The Government of Zimbabwe estimates that more than three-quarters of economic activity takes place in the informal sector, depriving the State of much-needed tax revenues, according to the results of the country’s first economic census, Bloomberg reported on Wednesday (24 July).
Although the high level of informality has “increasingly become a significant source of livelihood,” its contribution to state revenues remains minimal due to non-compliance with the formal tax system, said the Zimbabwe National Statistics Agency in a report released in the capital, Harare, on Wednesday.
The growing informality is a “critical risk” to the economy, as less than a quarter of formal businesses bear the tax burden, according to the Confederation of Zimbabwe Industries (CZI), the country’s largest industrial body.
“Formal businesses are being squeezed,” said MacDonald Mutengo, CZI’s lead researcher, adding that “they are not making profits and are highly regulated.”
The informal sector has flourished as formal jobs disappeared due to decades of economic mismanagement that led to repeated currency collapses and hyperinflation crises. The census surveyed 204,798 businesses across various fields, including financial services and construction. The wholesale and retail trade sector accounted for the largest share of economic activity, contributing 73%, followed by manufacturing at 8%.
The province of Bulawayo registered the highest concentration of formal businesses, at 40%, compared to less than 30% in other regions.
Source: Diário Económico
