KEY POINTS
- Zimbabwe makes electronic money mandatory to fast-track business formalization.
- The informal sector costs the country over $1.15 billion in revenue.
- Authorities plan to streamline business regulations and boost electricity supply.
As part of initiatives to hasten the formalization of the business sector, the Cabinet has authorized requiring all enterprises to use electronic money.
Government enforces electronic money to drive business formalization
Pressure on Zimbabwe to formalize its economy has grown, especially after a number of large retailers, which are important sources of tax income, closed their doors this year as a result of unfair competition from long-standing firms in the black market.
According to official data, a sizable section of the workforce is employed in Zimbabwe’s informal economy, which generates about 65% of the country’s GDP. According to government data, informality cost Zimbabwe at least $1.15 billion in missed fiscal revenue between 2020 and 2023.
Local authorities will grant vendor licenses under the new structure after consulting with the federal government.
On Tuesday, Information Minister Jenfan Muswere stated during a post-Cabinet briefing:
Authorities introduce tax reforms and compliance measures for businesses
“As part of short-term measures, all businesses will now be required to use electronic money. This will be accomplished by establishing a Domestic Inter-agency Team to ensure that the informal sector complies with tax laws and by introducing a mandatory tax payment system to ensure that all eligible taxpayers pay taxes.”
The government wants to increase the foreign exchange market’s efficiency and include all firms in the tax system.
According to New Zimbabwe, in order to facilitate the transfer of micro, small, and medium-sized businesses into the formal sector, authorities intend to increase the electricity supply, streamline company fees and levies, and eliminate duplication of effort among government departments.
Additionally, the Cabinet adopted measures to improve the electricity distribution network, encourage the use of alternative energy sources, speed up the construction of power plants, and increase the coverage of social protection for workers in the unorganized sector.
