Vusumuzi Dube
Judith Phiri, Business Reporter
THE Government has introduced additional measures to support the survival of the formal sector and ensure the informal sector complies with legal requirements such as tax compliance.
This comes as retailers have raised concerns over the unregulated informal sector, which they argue offers goods at much lower prices, largely because it operates outside compliance with statutory obligations such as registration, taxes, licensing fees and labour laws.
On Thursday, President Mnangagwa took time off his annual leave to chair a session on developments in the economy designed to map the way forward.
The session, which also included the two Vice Presidents and all Economic Ministries, deliberated on measures Government has taken on the economy, and developments in specific economic sectors, including the retail subsector.
In a statement on Friday, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said this culminated in additional measures being proposed.
“The measures implemented so far need to be enhanced. Government, in consultation with business and industry, and the Ministry of Industry and Commerce, is therefore proposing additional measures to address the impact of the informalisation of the economy,” he said.
“Research and consultations indicate that some of the reasons formal businesses are experiencing distress include competition from the informal sector, poor management and poor corporate governance which have resulted in business failure in some instances.”
Prof Ncube said the proliferation of smuggled imports-mostly in reserved sectors-which are being sold exclusively in USD, and the high cost of doing business among others, also contribute to the formal sector challenges.
The Minister said the Government was proposing additional measures to promote formalisation and tax compliance by the informal sector that include mandatory use of point-of-sale machines by all informal traders.
He added: “The additional measures include adoption of international best practise on tax payment, which ensures every eligible taxpayer complies. Level the playing field between formal and informal businesses by discouraging manufacturers from supplying directly to end users and the informal market.”
Prof Ncube said there was also going to be establishment of a Domestic Interagency Enforcement Team to enforce compliance in the informal sector, while also enforcing collaboration between local authorities and Central Government in the licencing and enforcement processes.
Furthermore, the Minister said the Reserve Bank of Zimbabwe (RBZ) will announce additional measures through the Monetary Policy Statement to enhance the formalisation of the market.
He said the Government will also embark on an exercise to streamline regulatory processes, fees and charges, as well as duplication of work by Government Agencies, in order to reduce the cost of doing business.
“There will be enforcement of the provisions of the Indigenisation and Economic Empowerment Act which provides for reserved sectors. As well as the provision of additional incentives to support industry through the Industrialisation Fund over and above the already existing incentives such as duty-free imports Special Economic Zones incentives,” he said.
Prof Ncube said there will be promotion of the procurement of goods and services from local producers and suppliers by Government, to support local industry.
The Minister said the Government was committed to improving the business environment, in order to curb the informalisation of the economy, as the country move towards Vision 2030.
Bongani Ndlovu