A SURGE in smuggling and unregulated imports is fuelling illicit financial flows, undermining Zimbabwe’s formal retail sector, with over 700 shops recently prosecuted for tax evasion, selling counterfeit goods and breaching consumer protection laws.
Authorities have seized over US$10 million worth of contraband as the Zimbabwe Revenue Authority (Zimra) and the Consumer Protection Commission (CPC) crack down on what they describe as a growing shadow economy that drains State revenue and destabilises legitimate businesses.
Since January, the CPC has conducted 3 391 inspections, resulting in 708 prosecutions and issuance of 447 compliance notices for businesses violating consumer protection laws.
Many of these violations relate to smuggled and substandard goods sold by unlicensed tuckshops and informal traders, who evade taxes and operate outside regulatory frameworks.
Seized goods include over 1 600 cans of energy drinks, 250 litres of non-alcoholic beverages and more than 1 000 bottles of premium alcoholic brands such as Heineken, Jack Daniels and Savanna.
Authorities also confiscated hundreds of tubs of camphor cream, over 570 boxes of powdered milk and major household appliances.
These goods are believed to have been smuggled from South Africa and Zambia through undesignated entry points.
CPC research and public affairs director Mr Kudakwashe Mudereri said the taskforce had made notable progress.
“Going forward, we intend to intensify enforcement and tighten inspections through the multi-agency task force,” he said.
“We have discovered that most of the illicit goods on the market are indeed being smuggled into the country.”
Economists define illicit financial flows (IFFs) as the movement of money across borders that is illegal or unethical, typically involving tax evasion, smuggling and unrecorded transactions.
In Zimbabwe, these flows are draining foreign currency reserves and weakening State revenue collection, while enriching an unregulated informal sector.
Zimbabwe’s formal retailers are sounding the alarm, warning that they cannot compete with informal players who benefit from smuggling and tax evasion.
OK Zimbabwe, one of the country’s largest supermarket chains, shut down four branches in March.
Botswana-listed Choppies announced its plans to exit the Zimbabwean market, citing a 30 percent drop in foot traffic due to informal competition.
“In Zimbabwe, over the last two years, there has been a significant shift to the informal retail sector, leaving the formal retail sector to battle a reduction of up to 30 percent in footfall and having to compete with the informal sector,” Choppies said in its exit announcement.
Other formal retailers have either scaled down operations or closed shop entirely.
This exodus of formal retailers represents a massive loss in investment, employment and tax revenues.
The Confederation of Zimbabwe Retailers (CZR) says formal traders are battling to survive due to the proliferation of untaxed tuckshops that offer cheaper prices by skirting licensing fees, labour laws and taxes.
CZR president Mr Denford Mutashu said: “The informal sector operates outside compliance with statutory obligations, offering goods at lower prices and making it increasingly difficult for formal businesses to compete.”
In urban centres like Harare’s Central Business District, the impact is visible.
Some once-thriving supermarkets are now struggling to restock their shelves, while informal shops, commonly known locally as tuckshops, have proliferated.
Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube, in the 2025 National Budget Statement, warned that smuggling is undermining Government revenue and weakening the competitiveness of local manufacturing.
Goods sold far below market value point to widespread tax evasion and manipulation of customs duties.
“The influx of imported goods sold at artificially low prices — well below what should be expected given ex-works prices, insurance, freight and duty costs — suggests widespread tax evasion, particularly through smuggling,” he said.
“It creates an uneven playing field for locally manufactured and legally imported products, deprives the Government of much-needed revenue, promotes illicit activities and discourages investment.”
At the heart of this informal retail boom lies a deeper problem: a complex web of illicit financial flows spanning smuggling and tax evasion that are destabilising a key economic sector and fuelling revenue leakages into neighbouring countries.
Much of this smuggling takes place across the porous Beitbridge border with South Africa.
Every day, vast quantities of goods — including beverages, clothing, processed foods and household essentials — are smuggled into Zimbabwe, bypassing customs controls.
These goods often end up on tuckshop shelves across the country.
Some of the most commonly used smuggling routes include Mai Maria, Panda Mine, Dite, Tshikwalakwala, Mawale, River Ranch (Beitbridge East), Sentinel, Tshivhara, and Shashe (Beitbridge West).
Tax evasion
The smuggled products are sold strictly in cash, usually in United States dollars.
This further complicates Government efforts to track sales, collect tax and boost revenue.
By avoiding electronic transactions, tuckshop operators evade the Intermediated Money Transfer Tax (IMTT) — a 2 percent levy on electronic payments — and remain outside Zimra’s fiscalisation systems.
As a result, vast sums of hard currency circulate in the informal market, often spirited out of the country to restock through smuggling operations.
This creates a vicious cycle that deprives the Government of millions in potential revenue daily and further entrenches the shadow economy.
Health concerns
Beyond economic harm, Prof Ncube highlighted the public health and safety risks associated with smuggled goods.
“Food items, medicines and alcohol that evade formal inspections pose significant dangers, as they are not subject to the necessary health and safety controls,” he said.
A market surveillance exercise conducted last year by the CPC found that some smuggled goods contained toxic additives, harmful pathogens and spoiled ingredients, which can result in serious health complications.
At the time, authorities warned that such products could lead to foodborne illnesses, allergic reactions and even long-term organ damage.
Public health expert and president of the Medical and Dental Private Practitioners of Zimbabwe Association, Dr Johannes Marisa, said consuming expired or counterfeit goods could result in dire consequences.
“It may cause severe complications such as multiple organ failure, liver and kidney damage, and other debilitating health issues,” he said.
“We urge the relevant authorities to take swift and decisive action to curb the influx of these harmful products and to protect consumers by ensuring only safe, approved goods are available on the market.”
Crackdown
In response to the growing threat, the Government last year launched a multi-agency crackdown targeting small businesses and cross-border transporters involved in smuggling.
The operation is spearheaded by a high-level task force led by the Ministry of Industry and Commerce, working in collaboration with Zimra, the Zimbabwe Republic Police, the Reserve Bank of Zimbabwe (RBZ) and the CPC, among other law-enforcement bodies.
During the festive season — when smuggling traditionally spikes — Zimra seized goods worth approximately US$2,4 million, primarily through inspections of commercial and passenger vehicles along key cross-border trade routes.
In support of the crackdown, the Ministry of Finance earlier this year introduced new regulations listing 19 product categories that will be presumed smuggled unless importers provide proof that all duties have been paid.
Under these rules, retailers must present valid documentation upon request by Zimra officials.
Failure to do so will result in immediate seizure of the goods under the Customs and Excise Act, along with penalties and liability for unpaid duties.
The targeted products include alcoholic and non-alcoholic beverages, cement, clothing and footwear, dairy products, diapers, electrical appliances and accessories, ploughs, processed meats, rice and pasta, sugar, tyres and motor spares, as well as washing powder and detergents.
Formalising the informal sector
To complement these measures, the central bank has directed banks to provide point-of-sale (POS) machines to all business account holders, including informal traders, in a bid to improve fiscalisation and tax compliance.
The Reserve Bank of Zimbabwe (RBZ) is also working with local authorities to ensure that only businesses with functional POS machines and registered bank accounts are eligible for trading licences or renewals.
RBZ Governor Dr John Mushayavanhu said the initiative is part of a broader drive to increase tax collections and formalise economic activity.
“The broader goal is to ensure that all businesses are connected to the formal banking system through the use of POS machines,” said Dr Mushayavanhu.
“In line with the Reserve Bank’s Monetary Policy Statement of February 6, 2025, banks were directed to provide POS machines to all business account holders, whether new or existing,” he continued.
“Specifically, regarding informal traders, the Reserve Bank is collaborating with local authorities to ensure that all applicants for trading licences (individuals or corporates) have a bank account and a functional POS machine at the point of licensing and/or renewal.”
He added that the programme will allow Zimra to track informal traders’ transactions, making it easier to bring them into the tax net and strengthen revenue collection.
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