Govt moves to ease formal business struggles

CLOUDINE MATOLA

The government has announced a series of measures to address challenges plaguing the formal business sector, which has been struggling with operational difficulties, Business Times can report.

This intervention follows a wave of closures and downsizing among formal businesses, driven by various economic pressures.

During a post-Cabinet briefing this week, Information Minister Jenfan Muswere outlined key reforms, including the mandatory use of electronic payments, simplified foreign exchange management, reductions in business costs, and stronger support for local industries.

Muswere emphasized that all businesses will be required to adopt electronic transactions as part of short-term economic stabilization efforts.

“Following the presentation of the Monetary Policy Statement by the Reserve Bank of Zimbabwe on 6 February 2025, Cabinet observed several factors negatively impacting the economy. To address these, the government has introduced a combination of short- and long-term interventions aimed at stabilizing the economy and supporting Micro, Small, and Medium Enterprises (MSMEs),” he said.

Among the short-term measures, Muswere highlighted:

• The introduction of a compulsory tax payment system to ensure that every eligible taxpayer contributes.
• The establishment of a Domestic Inter-Agency Team to enforce tax compliance within the informal sector.
• A new framework requiring all vendor licensing by local authorities to be coordinated with the central government.
• A mandate for vendors to open bank accounts and be issued Point of Sale (POS) machines upon registration.

Beyond electronic payments, the government is also refining foreign exchange policies and easing business costs.

“Cabinet has endorsed improvements in the foreign exchange management system, including reducing the foreign currency retention level for exporters from 75% to 70%, lowering bank charges, and introducing minimum deposit interest rates,” Muswere said.

In addition, the government is adopting medium-term measures such as:

• Easing the cost of doing business by cutting fees, streamlining processes, and eliminating bureaucratic duplication among government agencies.
• Strict enforcement of the Indigenisation and Empowerment Act, which reserves certain economic sectors for locals