaona kunge munonyanyoziva comma chete. Musandituka but ndaona sekudaro.
Green Bomber · 1 month ago
A big piece of s.h.i.t💩
skun · 1 month ago
vachaita compete navo how when they are closing shops and selling their equipment and so on..blaz Ava havasi serious, they don't see th reality on the ground becoz everything is done for them, ende Hapana anoti bufu mu parliament macho becoz munhu unohla kudzingwa , it's faken' sad honestly, unoisa ma tax for small business which is ok zvododini, vatadza vatadza simple as that, y don't they accept defeat, doesn't ncube have economic advisers at his disposal or even scouts to see what's going on on the ground,
Chidhomoro Chikwatanuro Chisvotonoro · 1 month ago
Mtuli my brother do not play around our brains , you know the truth about Zimbabwe Economy ,do not apply theoretical solutions which will always fail yet giving you Vultures momentum to proceed with enriching your selves.Zimbabwe Economy is failing because of politics .Ndatokuudza the truth , Economic principals will never stabilize economy but politics will ,ndapedza.
ponesai · 1 month ago
you cannot rig economy boys
Vic Venom · 1 month ago
Mthuli is onto something here...For too long the formal sector has been burdened with covering for the larger informal sector...I do not blame him for doing the right thing , people are making a killing in the informal sector , proudly boasting about their tax dodging ways...Just peer into the shady WhatsApp groups of informal traders and see for yourself how much money they are making...I recently saw someone make 20X profit on timepieces smuggled from SA with the government getting nothing from it.. That is not right and surely Mthuli must rectify the situation...Rant over sanity restored
skun · 1 month ago
smuggled goods is not people's fault but the gvt itself to blame for failing to contain and make the border strict,
. · 1 month ago
chimbo verenga comment ya pats pamusoro coz tazviona maka pihwa mari yeku taura pa pindila
Vic Venom · 1 month ago
🤣🤣 are you justifying criminality because the "people" are benefitting??..Rant over sanity restored
xxc · 1 month ago
Wotonzwa mumwe achiti ipai Mnangagwa family imwe term atonge , , tinotofa tose akasara iye nemhuri yake Pana Mugabe hapana kumbodai kuvharwa kwemsshop
Mtuli · 1 month ago
Mbavha idzo soon tikudzokera ku 2008 naye minister wenyu uyoo
Corruptmore Looto · 1 month ago
@😎(When you replied me down below )😅😅For the first time ever you have said something that makes great sense with a real world application, why can't you give us comments like this everytime instead of your usual defence of the regime by blaming it on sanctions😅. But doing away with the Mushikashika for once and for all by introducing proper buses would be the ideal solution, then those who want to travel in taxes and the like can use that meter system.
Anonymous · 1 month ago
stop corruption at the border and elsewhere and actually make arrests that lead to significant jail time, that will fix these issues straight away
LZW · 1 month ago
The definition of insanity is doing the same thing over and over expecting different results such is the case with the Zanu PF. The worst political party in history, no solution for the beautiful nation of zimbabwe, will ever come from these delinquents.
Pasi Pamera Ziso · 1 month ago
The prescription is correct, but he left out something which is very crucial for the economy to regularise itself; all USD transactions should done electronically ( swipe and e-wallets). Usage of hard cash should be reserved for our local currency. This will definitely automate enforcement of taxes through the financial sector which shall hold bank accounts for all traders who want to trade in USD. Failure to formalise your business means no POS machine and no USD transactions. Businesses will formalise and align to tax regulations in less than 3 months because no sane business man would want to lose out on USD transactions despite the taxing operational requirements.
Anonymous · 1 month ago
You must be joking. We tried that. After a while they said the USD never existed and they converted the USD at what ever rate they deemed was acceptable to them, not according to the market.. Be real.
Pasi Pamera Ziso · 1 month ago
I never said that they should convert or equate the USD to ZIG no, the ZiG will trade as ZiG and no USD should be converted or equated to ZIG it will remain USD in nostro accounts. Last time the Zim dollar was equivalent to the USD and existed interchangeably and that was very wrong. This time they should not convert. USD will trade as USD and ZiG will trade as cash.... parallel.
Corruptmore Looto · 1 month ago
Seems like I don't have to go through the trouble since Anonymous has explained everything clearly, the only way to promote a cashless society is removing those transaction fees namely the IMTT and numerous bank charges, forcing everyone to use the US in electronic form on a large scale will not work, how are they supposed to enforce that. The solution is pretty simple, incentivise formalisation, reduce taxes and abandon the local currency for the meantime that will wipe out all currency distortions.
huchi.com · 1 month ago
mxxxxx how will a vendor be forced to have a.swipe machine
Pasi Pamera Ziso · 1 month ago
How? Why not?, it's already in place, Ecocash or One money.
Pasi Pamera Ziso · 1 month ago
By simply banning the use of USD cash. If you want USD, then you have to use POS, ECOCASH, ONE MONEY ETC. Use of hard cash will be restricted to the ZIG only. 😊😏🤔
Mr · 1 month ago
that term. 'banning' is the source of zim's problems, force is never a best option in any given circumstance
Vic Venom · 1 month ago
🤣🤣 continue peddling lies tax dodger Mthuli is coming for you...Do you even know who the Chicago Boys were??...They are the reason why Chile experienced an economic miracle under the rule of Pinochet....If Mthuli has the same mindset then I am all for it .. Imagine fuming and making up lies about my s.e.x.ual orientation because the government is rightly demanding more taxes from a severely undertaxed sector of the economy... Rant over sanity restored
Anonymous · 1 month ago
Khan, Erudite, Vic Venom. Whatever you choose to call yourself. Keep your delusions about dictators who stuffed their countries to yourself. Just now you will be praising every leader that massacred their own people. You can't bring anything new to the conversation. Zimbabwe must have the most number of Taxes and levy headings in the entire world. We are getting new ones all the time. What happened to all the money that we have been paying to the Aids Levy. Now Mthuli is saying we need more taxes to compensate. Be real.
Corruptmore Looto · 1 month ago
Pinochet is certainly a controversial figure but the fact remains, he kickstarted Chile's rise into being one of South America's most stable and prosperous economies but for the now I don't see anything like that happening in the immediate future for this country being ruled by these lot, there is nothing about them that screams free market, it is mostly command policies, which they try to ram through use all the time and retract them as soon as they prove to be disastrous. That's the vicious cycle we are currently stuck in.
😎 · 1 month ago
Ukaona zvima policies of the zvacho zviri ma volumes kudaro kahi zivakuti hakuna zvinemsoro zvirikutaurwa, handina kumboona Trump achitaura ma fine tuning se aya aburwa na Mthuli, Trump is angoti gaga straight to the point Zvimwe we had to deduce achiita fine tuning hake, A Mthuli you are a Proffessor and saka nyaya dzako ngadzive wo nemadeduction vanhu wo va conclude vari vega Ma volumes ano distorted nhanga nyaya
Sir African · 1 month ago
You pay tax on your salary. You tax when you pay council rates You pay tax when salary is deposited in your account You pay tax when you withdraw your salary from the bank. You pay tax when you buy groceries from formal businesses. You pay tax when you buy from a hardware shop You pay tax when you buy electricity.
1
SanchzyChizimbe🔥 · 1 month ago
tax tax tax😂
Sir African · 1 month ago
Bread would be warehouses first before it is sold to the consumer. Those who sale Howa ,mazhanje,roasted maize ,tomotoes etc along our highways will be required to have POS machines. Anyone who break the law will be beaten by our hard working police officers. Hawkers who sale on our streets,including those who sale home made floor polish,toilet brushes are included.Lest we forget, your local Barber is also required to be registered with Zimra and have a bank linked POS.
Ediots · 1 month ago
People stop paying tax when the economy does not allow for the same. the gvt has destroyed the economy and is expecting the industry to bail it out. if taxes had tangible results then it wouldnt hurt to contribute to the fiscus. in Zim paying tax feels like a reap off by the gvt, the gvt is operating like a tout
Mavivi · 1 month ago
Shiri inongozomhara
kkk · 1 month ago
uyu anopenga
Vic Venom · 1 month ago
One of the major causes of the liberation struggle was taxation without representation and not the abolition of taxation... Zimbabwe is not some microstate like Monaco or the Isle of Man where one can live as a tax exile.... Taxation of the informal sector is a necessary evil because for too long it has been allowed to run rampant, reaping the rewards of close to zero taxation...The informal sector should feel the pinch...Rant over sanity restored
Hamuhwine match · 1 month ago
Your ****ual orientation is the reason dzisingatore mushe ViC Venom hamuhwine match the vabereki vedu have been on the receiving end of lutocratic machinations but they always weather the oligarchical Chicago boys inspired inanity disguised as policy thrusts
PitothMaximus · 1 month ago
@Hamuwine match 🚮
Gonzo · 1 month ago
Apana kwatiri kuenda nenyika ino naana Mthuli kungoisa zvimitemo zvekurwadzisa nekutibira vanofunga kuti atina pfungwa here ???
screwdriver · 1 month ago
Uyu ndisati ndaverenga zvaari kutaura ndotoziva kt hapana chipenyu apa asi kubira vanhu chete
pk · 1 month ago
🤣🤣🤣🤣🤣🤣 seeking new ways of taking money from us how can a grown up person wake up every morning thinking of new ways steal from the poor🤣🤣🤣🤣🤣🤣🤣

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