Shock admission as minister lifts lid on economic burden
Finance Minister Mthuli Ncube has admitted that some businesses in Zimbabwe are only profitable when they break the law — revealing a startling truth about the country’s regulatory environment.
Presenting the 2025 Mid-Term Budget Review to Parliament on 31 July 2025, Ncube said:
“We have a situation where in some sectors, players or private players are only profitable if they don’t comply with regulatory requirements.
“If they comply, they make losses and that situation needs to be changed.”
His unscripted remarks confirmed what many business owners have long complained about — that excessive fees, taxes and bureaucratic red tape are driving firms into the shadows.
Informal sector booming as formal space shrinks
The comment comes just days after the Zimbabwe National Statistics Agency (ZIMSTAT) announced that the informal sector has grown from 60% to 76.1%, a 16.1 percentage point increase.
This trend points to growing economic strain as more companies flee the formal economy. According to the Reserve Bank of Zimbabwe, the informal sector is now generating around US$14.2 billion annually, almost matching the formal sector — all while avoiding the mountain of legal requirements.
Ncube said government was aware of the burden:
“During the second half of the year, government will be seized with the implementation of business reforms, targeting the reduction of fees and charges as well as regulatory requirements.”
He added that agriculture would be the first sector to be reviewed “in a week or two”.
Businesses punished for doing things by the book
Economists and business organisations have repeatedly raised concerns about over-regulation. Speaking on the issue, economist Chenayimoyo Mutambasere told NewsDay:
“They are saying it’s expensive to do business in Zimbabwe, the compliance routes are too expensive.”
Research by local fact-checking organisation ZimFact earlier this year found that nearly 50 different taxes exist in Zimbabwe, spread across acts like the Finance Act, Income Tax Act, and Customs and Excise Act.
Despite this, the Treasury is still pushing ahead with efforts to widen the tax net. Ncube stated:
“Proposed tax-related interventions will be critical in funding key developmental programmes… and responding to taxpayers’ concerns in an evolving economic landscape.”
He acknowledged that the tax system was being reviewed:
“Government will continue to review the existing tax system with a view of reducing reported and observed distortions… This process will benefit from ongoing consultations across the country.”
Government spending for the first half of the year reached ZiG98 billion (US$3.7 billion), missing the ZiG127.5 billion (US$3.5 billion) target. Ncube said the objective is to bring revenue collection closer to international standards:
“The goal is to attain a revenue target within the median band of between 22% and 25% of GDP for middle-income countries by 2030.”
But for now, companies struggling under the weight of compliance costs will have to wait for reforms to kick in.
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The post Companies In Zimbabwe Only Profitable When Breaking The Law, Admits Mthuli Ncube appeared first on iHarare News.