Zimbabwe Loses $1.5 Billion in Tax Revenue Due to Informalisation

Zimbabwe lost $1.5 billion in tax revenue between 2020 and 2024 due to the expansion of the informal sector, according to the World Bank Zimbabwe Public Finance Review.

The report attributes this loss to strict business formalisation policies, which have driven many small businesses into the informal sector. It warns that unless these policies are revised, revenue losses will continue.

Speaking in Parliament, Makokoba Member of Parliament Thokozani Khupe said many small business owners remain informal due to limited access to affordable loans, as banks require high-interest rates and extensive documentation.

Economist Titus Mukove urged the government to support formalisation efforts beyond ZIMRA’s mandate.

With 60% of Zimbabwe’s workforce in the informal sector, experts say formalisation is key to boosting tax revenue.