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Broadening the Base : Why Zimbabwe’s SME Strategy Could Define Fiscal Sustainability

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6 months ago

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Broadening the Base : Why Zimbabwe’s SME Strategy Could Define Fiscal Sustainability

By Staff Reporter

For decades, tax authorities across Southern Africa have grappled with the same paradox: economies dominated by small and medium enterprises (SMEs) that generate substantial economic value, yet contribute disproportionately little to national tax revenues.

In Zimbabwe, where informal and small-scale businesses now account for more than 60 percent of gross domestic product, that challenge has moved to the centre of fiscal policy — and with the 2026 National Budget, government is signalling a decisive shift in how it intends to close the gap.

At the heart of this strategy is a clear directive to the Zimbabwe Revenue Authority (ZIMRA): make tax compliance simpler, fairer and more accessible for SMEs — not as a concession, but as a growth strategy.

Government has directed the ZIMRA to develop tailored, simplified strategies to bring small businesses and start-ups into the tax net in a bid to widen the tax base and meet ambitious revenue targets.

The policy push comes as Treasury sets its sights on US$7.57 billion in revenue for 2026, up from about US$6.2 billion previously, amid tightening fiscal conditions and rising demand for public services.

The medium-term revenue target stands at US$7.2 billion by end-2025, underscoring the urgency of broadening the tax base rather than increasing the burden on existing compliant taxpayers an uphill battle as a significant portion of economic activity remains outside the tax net.

Deputy Minister of Finance, Mr Kudakwashe Mnangagwa, framed SME compliance as both an economic and civic imperative and urged ZIMRA to widen the tax base and include the SME sector which accounts for more than 60% of Gross Domestic Product.

He said every tax payment is an act of patriotism, essential for national development in line with Vision 2030.

“ZIMRA must develop sector-specific strategies to bring start-ups, macro-operators, and small to medium enterprises into voluntary compliance and compliance must be fair, simple and enabling, never a barrier to innovation or enterprise,” Mr Mnangagwa said during the recent ZIMRA Taxpayer Appreciation Awards

“Taxes should create space for businesses to thrive, start-ups to grow and creativity to flourish.”

His remarks echo a growing regional consensus that coercive enforcement alone cannot sustainably integrate informal businesses into the tax system.

Zimbabwe’s SME sector has grown rapidly over the past decade, driven by de-industrialisation, demographic pressure and the expansion of informal trade.

According to the 2022 FinScope SME Survey, the sector contributes an estimated US$8.2 billion to National GDP, making it one of the most significant engines of economic activity.

Yet much of that value remains outside the formal tax net.

With more than 70 percent of the economy operating informally and largely cash-based, collecting value-added tax (VAT), corporate income tax and presumptive levies has proven increasingly difficult.

Weak record-keeping, limited digital access and mistrust of tax authorities have compounded the challenge.

Mr Mnangagwa condemned smuggling activities and tax evasion saying it undermined the country’s development.

Reports indicate that rampant tax evasion and widespread smuggling are crippling Zimbabwe’s revenue collection efforts, costing the nation millions of United States dollars annually and directly threatening the funding of critical public services, officials have warned.

According to official statistics, the government continues to lose vast sums to smuggling, tax fraud, under-invoicing and other illicit financial activities.

Some registered businesses fail to use or tamper with fiscalised electronic registers to underreport sales and avoid paying the correct amount of VAT.

Alongside reform, government has intensified its messaging on the costs of non-compliance. Smuggling, under-invoicing and tax fraud continue to drain public resources, costing the country millions of US dollars annually, according to official estimates.

Mnangagwa was blunt in his assessment, “Compliance is more than law, it is a moral commitment to our communities and future generations.”

“Every act of smuggling, evasion or corruption steals from our children, our communities and our future,” he said.

He linked revenue leakage directly to service delivery gaps, arguing that undeclared goods and falsified returns deprive hospitals of medicines, schools of textbooks and communities of infrastructure.

The challenge is not unique to Zimbabwe. The African Development Bank estimates that illicit financial flows cost the continent over US$80 billion annually, undermining development and investor confidence.

ZIMRA Chairperson, Mr Anthony Mandiwanza, said the authority is recalibrating its approach, balancing revenue mobilisation with practical support for taxpayers, making compliance simpler, especially for small and medium enterprises (SMEs) and start-ups.

Mr Mandiwanza said ZIMRA is pursuing a dual strategy anchored on aggressively expanding revenue collection while making compliance more accessible.

“In the spirit of leaving no one and no place behind, we are also taking services directly to citizens through mobile units, digital platforms, and kiosks at all regional offices,” he said.

“These initiatives are designed to address structural barriers faced by SMEs, including limited internet access, lack of digital literacy and high compliance costs relative to business size,” he said.

He said the push for “sector-specific strategies” and the expansion of mobile and digital tax services are designed to bring more players into the formal system voluntarily.

ZIMRA’s strategy aligns with international best practice. Across Africa, revenue authorities are increasingly adopting “facilitative compliance” models — simplifying registration, reducing filing frequency for small firms and offering education before penalties.

The Kenya Revenue Authority, for example, has rolled out mobile tax clinics and simplified turnover taxes for micro-enterprises, while South Africa’s SARS operates a graduated compliance framework for small businesses. Zimbabwe’s reforms suggest a similar trajectory.

Treasury’s revenue targets reflect growing confidence in macroeconomic stability, particularly following improved inflation control and currency management under the Zimbabwe Gold (ZiG) regime.

But analysts warn that targets of this scale cannot be met without tapping into the informal economy.

Economists note that Zimbabwe’s tax-to-GDP ratio, while improving, remains constrained by narrow compliance.

“Broadening the base is more sustainable than raising rates,” said one Harare-based fiscal analyst. “You cannot keep taxing the same formal firms harder while the majority of economic activity sits outside the system.”

Government’s SME support programmes strengthen this argument.

Treasury officials argue that formalisation and tax compliance should increasingly be tied to access to finance, markets and government support — a model used successfully in countries such as Rwanda and Mauritius.

In 2023, the government disbursed US$5,3 billion to support small and medium scale enterprises last year using the Small and Medium Enterprises Development Corporation, the Zimbabwe Women Microfinance Bank, the Zimbabwe Community Development Fund and the Women Development Fund.

Across Southern Africa, fiscal pressures are intensifying. Slower global growth, climate-related shocks and rising debt servicing costs have forced governments to seek more reliable domestic revenue streams.

Zimbabwe’s strategy reflects this regional reality. By focusing on SMEs — the most dynamic yet under-taxed segment of the economy — authorities are attempting to align revenue mobilisation with inclusive growth.

The 2026 Budget reinforces this logic by avoiding aggressive new taxes and instead focusing on compliance efficiency, digitalisation and behavioural change.

The push to ease SME compliance is not about lowering standards, but about widening opportunity. In an economy where small businesses are no longer peripheral but central, fiscal systems must adapt.

As the 2026 Budget takes effect, Zimbabwe’s revenue strategy sends a clear message: growth, compliance and development are not competing goals — they are mutually reinforcing.

The success of ZIMRA’s reforms will ultimately depend on execution. Simplification must be real, not rhetorical. Digital platforms must work reliably. Enforcement must remain firm but fair.

If successful, Zimbabwe could offer a regional case study in how to transition from a narrow, enforcement-heavy tax system to one built on participation and trust.

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ZSE and NVCCZ Forge Strategic Partnership to Build Venture-Backed SME Pipeline for ZEEX

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2 months ago

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June 26, 2026

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ZSE and NVCCZ Forge Strategic Partnership to Build Venture-Backed SME Pipeline for ZEEX

Harare, Zimbabwe – June 2026 – In a significant development for Zimbabwe’s entrepreneurial and capital markets ecosystem, the Zimbabwe Stock Exchange (ZSE) and the National Venture Capital Company of Zimbabwe (NVCCZ) have signed a Memorandum of Understanding (MOU) aimed at creating a structured pathway for startups and small-to-medium enterprises (SMEs) to access capital markets through the Zimbabwe Entrepreneurship Exchange (ZEEX).

The partnership marks a major step toward bridging the gap between venture capital financing and public market participation, providing entrepreneurs with a clear roadmap from startup funding to long-term growth and investment opportunities.

Creating a Growth Journey for Zimbabwean Enterprises

Historically, venture capital funding and capital markets have operated independently, leaving many promising businesses without a clear route to scale beyond their initial funding stages. Through this partnership, ZSE and NVCCZ seek to change that by establishing a continuum of support that combines financing, governance, compliance readiness, and market access.

The collaboration will focus on identifying high-potential startups and SMEs already supported by NVCCZ and preparing them for eventual participation on ZEEX, Zimbabwe’s newly approved digital capital market platform.

Key Areas of Collaboration

1. Pipeline Development

The two institutions will jointly identify venture-backed businesses with strong growth potential and develop structured graduation pathways that guide them from early-stage financing to public capital market participation. Clear eligibility standards and quality benchmarks will be established to support this transition.

2. Co-Financing and Blended Finance

The partnership will explore innovative financing models that combine venture capital and public market funding. This includes co-investment opportunities and blended finance mechanisms that leverage both public and private sector capital to accelerate business growth.

3. Capacity Building

Recognising that access to capital alone is not enough, the partners will offer training programmes focusing on corporate governance, financial reporting, investor readiness, and compliance with ZEEX listing requirements. Selected enterprises will also receive advisory support to strengthen their readiness for market participation.

4. Market Development

Joint awareness campaigns, investor roadshows, SME financing conferences, and sector-specific financing platforms will be developed to deepen understanding of capital market opportunities among entrepreneurs and investors alike.

5. Product Innovation

The agreement also opens the door for the development of innovative financial products tailored to growth-stage businesses, including SME bond programmes, sustainability-linked instruments, structured SME funds, and alternative digital listing platforms.

Strengthening Zimbabwe’s Entrepreneurial Ecosystem

Speaking on the partnership, ZSE Holdings Group CEO Justin Bgoni highlighted the importance of creating a structured connection between venture capital and public markets.

He noted that entrepreneurs receiving venture capital support can now see a credible pathway toward public market participation from the outset, providing greater certainty and long-term planning opportunities.

NVCCZ Chief Executive Officer Tinotenda Kambasha described the partnership as a milestone for Zimbabwe’s innovation ecosystem, emphasizing that successful venture investing requires support throughout the entire growth journey of a business.

According to Kambasha, the collaboration will provide venture-backed enterprises with strategic exit opportunities while promoting investor participation, improving liquidity, and enabling the recycling of capital into future generations of innovative Zimbabwean businesses.

What This Means for Zimbabwe

The partnership arrives at a critical time when Zimbabwe is seeking new ways to stimulate entrepreneurship, attract investment, create employment, and accelerate economic growth.

By connecting startups, SMEs, investors, venture capital providers, and the capital markets through ZEEX, the initiative is expected to strengthen financial inclusion, support business formalisation, and create sustainable pathways for enterprise growth.

As ZEEX moves closer to full operationalisation, the growing number of institutional partnerships being secured by ZSE demonstrates increasing confidence in the platform’s potential to transform how Zimbabwean businesses raise capital and how investors participate in the country’s economic development.

For entrepreneurs and investors alike, the ZSE-NVCCZ partnership represents an important step toward building a more vibrant, innovative, and investment-ready Zimbabwean economy.

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A Leader’s Next Chapter: Justice Matsatsira Appointed to the Board of Directors of Manica Diamonds Football Club

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2 months ago

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June 17, 2026

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A Leader's Next Chapter: Justice Matsatsira Appointed to the Board of Directors of Manica Diamonds Football Club

The Business Diary proudly celebrates a significant milestone in the professional journey of its Chief Executive Officer and Publisher, Justice Matsatsira, following his appointment to the Board of Directors of Manica Diamonds Football Club.

This prestigious appointment reflects Mr. Matsatsira’s growing influence as a business leader, strategist, and advocate for sustainable institutional growth. It is a recognition of his unwavering commitment to excellence, visionary leadership, and his continued contribution to Zimbabwe’s economic and social development.

Over the years, Justice Matsatsira has established himself as a respected voice within Zimbabwe’s business community. Through his leadership of The Business Diary, he has played a pivotal role in promoting entrepreneurship, fostering dialogue on economic development, and providing a platform that highlights business opportunities, innovation, and thought leadership across various sectors.

His appointment to the Manica Diamonds Football Club Board comes at a time when football clubs are increasingly embracing professional governance structures and strategic leadership to drive long-term success both on and off the field. Mr. Matsatsira brings with him extensive experience in business development, corporate communications, stakeholder engagement, and strategic management—qualities that will undoubtedly add value to the club’s vision and future aspirations.

Speaking on the significance of leadership, Justice Matsatsira often emphasizes that true leadership is measured not by title, but by impact.

“Leadership is not about position. It is about impact, influence and inspiration.”

This philosophy has guided his professional journey and continues to shape the way he approaches business, community development, and organizational growth.

At The Business Diary, we view this appointment as more than a personal achievement. It is a reflection of the confidence that institutions place in leaders who consistently demonstrate integrity, professionalism, and the ability to deliver meaningful results. We are confident that Justice Matsatsira’s strategic insight and commitment to excellence will contribute significantly to the continued growth and success of Manica Diamonds Football Club.

As he embarks on this exciting new chapter, we extend our heartfelt congratulations and best wishes. We celebrate not only the achievement itself, but the leadership, dedication, and vision that made it possible.

Congratulations, Justice Matsatsira, on your appointment to the Board of Directors of Manica Diamonds Football Club. May this new role bring continued success and create even greater opportunities to inspire positive change.

 

The Business Diary

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Harare, Zimbabwe

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NESZ 2026: A Convergence of Visionary Leaders Shaping the Future of Education in Zimbabwe

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3 months ago

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May 4, 2026

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NESZ 2026: A Convergence of Visionary Leaders Shaping the Future of Education in Zimbabwe

Zimbabwe stands at a defining moment in its education and development journey.

As the nation accelerates toward a knowledge-driven, innovation-led economy, the National Education Summit Zimbabwe (NESZ) 2026 emerges as a critical platform where policy, practice, and progress converge. Scheduled for 27–30 May 2026 at the Zimbabwe International Trade Fair (ZITF) Grounds in Bulawayo, this year’s summit promises to be the most impactful yet.

Under the theme

“From Policy to Practice: Driving Innovation & Investment in Zimbabwe’s Education System,”
NESZ 2026 brings together an exceptional lineup of speakers—leaders whose influence spans government, academia, industry, and global institutions.

A Powerhouse Line-Up of Speakers

This year’s summit features a distinguished assembly of policymakers and thought leaders at the forefront of Zimbabwe’s transformation agenda.

From government, the summit will host senior leaders responsible for shaping the country’s economic, education, and digital future, including:

  • Hon. Prof. Mthuli Ncube – Minister of Finance, Economic Development and Investment Promotion
  • Hon. Dr. Tatenda Mavetera – Minister of ICT, Postal and Courier Services
  • Hon. Prof. Paul Mavima – Minister of Skills Audit and Development
  • Hon. Edgar Moyo – Minister of Public Service, Labour and Social Welfare
  • Hon. Mangaliso Ndlovu – Minister of Industry and Commerce
  • Hon. Supa Mandiwanzira – Chairperson, Parliamentary Portfolio Committee on Primary and Secondary Education

Adding to this powerful policy voice is Hon. Dr. Frederick Shava, a seasoned diplomat and ambassador, bringing global perspective to Zimbabwe’s development discourse.

Leaders in Education, Innovation, and Human Development

Beyond government, NESZ 2026 features influential educationists, institutional leaders, and changemakers whose work continues to shape learning ecosystems:

  • Sr. Dr. Annah Theresa Nyadombo – Global safeguarding expert and education leader
  • Dr. Anna Moyo – Dean of Education, Midlands State University
  • Mr. Canaan Mpala – General Manager, TelOne Centre for Learning
  • Mr. Amos Guy Ngwarati – Headmaster, Wise Owl High School
  • Mr. Tim Middleton – Executive Director, Association of Trust Schools (ATS)

From grassroots education to higher learning and institutional leadership, these speakers bring a holistic perspective on the challenges and opportunities within Zimbabwe’s education system.

Champions of Empowerment and Enterprise

The summit also highlights leaders driving inclusive economic participation and community transformation:

  • Hon. Getrude Mutandi – Member of Parliament and Chairperson of the Parliamentary Portfolio Committee on Women Affairs, Community and SME Development

Her work, alongside others, underscores the critical link between education, entrepreneurship, and sustainable socio-economic growth.

What to Expect at NESZ 2026

NESZ 2026 is not just a conference—it is a strategic platform for action.

Participants can expect:

  • Policy-to-Practice Conversations

Engage directly with policymakers and decision-makers on how national education policies are being translated into real-world impact.

  • Innovation and Technology Showcases

Experience cutting-edge solutions in education, STEM, and digital transformation aligned with Zimbabwe’s Education 5.0 agenda.

  • Investment and Partnership Opportunities

Connect with investors, corporates, and development partners shaping the future of education and skills development.

  • Thought Leadership and Insight

Gain valuable perspectives from leading voices across education, government, and industry.

  • Networking and Collaboration

Build meaningful connections with educators, innovators, entrepreneurs, and policymakers from across Zimbabwe and beyond.

Why NESZ 2026 Matters

At its core, NESZ is about one thing: transformation.

It is about moving beyond conversations and into implementation.
It is about aligning education with industry, innovation, and national development.
It is about building a system that equips Zimbabweans not just to learn—but to create, lead, and compete globally.

With a speaker lineup of this calibre, NESZ 2026 is poised to spark the ideas, partnerships, and actions that will shape the next chapter of Zimbabwe’s education story.

Be Part of the Movement

📍 Zimbabwe International Trade Fair Grounds, Bulawayo
📅 27–30 May 2026

This is where education meets innovation.
This is where policy meets action.
This is where the future is built.

Register. Participate. Exhibit.

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