Mediline Sibanda opened her hairdressing business 13 years ago in Bulawayo’s bustling central business district where she operates alongside other vendors and traders that are part of the country’s thriving informal economy.
Like many women in the informal sector, Sibanda is juggling motherhood with trying to provide for her family. The one-room salon she shares with a cell phone vendor has chairs rented by other hairdressers and a large bench for customers waiting their turn. There is no paperwork, no cash registers, no regulation.
Zimbabwe’s government has struggled to force the country’s millions of vendors and traders in the informal economy – where most Zimbabweans are now employed and make their living – to pay corporate and personal income taxes based on the money they are making.
Much of the Zimbabwean economy operates informally with vendors selling their wares and services on the sides of main roads or from their homes, rather than through formal, registered businesses.
Finance Minister Mthuli Ncube has proposed that starting in 2025 larger vendors in the informal sector – such as car dealers, hardware vendors, grocers, home ware sellers, clothes makers and lodges – must register with the Zimbabwe Revenue Authority, or ZIMRA, transact with sales machines, and maintain records of all transactions.
However, informal vendors such as Sibanda and groups advocating for women – who mainly make up the informal sector – argue that it is unfair to seek revenue from a miniscule source compared to the vastly greater sums lost through corruption in the broader economy.
Hair salons and other small vendors pay a presumptive tax – a simplified tax – that was introduced by the government in 2005, and expanded in 2011.
Its purpose was to try to collect revenues from the informal sector at a time that Zimbabwe’s struggling economy was shedding wage-paying jobs.
To Sibanda, the issue amounts to an unclear attempt by the government to take what little money she and other informal vendors make.
“There is no money,” she said, “and to be honest, we don’t understand the tax issues because there is no profit in this business.”
By 2024, Zimbabwe’s informal economy accounted for roughly 60% of gross domestic product (GDP), one of the largest in the world, and employed over 76% of the workforce, according to the African Development Bank.
Collecting presumptive taxes has had its challenges because of poor enforcement and corruption, including among officials meant to enforce it.
In 2022, for example, tax official in Gweru Taxes Liaison section, Mercy Dzuke (48) was arrested after trying to extort US $500 from a doctor’s surgery in Gweru for failing to submit income tax and PAYE tax on time.
Source: CITE
