Mnangagwa commits to ease formalisation costs for SMEs

PRESIDENT Emmerson Mnangagwa Friday committed to ease formalisation costs for the Small to Medium Enterprises (SMEs) in a bid to assist them graduate into larger entities.

Informalisation in Zimbabwe represents over 76% of total economic activity, driven primarily by currency instability, high formal taxation, and job scarcity. The Zimbabwe National Statistics Agency (Zimstat) reports that the vast majority of business establishments now operate outside formal regulatory and tax structures.

Economic experts view rapid informalisation as an indication of deeper economic problems affecting business existence. They argue that the benefits likely to be realized under informality are very minimum for both the citizens and the taxpayer.

Several researchers in Zimbabwe have established the avoidance to comply with tax regulations as chief among the causes prompting informal players to formalize.

Speaking at the Inaugural National MSME and Cooperatives Indaba, Friday, Mnangagwa pledged to make formalisation costs lower for Zimbabwe.

“Formalisation remains a critical national priority. Hence, the government has embarked on a comprehensive regulatory reform program aimed at easing the cost of doing business and slashing compliance burdens. In return, I urge our entrepreneurs to embrace formalisation and become active participants in building a stronger and more prosperous Zimbabwe,” he said.

Ultimately, he underscored that enterprises must graduate from micro to small, small to medium, and medium to large-scale enterprises.

“Through hard honest work, ingenuity, innovation, focus and zeal there is no limit to what can be achieved by you, our SMEs and cooperatives,” Mnangagwa said.

Analysts contend that the failure of formalisation in Zimbabwe stems from prohibitive regulatory costs,  macroeconomic instability, policy direction unpredictability and a policy approach that relies on punitive enforcement rather than supportive incentives.

Currency distortions and overvalued exchange rates are also some of the barriers they believe need urgent resolve.

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