ZIMBABWE’S industry and commerce sectors have reiterated their call for government’s intervention as more companies shut down weighed down by the country’s non-performing economy, NewsDay Weekender can report.
The plea comes as Zimbabwe’s retail sector continues to face significant challenges such as high inflation, foreign currency shortages and increasing competition from informal traders.
Speaking to NewsDay Weekender this week, Zimbabwe National Chamber of Commerce president Tapiwa Karoro said informality remained a significant challenge in the country, with estimates indicating that more than 72% of the economy operates in the informal sector.
“This has resulted in low tax compliance, reduced productivity, constrained investment and limited access to social security benefits,” Karoro said.
“While the 5% withholding tax on non-registered MSMEs [micro, small and medium enterprises] measure seeks to enforce tax compliance, it has inadvertently discouraged informal traders from engaging with formal wholesalers, thereby pushing more transactions underground.”
He called on the government to implement a graduated tax structure with lower initial rates to encourage voluntary registration.
Karoro also called for formalisation of the economy, saying it was crucial for sustainable economic growth, increased tax revenue, improved business productivity and enhanced investor confidence.
“A mix of incentives, regulatory reforms, enforcement mechanisms and digital transformation will be essential in creating a balanced and inclusive economic environment,” he said.
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Meanwhile, the Consumer Council of Zimbabwe (CCZ) has also raised alarm over the continued closure of formal retailers.
In a statement this week, the CCZ cited unfair competition from informal traders as a major contributor to the trend.
It further expressed concern over the continued closure of formal retailers and wholesalers.
“Those still operating face an uncertain future amid growing pressure on volumes, exchange rate and viability, due to mounting competition from informal traders who include street vendors and tuckshops, among others,” the council said.
It said formal retailers and wholesalers contribute significantly to the national fiscus through payment of statutory obligations such as taxes, salaries and utilities.
“Informal traders usually avoid customs and excise duties through smuggling of goods, which is proving to be unfair competition on the part of formal business, that also battle with huge overhead costs that ultimately affect their pricing structures,” the council said.
The CCZ said every trader, regardless of their status, should be governed by the Consumer Protection Act to ensure that consumers are treated fairly and their rights are upheld.
The council said the closures have far-reaching consequences, including reduced tax revenue, unemployment and disruption of the food value chain.
“This, in turn, compromises consumers’ rights to choose, fair value, information and disclosure,” the council said.
In an interview, development economist at the Africa Centre for Economic Justice, Chenayimoyo Mutambasere, said the lack of policy clarity on the dual currency system was significantly undermining confidence on the market.
“Senior politicians often discuss de-dollarisation, creating uncertainty that hampers long-term planning and investment,” she said.
“The current policy thrusts have exacerbated and failed to mitigate against risks faced by retailers such as currency risk with frequent swings in the ZiG, inflationary pressures eroding local currency earnings.
“Retailers are forced to adjust ZiG prices upward to maintain profitability, which, in turn, spills over into US dollar pricing due to hedging against currency risks.”
