Harare – In a bid to formalise the informal sector, increase tax compliance, and stabilise the struggling economy, the Zimbabwean government has mandated the adoption of electronic payment systems for all businesses, including Micro, Small, and Medium Enterprises (MSMEs). The announcement was made on Tuesday by Information Minister Jenfan Muswere, outlining a series of short-term interventions approved by Cabinet.
Under these reforms, vendors are now required to register with local authorities, open bank accounts, and acquire Point of Sale (POS) machines. The government aims to ensure that “every eligible taxpayer pays tax” through this compulsory payment system, enforced by a “Domestic Inter-agency Team” tasked with ensuring informal sector compliance with tax laws, according to Muswere. The measures were presented by Finance Minister Mthuli Ncube.
These changes are part of a broader effort by President Emmerson Mnangagwa’s administration to address the challenges facing the Zimbabwean economy, which has been plagued by currency instability, company closures, and a shrinking formal sector.
The government has also endorsed refinements to the foreign exchange system, including reducing the foreign currency retention rate for exporters from 75 percent to 70 percent and lowering bank charges and minimum deposit interest rates.
The Reserve Bank of Zimbabwe governor, John Mushayavanhu, has also issued a new directive requiring companies listed on the Zimbabwe Stock Exchange to report their financial results in the ZiG currency, the country’s struggling local unit.
“Given the need to ensure comparability of financial statements, the Reserve Bank, following consultations with the Public Accountants and Auditors Board (PAAB), requires that all entities adopt a common presentation currency, ZiG, for reporting purposes, with immediate effect, including for the 2024 audited financial statements,” Mushavanhu said last week.
While listed companies, such as Delta Corporation, have noted that more than 70% of transactions were in US dollars, Mushayavanhu said the requirement to report financials in local currency was “consistent with the increase in the number and value of transactions settled” in ZiG. Zimbabwe introduced the ZiG currency in April last year.
In addition to these short-term measures, the government has outlined medium-term interventions, including streamlining regulatory processes, improving electricity supply through power plant construction, enforcing local procurement policies, and incentivizing alternative energy use.
To further support MSMEs, the government has pledged to create designated workspaces, simplify taxes, strengthen business development, and ban the importation of second-hand goods.
“These measures will provide the necessary support for MSMEs to transition into formal businesses, addressing long-standing challenges in the economy and fostering sustainable growth,” Muswere said.
However, the government’s recent decisions have faced criticism from various sectors. The reduction in the foreign currency retention rate for exporters has raised concerns about the impact on businesses that rely heavily on foreign currency for their operations.
The Horticultural Development Council said the lowering of the forex retention threshold from 75% to 70% “presents significant challenges for the horticulture sector that relies heavily on foreign currency earnings” to sustain production.
“The horticulture industry operates within tight cost margins, with most inputs—such as power, fuel, seed, fertilisers, packaging, and freight—denominated in US dollars,” said Linda Nielsen, CEO of HDC. “The reduction in forex retention means exporters will have less hard currency to meet these critical expenses, placing strain on cash flow and investment in the sector.”
The Confederation of Zimbabwe Retailers has also expressed concerns about the impact of the reduced foreign currency retention threshold on the retail and wholesale sector.
“Exporters, who also supply goods to local formal retailers and wholesalers, rely heavily on foreign currency for key inputs in their various fields,” said Denford Mutashu, head of the Zimbabwe retailers grouping. “With reduced forex retention, these exporters may struggle to meet their USD-denominated expenses, leading to higher production costs and possibly further dollarising supply chains.”
Zimbabwean retailers have been among the most affected by the country’s currency uncertainty, with many wholesale and retail companies folding up, rationalising operations and destocking.
