Tax reforms key to unlock SMEs growth: Mutsvangwa

CLOUDINE MATOLA

Minister of Women Affairs, Community, Small and Medium Enterprises Development, Monica Mutsvangwa, has called for a comprehensive overhaul of the tax regime to better support Zimbabwe’s Small and Medium Enterprises (SMEs). She said the reforms would encourage formalisation and stimulate economic growth.

Speaking at the Zimbabwe Accountants Conference (ZAC) conference in Harare last week—an event hosted by the Public Accountants and Auditors Board (PAAB)—Mutsvangwa stressed that the current tax structure imposes a heavy burden on SMEs, stifling their growth potential.

“It is crucial that we align taxation policies with the realities faced by SMEs. The cost of compliance is simply too high. I spoke to an SME operator who has one to five employees and a turnover of around $30,000, yet compliance costs exceed $8,000. That’s unsustainable,” she said. “We are engaging the Ministry of Finance, the SMEs Chamber, and other stakeholders to push for tailored tax measures. A one-size-fits-all approach no longer works.”

Zimbabwe’s SME sector is estimated to contribute about 40% of the country’s GDP. Mutsvangwa said that appropriate tax reform, coupled with support services, would incentivise more SMEs to formalise their operations, thus broadening the tax base.

She cited the example of Chiredzi, where local authorities allocated land to SMEs, who then constructed permanent structures.

This development, she noted, had made it easier for both local governments and the national treasury to collect revenue.

“Formalisation becomes possible when we first understand the needs of SMEs and offer the right support,” she said.

The minister also highlighted strides being made to improve SME access to funding. She revealed that her ministry had signed several Memorandums of Understanding (MOUs) with major commercial banks to unlock financing for small businesses.

“Historically, banks did not take SMEs seriously as credible borrowers. That is changing. Over the past two years, we have partnered with commercial banks to review business proposals from SMEs and design special funding programs that meet their needs,” she said.

Mutsvangwa commended the Reserve Bank of Zimbabwe (RBZ) for introducing financial strategies aimed at enhancing loan access, particularly for rural entrepreneurs who often lack traditional forms of collateral.

“We are happy that financial institutions now allow SMEs to use alternative forms of collateral. It’s a game-changer, especially for rural communities,” she said.

Looking ahead, Mutsvangwa said the empowerment of SMEs is central to Zimbabwe’s Vision 2030, which seeks to transform the country into an upper-middle-income economy.

“Micro, small, and medium enterprises are the backbone of our economic transformation. They contribute significantly to GDP, employment creation, and income generation. More importantly, they are incubators for the middle class, which is essential for political stability and national prosperity,” she said.