Online Reporter
Debra Matabvu
FUEL smuggling in Zimbabwe is no longer just a law-enforcement issue or a matter of lost tax revenue.
Analysts and anti-corruption watchdogs say the growing trade points to a wider network of illicit financial flows that are draining critical public funds.
Recent trends illustrate how regulatory gaps, untraceable cash transactions and market distortions have transformed Zimbabwe’s fuel sector into a pathway for financial leakage.
Zimbabwe Energy Regulatory Authority (Zera) CEO Mr Edington Mazambani said the country has witnessed an increase in fuel smuggling over the past few years.
“This year, it (fuel smuggling) seems low compared to last year (2024) and the year before (2023),” he said.
“We would detect this through price differentials; for example, a service station would sell petrol at US$1,29 against the regulated price of US$1,49.
“This raised suspicions, with investigations revealing smuggling.
“This year, under-pricing is not as prevalent but that does not mean fuel smuggling is not taking place.”
Mr Mazambani said the fuel is smuggled through porous borders.
He called on Government to ensure there is tight security at the ports of entry.
In February 2025, the Zimbabwe Republic Police recovered over 26 000 units of smuggled vehicle brake fluid at a local auto shop in Harare.
The contraband, valued at tens of thousands of US dollars, had evaded formal customs checks through the country’s borders, particularly those shared with South Africa and Botswana.
While seemingly minor, this bust points to a broader systemic problem: the smuggling and underreporting of vehicle fuels and oils enable IFFs.
Fuel stations on the rise — But at what cost?
Over the past decade, Zimbabwe has witnessed an explosive growth in the number of fuel service stations.
According to the Harare Retail Overview 2024 report by Injecta Analytics, Zimbabwe now has 1 085 fuel stations for a registered vehicle population of just under 1,5 million.
This figure is disproportionately high compared to South Africa, which has 4 600 stations serving approximately 11,5 million vehicles.
In 2012, Zimbabwe had just 299 stations.
As of March 2024, fuel accounted for 21 percent of the country’s total imports.
However, this rapid growth in the sector has raised red flags.
The rapid expansion, attributed to liberalised fuel imports and deregulation, has raised suspicions among authorities and financial experts that many of these stations may be involved in illicit trade, tax evasion and money laundering.
A black-market ecosystem
Statutory Instrument (SI) 150 of 2024, which mandates the blending of ethanol with petrol, has inadvertently fuelled the black-market trade in unblended fuel.
Some motorists believe unblended fuel performs better or lasts longer, increasing demand for smuggled alternatives.
This has created fertile ground for criminal networks that import unblended fuel from neighbouring countries and sell it at inflated prices on the street, often in five-litre containers without any safety or regulatory oversight.
As of April 2025, street dealers sold black-market diesel for US$7,50 and petrol for US$6,50 per five litres.
This is significantly cheaper than the pump prices of US$1,52 and US$1,53 per litre, respectively.
“The fuel lasts longer, so that is why we buy from the street dealers,” said a commuter omnibus driver in Harare.
US dollar cash economy fuels opacity and illicit flows
Zimbabwe’s increasing dependence on US dollar cash transactions — especially in sectors such as fuel and vehicle oils — has become a key enabler of illicit financial flows (IFFs).
Large financial activity remains off the books in an economy where many businesses, particularly fuel stations, transact almost entirely in US dollar cash and often refuse electronic payments.
This opacity facilitates tax evasion, underreporting of revenue and laundering of proceeds from smuggling.
The absence of digital payment records weakens the Government’s ability to monitor financial movements and enforce tax compliance.
The United Nations Economic Commission for Africa (UNECA, 2020) notes that economies reliant on physical cash are more susceptible to IFFs because of limited transaction traceability.
Furthermore, a report by Global Financial Integrity (2021) identifies Zimbabwe as one of several African countries where cash-based sectors — including mining and fuel — are major contributors to IFFs.
This unmonitored flow of capital deprives Zimbabwe of revenue that could otherwise support social services, infrastructure development and economic reform.
Transit loophole: A gateway to smuggling
Fuel entering Zimbabwe enroute to other countries is typically exempt from domestic taxes.
However, authorities have uncovered schemes where tankers supposedly “in transit” instead offload their fuel illegally within Zimbabwe’s borders.
Once diverted, the fuel enters the black market, allowing smugglers to avoid local and transit-related taxes.
An official from the Zimbabwe Revenue Authority (Zimra) has acknowledged the extent of the issue. “The smuggling is prejudicing the country millions of dollars in tax evasion,” he said.
“Any revenue due to the State will be recovered, and where prosecutions are required, these will also be pursued.”
Government Interventions
Government in 2017 introduced the Electronic Cargo Tracking System (ECTS) used on fuel trucks to track and monitor fuel in transit.
However, reports indicate that some fuel truck drivers have been conniving with staff at the country’s borders to temper with the ECTS and smuggle fuel into the country.
Authorities have, however, has been clamping down on this practice. In 2023, former Finance and Economic Development Deputy Minister Terence Mukupe was sentenced to three years in prison after found guilty of importing 138 000 litres of diesel from South Africa and selling it in Zimbabwe without paying duty.
Digital payments missing in action
A major red flag in Zimbabwe’s fuel industry is the avoidance of electronic payment options.
Most service stations deal exclusively in cash, and the refusal to adopt digital transactions limits financial transparency. This makes it nearly impossible for tax authorities to trace income and enforce compliance.
Moreover, it encourages underreporting.
Economist Persistent Gwanyanya, a Reserve Bank of Zimbabwe’s Monetary Policy Committee member, expressed concern over this loophole.
“The proliferation of service stations and the exclusive use of US dollars in cash transactions pose a huge challenge to money laundering,” he said.
“Government has put in place various measures which include mandatory tax paying for fuel tankers in transit. However, the issue of fuel smuggling has not stopped and fuel is being sold on the black market.”
Environmental and safety risks
Beyond economic concerns, the unchecked growth of fuel stations — some of which operate without proper licences — has raised alarm among residents.
In some Harare suburbs, up to five stations exist within a 1,13km radius.
Spills and fuel storage near homes present significant environmental and safety hazards.
In response to these growing concerns, the Government is considering fuel import and regulation reforms.
This includes tighter controls on transit fuel, enhanced licensing oversight and potentially mandating digital payment systems to improve transparency and reduce IFFs.
Until then, Zimbabwe’s fuel economy remains a powerful but porous channel for illicit financial flows, costing the nation millions and undermining development goals.
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