Online Reporter
Tapiwanashe Mangwiro
The Competition and Tariff Commission (CTC) has called on the Government to institute policy reforms to level the playing field between the formal and informal sectors, warning that uncontrolled informalisation creates unfair competition, kills formal employment and erodes the national tax base.
In a speech delivered at the 2025 National Tariff and Competition Conference in Harare, CTC economist Mr Tatenda Mapuranga said the imbalance between regulated and unregulated businesses has now reached a critical stage, with far-reaching implications for the country’s industrial recovery and fiscal stability.
He believes that Zimbabwe’s economic structure is one defined by a marked structural dualism, a shrinking regulated formal sector and an expanding unregulated informal sector.
“According to the 2025 Economic Census by ZimStat, 76,1 percent of establishments sampled were largely informal.”
“That statistic alone shows the extent to which informalisation has taken root. What we have now is an economy that largely operates outside the reach of regulation,” Mr Mapuranga said.
He explained that informal traders thrive because they face few compliance requirements, giving them a strong cost advantage over formal enterprises.
“The reality is that informal operators function outside the burden of statutory obligations such as VAT, PAYE, and licensing fees,” he said.
“They can offer cheaper prices and operate with greater flexibility, while formal businesses are weighed down by compliance costs, audits, and taxes.”
The CTC’s case study on the fast moving consumer goods (FMCG) sector illustrated how this imbalance plays out in the market. Informal retailers are selling basic commodities at prices far lower than formal outlets, in some cases, more than 150 percent cheaper.
“For instance, a 2kg washing powder sells for about US$3,50 at informal markets, which is roughly 160 percent cheaper than what formal retailers charge,” said Mr Mapuranga, citing 2025 price data from Zimpricecheck.
He said that such disparities made it nearly impossible for compliant retailers to compete, as taxes, wages, and formal lease agreements constituted significant costs.
“What this means is that our formal retailers, who pay taxes and employ people under proper contracts, are fighting an uneven battle,” he said.
“The market is rewarding non-compliance over compliance.”
