Zimbabwe's cash economy expands

Passenger vehicle imports into Zimbabwe have more than doubled over the past three years, providing fresh evidence of the growing influence of the country's cash-driven informal economy and its increasing appetite for asset accumulation.

New data analysed by brokerage IH Securities shows that passenger motor vehicle imports have risen from between US$2.5 million and US$3 million per month in early 2023 to approximately US$6 million by March 2026.

The sharp increase reflects the substantial volumes of United States dollar liquidity circulating outside formal banking channels, with informal traders, artisanal miners, cross-border merchants and recipients of diaspora remittances increasingly directing their earnings into vehicle purchases and other tangible assets.

According to the latest figures from the Zimbabwe National Statistics Agency (ZimStat), the country had approximately 1.75 million registered vehicles by the end of 2025, underscoring the importance of motor vehicles as both transport assets and stores of value.

"Higher up the consumer spend pyramid, durables tell a different story. ZimStat trade data show passenger motor car imports rising from roughly US$2.5 million to US$3 million per month in early 2023 to US$6 million by March 2026, more than doubling over the period," IH Securities said in its 2026 Consumer Sector Report.

"The trajectory is, in our view, a direct read-out of a booming cash economy in the informal and primary sectors, where tuckshop traders, cross-border merchants, artisanal miners and smallholder agriculture have generated sustained US dollar cash surpluses that bypass the formal banking system and surface visibly in vehicle purchases."

The brokerage noted that the trend is being reinforced by strong diaspora remittance inflows, which now amount to nearly US$2.5 billion annually.

"The combination explains why vehicle import volumes have remained resilient even as formal banking-sector credit data understate consumer durable demand," the report said.

Analysts say the figures highlight the growing disconnect between official financial sector statistics and economic activity occurring outside traditional banking channels.

The report also points to a gradual shift in the composition of vehicle imports following Government's decision to reduce customs duty on fully battery-electric vehicles from 40 percent to 25 percent with effect from January 1, 2025.

The policy change has encouraged increased market participation by Chinese vehicle manufacturers, including BYD, Chery and Omoda, which have expanded their footprint through local dealerships and after-sales support networks.

The expansion has begun to challenge the long-standing dominance of imported Japanese second-hand vehicles in Zimbabwe's automotive market.

However, IH Securities cautioned that widespread adoption of electric vehicles remains constrained by inadequate charging infrastructure, power supply challenges and the relatively high purchase cost of new electric models.

The brokerage further highlighted the scale of Zimbabwe's informal economy, noting that informal activities account for approximately 58 percent of total employment, compared to 36 percent in the formal sector and six percent in household employment.

"The dominance of informal earnings translates into income volatility, limited credit access and a consumer base that transacts predominantly in cash and US dollars, bypassing the formal banking channel," the report said.

The growing reliance on cash transactions has attracted the attention of regulators.

Last week, FIU director-general Oliver Chiperesa said authorities had intensified oversight of sectors frequently involved in high-value cash transactions, including vehicle dealerships, estate agencies and professional service providers.

"There is increased supervision and monitoring of estate agencies, car dealers, accountants and others to ensure they identify and report suspicious transactions," Chiperesa said.

He added that the Government's planned transition towards a mono-currency system is expected to improve transaction traceability and reduce the risks associated with cash-based economic activity.

"All high-value transactions will be occurring through banking channels, thereby reducing the risk of money laundering," he said.

The findings highlight both the resilience of Zimbabwe's informal economy and the growing challenge for policymakers seeking to channel economic activity through formal financial systems while maintaining transparency and regulatory oversight.