Zimbabwe's 'pizza budget' proves economy on the verge of collapse

Zimbabwe's 'pizza budget,' presented two days ago by Finance Minister Professor Mthuli Ncube as the 2025 National Budget Proposal, is a stark illustration of an economy on the verge of collapse.

Among the many proposals, the announcement of a new tax on fast foods like pizza, burgers, French fries, and doughnuts stood out as both absurd and troubling.

This peculiar obsession with taxing nearly everything points to a deeper crisis within the Zimbabwean economy.

While governments worldwide rely on taxes to fund critical services and development projects, the President Emmerson Mnangagwa administration's approach reveals a desperate and unsustainable strategy rooted in a failing economic structure.

Globally, governments derive their revenue primarily from well-established sources such as income tax, value-added tax (VAT), capital gains tax, property tax, excise duties, import and export taxes, dividends from state-owned enterprises (SOEs), and royalties from natural resource exploitation.

These traditional revenue streams are designed to support civil servants, infrastructure development, social services, and national security.

However, the reliance on taxing fast foods, as introduced in Zimbabwe's recent budget, suggests the government is scraping the bottom of the barrel.

This is not just a sign of callousness toward a population already suffering under severe poverty, with an estimated 70% living below the poverty line, but also indicative of a government running out of viable revenue options.

The inability to secure sufficient revenue from traditional sources raises the question: why is the Mnangagwa regime incapable of generating income through established means like income tax, VAT, or SOE dividends?

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The answer lies in the systematic collapse of these sectors, fueled by years of economic mismanagement, corruption, and misguided policies.

Income tax, a cornerstone of government revenue, is in dire straits because only about 10% of Zimbabweans are formally employed.

With unemployment levels so high, it is unsurprising that income tax contributions have dwindled to negligible levels.

The informalization of the economy has rendered income tax collection nearly impossible.

The informal sector, which now constitutes roughly 90% of the economy, is largely unregulated and beyond the government's ability to monitor or tax effectively.

Despite announcements of mandatory Zimbabwe Revenue Authority (Zimra) registration for informal traders and plans to tax small grocery shops, boutiques, and car parts dealerships, enforcement remains laughable due to the state's lack of capacity.

The challenges extend to VAT, another crucial revenue source.

Zimbabweans' spending power has been decimated by poverty and inflation, leaving little room for significant VAT contributions.

Moreover, with most economic activity occurring informally, VAT collection is further undermined.

In a scenario where formal businesses have either closed down or downsized due to an unstable currency, inconsistent policies, high taxes, and persistent electricity shortages, the traditional avenues for VAT collection have virtually dried up.

This is a direct reflection of an economy in ruins, unable to support even the basic functioning of formal commerce.

Similarly, excise duties, import and export taxes, and customs revenues have all suffered as a result of the dominance of the informal sector.

Informal cross-border traders often bypass normal import processes, depriving the government of customs duties.

Although the finance minister has threatened crackdowns on this practice, the state's inability to enforce such measures renders these threats hollow.

Zimbabwe's failure to regulate its informal sector is symptomatic of a broader economic collapse, where even basic controls over trade and commerce are ineffective.

The issue of dividends from state-owned enterprises paints an equally grim picture.

Once vibrant companies like the National Railways of Zimbabwe (NRZ), Zimbabwe Electricity Supply Authority (ZESA), Zimbabwe United Passenger Company (ZUPCO), and Zimbabwe Iron and Steel Company (ZiscoSteel) have been crippled by decades of corruption, mismanagement, and illicit financial activities.

These SOEs, which should be contributing significant revenues to the state, are instead perennial liabilities.

Their collapse highlights the systemic failures of governance and leadership that have plagued Zimbabwe, leaving the government with few reliable revenue sources.

Zimbabwe's natural resource sector, despite its immense potential, has also failed to contribute meaningfully to state coffers.

The country boasts some of the world's most sought-after minerals, including gold, diamonds, lithium, and platinum.

Yet, smuggling and corruption have severely undermined this sector.

The Al Jazeera documentary "Gold Mafia" exposed high-ranking officials and their associates involved in gold smuggling and money laundering.

Just recently, the brother of controversial businessman and convicted criminal Wicknell Chivayo was arrested in South Africa for smuggling R15 million worth of gold, underscoring the depth of the problem.

Zimbabwe reportedly loses over $2 billion annually to mineral smuggling, much of it facilitated by individuals linked to the powerful and well-connected.

As a result, royalties from these resources, which should be a significant source of revenue, barely make it into state coffers.

Against this backdrop, the government's reliance on taxing ordinary citizens, including levying duties on fast foods and increasing toll fees and taxes on basic commodities, reveals the extent of the economic collapse.

This strategy disproportionately targets a population already grappling with poverty and hardship, reflecting the desperation of a regime unable to generate income through traditional, sustainable means.

It is an indictment of failed leadership that prioritizes survival over the well-being of its citizens.

The economic challenges facing Zimbabwe are further compounded by an unstable currency, high inflation, and inconsistent policies.

These factors create an environment hostile to formal business operations, discouraging investment and stifling economic growth.

Persistent electricity shortages exacerbate the situation, making it nearly impossible for industries to function efficiently.

According to the Zimbabwe Chamber of Mines, the mining sector is set to lose $500 million this year alone due to incessant power cuts.

This has had a devastating impact on the economy, leaving the government scrambling for alternative revenue streams, no matter how impractical or exploitative.

What emerges from this analysis is a clear picture of an economy on the brink of collapse.

The Mnangagwa administration's "pizza budget" is not just an attempt to extract revenue from an already impoverished population; it is a desperate measure by a government that has run out of options.

The traditional pillars of economic stability - formal employment, robust SOEs, regulated trade, and effective resource management - have all but crumbled under the weight of corruption, mismanagement, and policy failures.

As a result, the government has turned to taxing anything and everything, regardless of the economic or social consequences.

The taxing of fast foods like pizza, burgers, French fries, and doughnuts is symbolic of a deeper crisis.

It reflects a government that has lost its way, resorting to short-term, unsustainable measures to address a long-term structural collapse.

This approach not only fails to address the root causes of the economic crisis but also risks deepening the suffering of ordinary Zimbabweans.

In conclusion, Zimbabwe's "pizza budget" is a stark reminder of the dire state of the nation's economy.

The government's inability to derive revenue from traditional sources speaks to a broader failure of leadership and governance.

Instead of addressing the structural issues that have led to this collapse, the Mnangagwa administration has chosen to target the most vulnerable, taxing them into deeper poverty.

This is not a sustainable solution; it is a desperate act by a regime struggling to stay afloat in an economy it has systematically destroyed.

The people of Zimbabwe deserve better - an administration that prioritizes sustainable economic growth, transparent governance, and the well-being of its citizens over short-sighted, exploitative policies.

© Tendai Ruben Mbofana is a social justice advocate and writer. Please feel free to WhatsApp or Call: +263715667700 | +263782283975, or email: mbofana.tendairuben73@gmail.com, or visit website: https://mbofanatendairuben.news.blog/