Online Reporter
Michael Tome
Business Reporter
THE Confederation of Zimbabwe Industries (CZI) has commended the Government for implementing several economic reforms that have bolstered macroeconomic stability and restored a measure of predictability in the economy.
CZI president Mr Mucha Mkanganwi said this while addressing delegates at the Zimpapers and Confederation of Zimbabwe Industries (CZI) organised 2026 post-Budget breakfast meeting held in Harare this morning.
He said the disciplined fiscal management, tight monetary policies and streamlined business regulations announced recently had stabilised the economy, a development not seen in Zimbabwe in more than four decades.
The Government has made significant efforts to strengthen public finance management and maintain fiscal discipline, including by ending the use of the central bank window to plug the Treasury’s fiscal holes.
Tight monetary and fiscal policies have stabilised the exchange rate and brought down inflation, which has positively impacted business confidence.
Zimbabwe has seen a massive drop in inflation and exchange rate stability since introducing the new Zimbabwe Gold (ZiG) currency in April last year, a gold and foreign currency anchored unit of account, which replaced the inflation-weary Zimbabwe dollar.
The annual ZiG inflation rate has plunged from 106 percent in June this year to 19 percent in November, while the monthly rate has averaged 0,5 percent since February this year, reflecting anchored inflation expectations.
According to Mr Mkanganwi, there have been marked improvements on the ease of doing business front, which renewed business confidence and supported industrial productivity.
“We are encouraged by the Government’s commitment to creating a predictable and supportive economic landscape. These measures are beginning to yield positive results for the industry,” said Mr Mkanganwi.
He added that macroeconomic stability had improved growth prospects across key economic sectors, with industry now looking to the next phase of reforms, including the deepening and modernisation of financial markets to support long-term investment.
“If you are able to grow GDP (gross domestic product) and even double it in five or six years, as we have seen in some projections, that is significant for the economy,” he said.
He also noted that inflation, long regarded as one of the biggest threats to business planning in the country, had been reduced to single-digit levels, a development he described as “outstanding” given Zimbabwe’s volatile economic history during the last four decades.
“I started working in the early 90s. I do not remember a time when inflation was in single digits. I congratulate the Government for its efforts to get us here. Inflation below five percent is quite exceptional.”
Mr Mkanganwi also commended ongoing efforts to enhance the ease of doing business, particularly reforms spearheaded by the Ministry of Finance, Economic Development and Investment Promotion, in collaboration with the World Bank and key private-sector players.
He commended the strengthening of the business-state partnership, describing it as one of the most constructive platforms for policy dialogue in recent years.
“I have been involved in advocacy for many, many years, and I can say without hesitation that we do have a listening Government. We have access, we have robust conversations, and we look forward to continuing that engagement,” he said.
CZI also indicated that the industry remains optimistic that sustained reform will anchor long-term stability, unlock fresh investment, and support Zimbabwe’s ambition to accelerate economic growth.
Speaking at the same event, tax experts also applauded the potential positive impact of the Treasury’s decision to raise the Value Added Tax (VAT) rate by 0,5 percentage points, saying the move will deliver an immediate boost to fiscal inflows.
However, on the other hand, they noted that the VAT increase may inadvertently cause a slight increase in business operating costs. While economists feel the added cost to business may impact competitiveness and, to some extent, consumer spending patterns, the VAT adjustment will offset the negative impact of the reduced intermediated money transfer tax (IMTT) cost on the fiscus.
The IMTT is a tax levied on electronic financial transactions in Zimbabwe. It was introduced in 2018 and is a significant source of Government revenue and is collected by the Zimbabwe Revenue Authority (ZIMRA).
Zimbabwe had to devise innovative ways to support domestic resource mobilisation to finance competing public expenditure, as it was blocked from accessing concessionary funding from global lenders due to long-standing loan arrears and Western sanctions.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube, in his 2026 national budget proposals delivered on November 27, 2025, reduced the IMTT rate by 0,5 percentage points to 1,5 percent to reduce its negative impact on business operating costs.
The marginal VAT adjustment to 15,5 percent from January 2026 will thus plug the void created by the IMTT reduction on fiscal revenue inflows, helping maintain balance in the Treasury’s already stretched funding kitty.
Associate director for tax advisory & consulting at Axcentium, Harriet Thompson, in her presentation at the 2026 post-budget breakfast meeting this morning, said the VAT adjustment would strengthen the Treasury’s revenue inflows as the tax is collected upfront.
Ms Thompson noted that VAT provides a predictable and steady stream of funds to the fiscus to support public expenditure. VAT remains one of Zimbabwe’s top contributors to tax revenue, and the authorities believe adjusting the VAT is necessary to shore up fiscal space amid rising expenditure demands.
However, this comes at a time when businesses are already grappling with higher production and import costs, and may view the VAT hike as adding a layer of pressure on business costs.
Companies now face a difficult decision of either absorbing the additional cost or passing it on to consumers. Zimbabwe’s new VAT threshold, however, remains with the regional benchmarks, given that South Africa’s VAT stands at 15 percent, while Botswana charges 14 percent.
“Increase in VAT Rate is going to immediately boost revenue to the fiscus as VAT is collected upfront,” Ms Hariet said.
“However, businesses have a choice to absorb the cost or pass it on to consumers.
While the VAT increase provides short-term fiscal relief, authorities will need to balance revenue mobilisation with competitiveness and consumer welfare to avoid widening the gap between the formal and informal economy.
Minister Ncube told the 2026 post-budget breakfast meeting that the decision to hike VAT would not impact prices for at least 14 basic commodities, cushioning the vulnerable from any potential price increases.
Basic foodstuffs are zero-rated for VAT in Zimbabwe and these include mealie-meal (corn flour), sugar, milk, meat (including beef, pork, and poultry), salt (in packs of less than 5kgs), bread, flour (wheat or meslin), cooking oil (specific types like soya-bean, groundnut, sunflower, cotton-seed, and maize oil), eggs.
Also zero-rated are key agricultural inputs such as fertiliser, seeds and plants, pesticides, animal feed and animal remedies, tractors and other specified agricultural machinery/equipment, live animals (cattle, pigs, goats, sheep) and bovine semen.
