• Introduction of Statutory Instrument to Combat Smuggling: Government has enacted a new statutory instrument empowering ZIMRA to crush smuggling
• Targeting Structural Issues Beyond Surface Solutions: It lacks proactive measures necessary for long-term resilience.
• Need for Fundamental Economic Reforms: Without addressing underlying issues the new SI risks being ineffective

Harare- In its efforts to mitigate the expanding informal economy, the government has introduced a new statutory instrument, Statutory Instrument 7 of 2025 designed to protect formal market enterprises. This initiative aims to establish a competitive equilibrium and reduce the influx of smuggled goods that have been undermining legitimate businesses. 

The latest Statutory Instrument authorises the Zimbabwe Revenue Authority (ZIMRA) to enforce compliance among businesses found in possession of specified goods without verified proof of duty payment.

These goods encompass a wide range of products, including alcoholic and non-alcoholic beverages, cement, clothing, electrical appliances, footwear, dairy products, diapers, agricultural equipment and parts, processed meat, rice, pasta, sugar, tires, motor vehicle parts, laundry and bath soaps, biscuits, and confectionery, among others.

Businesses unable to provide adequate documentation demonstrating lawful importation will be classified as having engaged in smuggling and will be subject to duty payments, along with applicable penalties. 

This measure is intended to revitalize established retailers and manufacturers, such as Zimplow , large scale retailers like OK Zimbabwe, and NTS, among others.

This policy has been introduced in the wake of widespread business closures and operational downsizing across the retail and manufacturing sectors. Prominent retailers, including OK Zimbabwe, TM, N Richards, Food World, and SPAR, have either shut down or significantly reduced their scale of operations. Similarly, Zimplow has scaled back its activities, citing intense competition from low-cost imported Chinese products, and has even ceased operations at some of its Trentyre facilities. 

However, this policy appears to be more reactionary than proactive. While it addresses immediate challenges, it falls short of the forward-thinking, strategic measures required to foster long-term resilience and competitiveness in the face of external pressures and market distortions. A more proactive approach would involve comprehensive structural reforms, enhanced support for local industries, and policies that anticipate and mitigate future disruptions rather than merely responding to them.

Zimbabwe primarily imports food products from South Africa, machinery from China, and footwear, clothing, and electrical accessories from Dubai, South Africa, and neighbouring countries like Mozambique and Zambia. 

The regulation specifically targets traders and manufacturers rather than end consumers. To eliminate ambiguity, the government has clarified that consumers will not be required to present proof of duty payment for imported goods purchased from local manufacturers, wholesalers, or retailers.

Instead, the onus lies on importers whether manufacturers, retailers, or wholesalers to provide verifiable evidence of compliant importation. 

Analysis

While the statutory instrument represents a progressive step toward curbing smuggling and protecting formal businesses, it addresses only the symptoms of a more systemic issue. To achieve sustainable resolution, the government must demonstrate consistency in its currency policy and adopt a proactive approach to combating corruption. 

A critical question arises: how do goods evade border controls despite the presence of ZIMRA officials? This blatant circumvention of customs regulations reflects the pervasive corruption within the system.

The unimpeded flow of smuggled goods highlights significant deficiencies in border control and customs enforcement. It is imperative that the government investigates and rectifies these vulnerabilities rather than merely addressing the surface-level manifestations of the problem. 

The unchecked movement of smuggled goods suggests either complicity among customs officials in accepting bribes or gross negligence in their duties. This raises a pressing concern: what measures will be implemented to deter these officials from engaging in corrupt practices under this SI? 

IWif bribes are accepted at the border, what will avoid the prevalence of fraudulent duty payment receipts and counterfeit documentation to undermine this government’s efforts to combat smuggling?

It is essential that the government takes decisive action to address the root causes of corruption, ensuring accountability among all stakeholders, including ZIMRA officials, and implementing robust internal controls to prevent future misconduct. Without addressing corruption directly, the new regulation risks being rendered ineffective. 

Equally significant is the list of imported goods specified in the regulation, which reflects the decline of domestic industries. The reliance on imports for basic commodities such as soap, rice, and sugar highlights the precarious state of the economy.

A struggling economy cannot be revitalized solely through anti-smuggling measures. Such an approach is akin to treating symptoms without addressing the underlying condition. Instead, the government must adopt a comprehensive strategy for economic development. 

To restore economic stability, the government must prioritise establishing sound currency fundamentals, ensuring fiscal discipline, and fostering trust among stakeholders.

A critical step in this process is abandoning the artificial pegging of the local currency, as this approach is unlikely to achieve the desired outcomes. In fact, the government should consider suspending the local currency in the short term and focus on rebuilding currency fundamentals, which are currently in disarray.

The erosion of public confidence in the existing currency will inevitably hinder the success of any new monetary framework introduced without addressing these foundational issues. 

Also, the implementation of this process is likely to have significant short-term implications, given that over 70% of Zimbabwe's economy is informal.

As informal traders go into hiding, shortages of basic goods are anticipated, and with formal markets not adequately stocked, prices are expected to rise sharply due to curtailed supply.

However, in the long term, with a properly functioning currency system, it is expected to yield positive results. However, it depends on either government is willing to give up on its tight grip of manipulating currency dynamics and enforcing discipline and curtailing corruption.

In conclusion, though the policy looks flowery, the government's reliance on legislation to correct economic imbalances is a form of "legislation inflation." This approach is unlikely to yield sustainable results, if it fails to address the underlying structural issues that are driving the informal economy's growth. A more effective solution would involve a combination of policy reforms, institutional strengthening, and private sector engagement.

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