Budget to overhaul operationsof informal sector, says Minister

Zvamaida Murwira

Senior Reporter

THE 2025 national budget makes a determined effort to formalise the informal sector by having large presumptive taxes, almost always far higher than a formalised business the same size would have to pay, as the only alternative to registration with the tax authorities.

This is meant to incorporate micro and small enterprises into the mainstream economy through transformative measures and facilitate migration towards formalisation of the informal sector, Women Affairs, Community, Small and Medium Enterprises Development Minister Monica Mutsvangwa told a post-budget meeting for micro, small and medium enterprises yesterday.

Several SME representatives gathered in Harare to discuss the importance of their sector to the 2025 national budget presented by Finance, Economic Development and Investment Promotion Minister Mthuli Ncube last week where he unveiled several fiscal measures meant to enhance economic growth.

Minister Mutsvangwa said her ministry had been inundated by SMEs keen to understand the implications of the budget on their industry.

“This demonstrates that MSMEs would like to align their business operations with the requirements and expectations of the Government. The budget as pronounced, entails incorporating micro and small enterprises into the mainstream economy, as well as enhancing efficiency in tax administration, thereby promoting taxpayer compliance,” said Minister Mutsvangwa.

“You will agree with me that the proposed measures in the budget statement are transformative and all encompassing towards formalisation of the informal sector to enhance effective and efficient domestic resource mobilisation. This ushers in several benefits chief among them the establishment of formal jobs and broadening of the tax base. This will also allow MSMEs to have access to finance, and infrastructure as well as enhance market penetration”.

She noted that the collective effort shown by MSMEs in convening the seminar underscored an enduring commitment to fostering sustainable growth and development of the sector.

 “This shows that our MSMEs and co-operative organisations, institutions of higher learning and research bodies have come of age and are taking a leading role in ensuring that businesses are in sync with topical issues affecting their growth and resilience,” the Minister said.

“This is our first engagement after the presentation of the 2025 budget and it is my fervent hope that similar programmes will be rolled out in other provinces.”

Minister Mutsvangwa said the sector played an integral role in the growth of the economy.

“In pursuit of the achievement of Vision 2030 to attain an upper middle income society, the MSMEs lie at the core of the vision as the sector has become a major contributor to economic growth indicators such as gross domestic product, employment creation, innovation and income generation,” she said.

“Statistics highlighted in the 2021 MSME show phenomenal growth of the sector with a contribution of more than 60 percent to the GDP. The same survey also depicted that approximately 4,1 million individuals were operating 3,4 million SMEs.”

Zimbabwe Building Contractors Association chief executive officer, Dr Tinashe Manzungu, urged SMEs to be vigilant and work hard. He said SMEs had a lot to learn from the construction industry, especially on discipline as an instrument of growth.

“There is a need for order and discipline. In our industry we have categorised our members in terms of size and that will determine the threshold of a tender one can participate in. A member in category B for example, cannot bid for a tender of say US$10 000, a preserve of those in Grade H for example,” said Dr Manzungu.

Economic analyst Mr Persistence Gwanyanya said there was need to focus more on the economic environment, rather than how much money would have been allocated by Treasury.

“The progress relating to growth and stability has not been what has been anticipated, but this has largely been because of external factors. Clearly, the budget will not meet the expectations of the generality of people in the economy, including SMEs. But relying on the increased budget vote is ill-advised. Government should create an environment that is supportive of people,” said Mr Gwanyanya.