WATCH: Industry players welcome move to regulate informal sector

02 Feb, 2025 - 00:02 0 Views
WATCH: Industry players welcome move to regulate informal sector Mr Louis Herbst

Judith Phiri, Business Reporter

INDUSTRY players have commended the Government for implementing additional measures aimed at supporting the formal sector’s survival while ensuring the informal sector adheres to legal requirements, including tax compliance.

The move comes amid growing concerns from retailers, who argue that the unregulated informal sector enjoys an unfair advantage by offering goods at lower prices, primarily due to its non-compliance with statutory obligations such as registration, taxes, licensing fees and adherence to labour laws.

In a statement on Friday, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube revealed the additional measures being proposed to enhance the current ones some of which were being implemented through the 2024 Mid-Term Budget and Economic Review and the 2025 National Budget to improve formalisation.

Ms Sithabile Bhebhe

Some of the additional measures included mandatory use of point-of-sale machines by all informal traders and the adoption of international best practise on tax payment, which ensures every eligible taxpayer complies.

The Government has also discouraged manufacturers from supplying directly to end users and the informal market, as well as establishment of a Domestic Inter-agency Enforcement Team to enforce compliance in the informal sector, among others.

Zimbabwe National Chamber of Commerce (ZNCC) Matabeleland Chapter past vice-president and businessman, Mr Louis Herbst said the additional measures were a welcome development.

“Recent dialogue spearheaded by President Mnangagwa underscores a pivotal moment for Zimbabwe as the Government tackles the urgent issue of informalisation within vital sectors, particularly retail and wholesale,” he said.

“The rising tide of informalisation poses significant threats, undermining fiscal discipline and regulatory compliance, ultimately jeopardising the integrity of our economic framework and exposing a venerability within our economy.”

He said the Government’s classification of specific goods as “deemed smuggled” unless accompanied by proof of customs duty payment is a necessary and long-awaited intervention to combat tax evasion and safeguard local producers.

Mr Herbst said mandating the use of point-of-sale (POS) machines transactions for MSMEs will not only enhance transparency but also cultivate a more structured financial ecosystem.

“However, these commendable measures must be complemented by rigorous enforcement and robust support mechanisms to ensure their efficacy.

“While the current initiatives are commendable, the proposed additional measures reflect a profound understanding of the challenges at hand. The requirement for all informal traders to utilise POS systems is crucial, as it fosters accountability and integrates informal businesses into the formal economy,” he said.

Bulawayo Chamber of SMEs vice-chairperson, Ms Sithabile Bhebhe said embracing international best practices in tax compliance will further instil a culture of transparency and responsibility across all sectors.

Mthuli Ncube donation

She said: “Equally important is the imperative to level the competitive landscape between formal and informal enterprises. By discouraging manufacturers from circumventing traditional supply chains, the Government can help restore equity in market competition.”

Ms Bhebhe said the measures will go a long way in bringing about sanity and protect formalised SMEs and businesses that have long been at the mercy of the informal sector.

She said the establishment of a Domestic Inter-agency Enforcement Team will enhance monitoring and enforcement capabilities, ensuring that policies are not merely theoretical but effectively operationalised.

Ms Bhebhe added: “We are also happy that there will be collaboration between local authorities and Central Government in licensing and enforcement processes. Streamlining these operations will mitigate bureaucratic inefficiencies and foster a more conducive business environment.”

The Government has reaffirmed its commitment to improving the business environment, in order to curb the informalisation of the economy, as the country move towards Vision 2030.

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