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Tapiwanashe Mangwiro
Senior Business Reporter
FINANCE, Economic Development and Investment Promotion Minister Professor Mthuli Ncube will present the 2025 National Budget Statement this afternoon, amid high expectations that Treasury’s expenditure plan will reignite the strong growth momentum of the recent past, build resilience in the economy to withstand future natural and human-induced shocks as well as engender durable macro-economic stability.
While cautious not to pre-empt the exact details of the 2025 fiscal plan, Minister Ncube revealed at a pre-Budget seminar earlier this month in Bulawayo, some key insights into the Government’s priority areas, which will seek to match the limited resources with the country’s developmental goals.
In line with the expectations of many economists, Minister Ncube indicated that agriculture remained the cornerstone of the economy and would seek to ensure the sector anchors recovery efforts following the impact of El Nino-induced drought, which weighed on the sector’s traditionally strong contribution to growth.
He underscored the importance of building resilience in the sector through irrigation rehabilitation and development in light of the impact of adverse weather on agricultural performance.
“This recommendation aligns with the Government’s thrust of building economic resilience,” the Minister noted, hinting at significant allocations to enhance productivity and mitigate the effects of climate change.
Prioritising irrigation projects is expected to bolster food security and create sustainability in the face of recurring droughts.
Minister Ncube acknowledged calls for taking measures to stimulate the manufacturing sector, particularly in Bulawayo, historically the country’s industrial hub. Emphasis will also have to be placed on mineral beneficiation and value addition to move the economy from primary production to higher-value secondary and tertiary industries.
Such initiatives are expected to create decent employment opportunities and reduce Zimbabwe’s reliance on raw material exports.
The Government appears poised to channel resources into industrial revival as a means to drive broader economic transformation.
Education emerged as another critical sector, with stakeholders advocating for increased funding to address infrastructure deficits, including the need to allocate resources for construction of new schools and staff accommodation.
Minister Ncube also acknowledged the importance of investing towards promoting digitalisation of the domestic economy, the procurement of teaching materials, and improving remuneration for educators.
These investments are anticipated to enhance learning outcomes and attract qualified personnel to the sector.
“We take note of the demand to prioritise educational locations,” he said, signaling significant attention to this area.
Responding to concerns about funding of health service delivery, Minister Ncube highlighted efforts to align budgetary allocations with the Abuja Declaration target of 15 percent of every country’s expenditure plan.
However, he stressed that improving the efficiency of financial resource utilisation within the health sector will be equally important. This dual focus aims to strengthen service delivery and ensure efficient use of funds to address systemic challenges such as infrastructure, equipment, and staffing shortages.
Zimbabwe National Chamber of Commerce (ZNCC) president Mr Tapiwa Karoro said the 2025 National Budget Statement presentation was a crucial moment in setting the nation’s fiscal priorities, allocations, and revenue-generating strategies for the year ahead.
“The chamber notes that the Ministry of Finance, (Economic Development and Investment Promotion) through Statutory Instrument (SI) 139 of 2024, introduced a new excise duty of US$0,50per million on e-cigarettes, effective August 1, 2024.
“This policy appears to stem from the perception that electronic cigarettes, or vapour products pose the same level of harm as traditional cigarettes and should therefore be taxed similarly.
“However, this view is not aligned with scientific evidence.
“Numerous credible studies have shown that vapour from e-cigarettes contains significantly fewer and lower levels of toxicants compared to cigarette smoke.The current excise rate is also notably higher than in comparable regions, being three times higher than in South Africa and approximately 4,5 times the EU (European Union) average,” he said.
Today’s budget is expected to address these strategic priorities, reflecting a balance between recommendations from the public and the Government’s vision for sustainable economic growth and social development.
Minister Ncube’s budget will also be expected to pronounce extensive measures to anchor stability of the domestic currency, Zimbabwe Gold, which appeared to come under extreme pressure later in the year, driving rapid increases in inflation.
In keeping with this policy focus, it is expected the national budget will once again reiterate Treasury’s commitment to maintain a tight fiscal regime to anchor durable stability while prescribing measures to streamline taxes and further improve the ease of doing business.
Expectedly, the citizenry awaits to find out what initiatives the national budget will propose to address the country’s energy challenges, which have become a huge albatross to business and economic growth.
Further, Minister Ncube’s budget will be expected to come up with measures to bolster disposable incomes, which were heavily eroded following the sharp adjustment of the ZiG exchange rate by the central bank in line with dynamics in the economy.
Further, Minister Ncube will also be expected to pronounce clear policy measures (safety nets) to cushion vulnerable groups from various forms of shocks, both economic (inflation) and natural (such as drought).
In its commentary ahead of the budget presentation today, the Bankers Association of Zimbabwe (BAZ) called for measures to promote the growth of the country’s digital economy and address challenges posed by the high level of informality of the economy.
Through such policy initiatives, BAZ believes the Government can align its broad objectives of economic transformation with financial inclusivity and sustainability. Central among its recommendations was the need to consider scrapping VAT on the electronic payment infrastructure.
BAZ said such exemptions would lower the cost of importing key technologies such as POS terminals, ATMs, self-service booths, and tablets, critical in the financial intermediary of banks.
“This will reduce the cost of importing the equipment and thus reduce the charges that are passed on to the customer,” BAZ said. The proposal aligns with the country’s digitalisation agenda and could catalyse a broader transition to cashless transactions, benefitting both financial institutions and consumers.
BAZ also highlighted the pervasive impact of Zimbabwe’s large informal sector on the banking industry and the economy at large.
Challenges include limited financial inclusion, tax evasion, and difficulties enforcing anti-money laundering (AML) and combating the financing of terrorism (CFT) regulations.
The banks’ lobby group noted that informal transactions often by-passed formal banking channels, creating a cash-based economy and shrinking potential sources of fiscal streams.
The banking lobby’s proposals underline the need for structural reforms in digital and informal sectors. Treasury’s response in the upcoming budget will reveal whether these recommendations are embraced to drive financial transformation in 2025.
Further, BAZ recommended enhancing fiscal efficiency and promotion of financial inclusion by reducing the intermediated money transfer tax.
By advocating for a reduction in the 2 percent IMTT, BAZ seeks to encourage formal transactions, reduce cash dependency in the economy, and strengthen revenue collection mechanisms for Treasury.
“Lowering the IMTT will not only drive more transactions through formal banking channels but also support broader economic stability by addressing risks associated with cash handling,” BAZ stated in its submission.
Another economist Enoch Rukarwa pointed to the interplay of high corporate tax, income tax, VAT, and withholding taxes with Zimbabwe’s informal economy, urging the Government to enhance strategies for formalising the informal sector through presumptive taxes.
Mr Rukarwa stressed the need for maintaining austerity, as the Government sticks to its contractionary monetary and fiscal policies.
“Overall, to accommodate a contractionary monetary policy, the government is likely to maintain austerity on the fiscal side of the economy,” he said.
Mr Rukarwa also underscored the comparative strength of Zimbabwe’s tax regime while urging reforms to formalise the informal sector.
“The Zimbabwean tax framework, while sometimes perceived as burdensome, aligns with regional standards. Strategic enhancements, such as enforcing collection of presumptive taxes, can broaden the tax base and foster inclusivity,” he said.
A financial markets analyst George Nhepera said Minister Ncube should come up with pro-business policies anchored on boosting the confidence of economic players.
“In my view, such policies could take the form of tax cuts or reduction which are targeted on key growth sectors of the economy.
“If these are carefully executed in terms of compliance, they could increase growth sectors of the economy. Another way to boost economic growth should be de-regulation in all sectors of the economy to relieve the economy of unnecessary regulations,” he said.
Economic analyst Malone Gwadu highlighted the importance of exchange rate stability and inflation control, emphasising the need for fiscal policies that strengthen the ZiG and enhance its utility in the market.
His call for economic diversification resonates with the Government’s vision to expand into high-potential sectors such as manufacturing and tourism.
“With deliberate fiscal tools that prioritise long-term growth, Zimbabwe can achieve a more competitive and inclusive economy,” Mr Gwadu said.
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