US$2bn vanishes through financial leakages

 LIVINGSTONE MARUFU

Zimbabwe could be losing as much as US$2bn annually to financial leakages, primarily driven by corruption and illicit activities at its porous borders, according to new findings and expert commentary.

Transparency International Zimbabwe (TIZ) released a report detailing how entrenched corruption and bribery—especially at ports of entry—are costing the nation heavily.

“Financial leakages at Zimbabwe’s ports of entry are estimated to cost the country between US$1.8bn and US$2bn annually. These leakages occur primarily due to corrupt practices, including bribery among customs officials, which diverts funds that could be used for national development,” the report states.

Local businesses also decried the corrosive effect of corruption on the economy. Christopher Mugaga, CEO of the Zimbabwe National Chamber of Commerce (ZNCC), said fiscal losses tied to corruption range between US$1.2bn and US$1.5bn.

“These losses arise from tender inflation, tax evasion, and inefficient use of public resources, which severely impact the government’s financial capacity,” Mugaga said.

Former finance minister Tendai Biti painted an even grimmer picture, asserting that the country could be losing over US$4bn annually through various forms of smuggling and illicit trade.

“We are losing US$1bn from tobacco smuggling, US$1bn from gold smuggling, and we are now possibly losing US$2bn on lithium alone,” Biti said.

“What we are losing in terms of illicit financial flows is more than what we get from diaspora remittances, which stand at US$1bn, and it’s certainly more than what we receive in foreign aid and direct investment—around US$200bn.”

The revelations come against the backdrop of Zimbabwe’s worsening score on the global Corruption Perceptions Index (CPI). The country dropped from 149 to 157 out of 180 countries, reflecting growing concerns over public sector corruption.

TIZ Executive Director Tafadzwa Chikumbu attributed the decline to several high-profile corruption scandals.

“Zimbabwe dropped by three percentage points to 21 from 24 a year ago. This was mainly due to the increase in corruption cases, with the ‘Gold Mafia’ and ‘Goatsgate’ scandals attracting international attention and undermining the country’s credibility in fighting corruption,” Chikumbu told Business Times.

He noted that the CPI does not measure all forms of corruption, such as money laundering or foreign bribery—areas where Zimbabwe also falls short. A key institutional weakness, he added, is the lack of judicial independence.

“Shielding the justice system from interference is paramount. Promote merit-based rather than political appointments and ensure the judiciary is staffed with qualified personnel and properly resourced,” Chikumbu said.

“Transparency is key—make legal data on judgments, settlements, and procedures publicly accessible.”

Chikumbu also called for international cooperation in prosecuting grand corruption cases where local justice systems are unwilling or unable to act.

“Foreign jurisdictions with stronger rule of law must step in, using tools like universal jurisdiction and legal standing for public interest organisations to pursue justice,” he added.

Economist Professor Tony Hawkins warned that Zimbabwe’s corruption ranking is actively deterring credible investment while encouraging shady players.

“Such a poor corruption ranking will certainly deter legitimate investment while attracting corrupt entities, both local and foreign. We’re already seeing this with low-quality foreign investments and a rise in informal businesses that evade tax and regulation,” Hawkins said.

“High levels of corruption are tightly correlated with weak income levels, high inflation, and failing public institutions. It also aligns closely with authoritarian governance.”

Economic analyst Victor Bhoroma echoed these concerns, stressing that corruption undercuts the country’s efforts to reform its business environment.

“Despite progressive economic policies, corruption severely tarnishes the country’s image. It undermines property rights and the rule of law—foundational elements of a functioning investment climate,” Bhoroma said. “Capital is shy; it goes where it feels safe.”

He added that corruption drains public finances, depriving the nation of tax revenue, savings, and investment capital.

“Corruption diverts public resources to private pockets, stunting public sector development. This weakens the state and leaves citizens without improved living standards, resulting in stagnant or even negative economic growth,” he said.

Another economist Vince Musewe went further, arguing that corruption undermines the very fabric of society.

“Corruption destroys the value of work ethic and ambition. It creates a false sense of achievement for the corrupt while eroding virtues, aspirations, and economic development,” Musewe said.

“Only radical and somewhat brutal transformation can save the country.”