Informal sector now a national security threat- Prof Mugano

Renowned Zimbabwean economist Professor Gift Mugano says the informal sector is now a national security threat.

He says the informal sector is killing formal businesses, negatively affecting revenue inflows to treasury and making it virtually impossible for the Government to foster policy compliance.

According to him, the striking examples are as follows:

1) Treasury instituted various tax measures such as presumptive taxes with a view to collect US$1.2 billion from the informal sector but only collected a paltry of US$35 million!

2) The IMTT (2%) used to contribute 16% of total revenue. Recent stats from Treasury shows that the IMTT is now contributing 3.41% of total revenue due to massive tax evasion as the informal sector is avoiding online payments in favour of cash transactions.

3) Informal jobs have shot to 87.7% in December 2023 from 75.6% in 2019, i.e., leaving the formal sector with a 12.3% share of contribution to employment – thus weakening PAYE inflows.

Resultantly, the latest report by AG shows the year – to – date deficit sits at ZiG6.68 billion.

4) The authorities failed to foster compliance on ZiG – they have no capacity to arrest over 7 million people in the informal sector. The informal sector is one of the major killers of our local currency!

We have deep rooted structural challenges which requires a massive paradigm shift in the way we run our economy. We need pragmatism, think tanking and disruptive thinking.

On a daily basis, we talk about politics and ZiG!

Without being prescriptive, when are we going to come up with disruptive strategies aimed at addressing the deep rooted structural challenges affecting our economy?

Yours Truly

The Professor of the Poor & Currency Seer