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Smuggling takes toll on Zimbabwe economy
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A sharp increase in smuggling and unregulated imports is intensifying illicit financial flows (IFFs) in Zimbabwe, severely undermining the country's formal retail sector. Authorities have recently prosecuted over 700 shops for tax evasion, selling counterfeit goods, and violating consumer protection laws, while seizing contraband valued at more than US$10 million.
The Zimbabwe Revenue Authority (Zimra) and the Consumer Protection Commission (CPC) are intensifying crackdowns on what they describe as a growing shadow economy that drains government revenue and destabilizes legitimate businesses. Since January 2025, the CPC has conducted 3,391 inspections, resulting in 708 prosecutions and 447 compliance notices for violations of consumer protection laws.
Many violations involve unlicensed tuckshops and informal traders selling smuggled and substandard goods while evading taxes and regulatory oversight. Confiscated items include over 1,600 cans of energy drinks, 250 litres of non-alcoholic beverages, and more than 1,000 bottles of premium alcoholic brands such as Heineken, Jack Daniels, and Savanna. Other seized goods include camphor cream, powdered milk, and household appliances. Most of these goods are smuggled from South Africa and Zambia through undesignated entry points.
CPC Research and Public Affairs Director, Kudakwashe Mudereri, emphasized the taskforce's progress and plans to intensify enforcement efforts. "We have discovered that most of the illicit goods on the market are indeed being smuggled into the country," he said.
Economists define illicit financial flows as illegal or unethical cross-border money movements involving tax evasion, smuggling, and unrecorded transactions. In Zimbabwe, these flows drain foreign currency reserves and weaken government revenue while enriching an unregulated informal sector.
Formal retailers warn that they cannot compete with informal players benefiting from smuggling and tax evasion. OK Zimbabwe, one of the country's largest supermarket chains, closed four branches in March, while Botswana-listed Choppies announced plans to exit Zimbabwe citing a 30% drop in foot traffic due to informal competition. Choppies noted, "Over the last two years, there has been a significant shift to the informal retail sector, leaving the formal sector battling reduced footfall and unfair competition."
The Confederation of Zimbabwe Retailers (CZR) highlights that informal traders, operating without compliance to licensing fees, labor laws, and taxes, are offering cheaper goods, squeezing formal businesses. CZR President Denford Mutashu said, "The informal sector operates outside compliance with statutory obligations, making it increasingly difficult for formal businesses to compete."
The impact is visible in urban centers like Harare's Central Business District, where supermarkets struggle to restock shelves while informal tuckshops multiply.
Finance Minister Professor Mthuli Ncube, in the 2025 National Budget Statement, warned that smuggling undermines government revenue and weakens local manufacturing competitiveness. "The influx of imported goods sold at artificially low prices, well below expected costs, suggests widespread tax evasion through smuggling," he said. "It creates an uneven playing field, deprives the government of revenue, promotes illicit activities, and discourages investment."
Porous borders, particularly the Beitbridge crossing with South Africa, serve as major smuggling conduits. Vast quantities of goods, including beverages, clothing, food, and household essentials, enter Zimbabwe daily via informal routes, ultimately sold in tuckshops. Common smuggling points include Mai Maria, Panda Mine, Dite, and others in the Beitbridge area.
Smuggled goods are mostly sold for cash in US dollars, evading electronic transactions and the Intermediated Money Transfer Tax (IMTT). This lack of fiscal visibility hampers Zimra's tax collection efforts and allows illicit cash to fuel the shadow economy and replenish smuggling networks.
Beyond economic harm, Prof Ncube raised public health and safety concerns over unregulated goods. "Food, medicines, and alcohol evading inspections pose serious dangers," he said. CPC market surveillance found smuggled products sometimes contain toxic additives and spoiled ingredients, risking foodborne illnesses and long-term health damage.
Public health expert Dr Johannes Marisa warned of severe consequences from consuming counterfeit or expired goods, including organ failure and debilitating conditions. He urged authorities to act decisively to protect consumers.
In response, the government launched a multi-agency crackdown last year targeting smuggling networks and non-compliant businesses. The Ministry of Industry and Commerce leads a taskforce including Zimra, police, the Reserve Bank of Zimbabwe (RBZ), and the CPC. During the 2024 festive season, Zimra seized US$2.4 million worth of goods from cross-border inspections.
New regulations require importers to prove duty payments for 19 specified product categories—including beverages, cement, clothing, dairy products, and electrical appliances—or face seizure and penalties under the Customs and Excise Act.
To formalize the informal sector, the RBZ has mandated banks to provide point-of-sale (POS) machines to all business account holders, including informal traders. This initiative links businesses to the formal financial system to improve tax compliance.
RBZ Governor Dr John Mushayavanhu explained, "The goal is to ensure all businesses are connected to the banking system via POS machines, enabling Zimra to track transactions and bring traders into the tax net."
The escalating smuggling crisis highlights a complex web of illicit flows destabilizing Zimbabwe's economy, draining revenue, threatening public health, and jeopardizing investment. Authorities vow to intensify efforts to clamp down on the shadow economy and restore fairness and stability to the retail sector.
The Zimbabwe Revenue Authority (Zimra) and the Consumer Protection Commission (CPC) are intensifying crackdowns on what they describe as a growing shadow economy that drains government revenue and destabilizes legitimate businesses. Since January 2025, the CPC has conducted 3,391 inspections, resulting in 708 prosecutions and 447 compliance notices for violations of consumer protection laws.
Many violations involve unlicensed tuckshops and informal traders selling smuggled and substandard goods while evading taxes and regulatory oversight. Confiscated items include over 1,600 cans of energy drinks, 250 litres of non-alcoholic beverages, and more than 1,000 bottles of premium alcoholic brands such as Heineken, Jack Daniels, and Savanna. Other seized goods include camphor cream, powdered milk, and household appliances. Most of these goods are smuggled from South Africa and Zambia through undesignated entry points.
CPC Research and Public Affairs Director, Kudakwashe Mudereri, emphasized the taskforce's progress and plans to intensify enforcement efforts. "We have discovered that most of the illicit goods on the market are indeed being smuggled into the country," he said.
Economists define illicit financial flows as illegal or unethical cross-border money movements involving tax evasion, smuggling, and unrecorded transactions. In Zimbabwe, these flows drain foreign currency reserves and weaken government revenue while enriching an unregulated informal sector.
Formal retailers warn that they cannot compete with informal players benefiting from smuggling and tax evasion. OK Zimbabwe, one of the country's largest supermarket chains, closed four branches in March, while Botswana-listed Choppies announced plans to exit Zimbabwe citing a 30% drop in foot traffic due to informal competition. Choppies noted, "Over the last two years, there has been a significant shift to the informal retail sector, leaving the formal sector battling reduced footfall and unfair competition."
The Confederation of Zimbabwe Retailers (CZR) highlights that informal traders, operating without compliance to licensing fees, labor laws, and taxes, are offering cheaper goods, squeezing formal businesses. CZR President Denford Mutashu said, "The informal sector operates outside compliance with statutory obligations, making it increasingly difficult for formal businesses to compete."
The impact is visible in urban centers like Harare's Central Business District, where supermarkets struggle to restock shelves while informal tuckshops multiply.
Finance Minister Professor Mthuli Ncube, in the 2025 National Budget Statement, warned that smuggling undermines government revenue and weakens local manufacturing competitiveness. "The influx of imported goods sold at artificially low prices, well below expected costs, suggests widespread tax evasion through smuggling," he said. "It creates an uneven playing field, deprives the government of revenue, promotes illicit activities, and discourages investment."
Porous borders, particularly the Beitbridge crossing with South Africa, serve as major smuggling conduits. Vast quantities of goods, including beverages, clothing, food, and household essentials, enter Zimbabwe daily via informal routes, ultimately sold in tuckshops. Common smuggling points include Mai Maria, Panda Mine, Dite, and others in the Beitbridge area.
Smuggled goods are mostly sold for cash in US dollars, evading electronic transactions and the Intermediated Money Transfer Tax (IMTT). This lack of fiscal visibility hampers Zimra's tax collection efforts and allows illicit cash to fuel the shadow economy and replenish smuggling networks.
Beyond economic harm, Prof Ncube raised public health and safety concerns over unregulated goods. "Food, medicines, and alcohol evading inspections pose serious dangers," he said. CPC market surveillance found smuggled products sometimes contain toxic additives and spoiled ingredients, risking foodborne illnesses and long-term health damage.
Public health expert Dr Johannes Marisa warned of severe consequences from consuming counterfeit or expired goods, including organ failure and debilitating conditions. He urged authorities to act decisively to protect consumers.
In response, the government launched a multi-agency crackdown last year targeting smuggling networks and non-compliant businesses. The Ministry of Industry and Commerce leads a taskforce including Zimra, police, the Reserve Bank of Zimbabwe (RBZ), and the CPC. During the 2024 festive season, Zimra seized US$2.4 million worth of goods from cross-border inspections.
New regulations require importers to prove duty payments for 19 specified product categories—including beverages, cement, clothing, dairy products, and electrical appliances—or face seizure and penalties under the Customs and Excise Act.
To formalize the informal sector, the RBZ has mandated banks to provide point-of-sale (POS) machines to all business account holders, including informal traders. This initiative links businesses to the formal financial system to improve tax compliance.
RBZ Governor Dr John Mushayavanhu explained, "The goal is to ensure all businesses are connected to the banking system via POS machines, enabling Zimra to track transactions and bring traders into the tax net."
The escalating smuggling crisis highlights a complex web of illicit flows destabilizing Zimbabwe's economy, draining revenue, threatening public health, and jeopardizing investment. Authorities vow to intensify efforts to clamp down on the shadow economy and restore fairness and stability to the retail sector.
Source - newsday
