HARARE — A surge in smuggling and the influx of unregulated imports is dealing a severe blow to Zimbabwe’s economy, triggering illicit financial flows (IFFs) and destabilising the formal retail sector.
Authorities have taken decisive action, prosecuting over 700 shops for tax evasion, selling counterfeit goods, and breaching consumer protection laws. Confiscated contraband is estimated at over US$10 million.
The Zimbabwe Revenue Authority (Zimra) and the Consumer Protection Commission (CPC) are stepping up enforcement against what they term a “growing shadow economy” — a sector siphoning government revenue and undercutting legitimate enterprises. Since January 2025, the CPC has carried out 3,391 inspections, leading to 708 prosecutions and the issuance of 447 compliance notices.
Many violations stem from informal traders and unlicensed tuckshops selling smuggled and substandard goods while bypassing taxes and regulations. Seized products include more than 1,600 cans of energy drinks, 250 litres of non-alcoholic beverages, and over 1,000 bottles of premium alcohol brands such as Heineken, Jack Daniels, and Savanna. Other confiscated items include powdered milk, camphor cream, and household appliances — mostly smuggled in from South Africa and Zambia through unauthorised border crossings.
Kudakwashe Mudereri, CPC Director of Research and Public Affairs, confirmed the taskforce’s findings: “We have discovered that most of the illicit goods on the market are indeed being smuggled into the country.”
Economists classify IFFs as cross-border financial movements involving tax evasion, smuggling, and unrecorded transactions. In Zimbabwe, these illicit flows are draining foreign currency reserves, weakening state revenues, and fuelling an unregulated informal sector.
Formal retailers are feeling the pressure. Major supermarket chain OK Zimbabwe closed four branches in March. Meanwhile, Botswana-listed retailer Choppies announced plans to exit Zimbabwe, citing a 30% drop in foot traffic due to informal competition. In a statement, Choppies noted: “Over the last two years, there has been a significant shift to the informal retail sector, leaving the formal sector battling reduced footfall and unfair competition.”
The Confederation of Zimbabwe Retailers (CZR) says informal traders, who operate without licences, evade labour laws and avoid taxes, are offering cheaper prices and squeezing out formal businesses. “The informal sector operates outside compliance with statutory obligations, making it increasingly difficult for formal businesses to compete,” said CZR President Denford Mutashu.
In Harare’s Central Business District, the impact is visible: supermarkets are struggling to restock shelves, while informal tuckshops continue to multiply.
Finance Minister Professor Mthuli Ncube raised alarm in his 2025 National Budget Statement, warning that smuggling is eroding government revenue and damaging local manufacturers’ competitiveness. “The influx of imported goods sold at artificially low prices, well below expected costs, suggests widespread tax evasion through smuggling,” he said. “It creates an uneven playing field, deprives the government of revenue, promotes illicit activities, and discourages investment.”
The Beitbridge border post, Zimbabwe’s busiest crossing with South Africa, has become a hotspot for smuggling. Goods including food, clothing, and beverages enter the country daily through informal routes such as Mai Maria, Panda Mine, and Dite. These goods are predominantly sold in US dollars, bypassing electronic payments and the Intermediated Money Transfer Tax (IMTT), which hampers Zimra’s tax collection and fuels further illicit activity.
Beyond economic losses, public health is also at risk. Minister Ncube warned that unregulated food, alcohol, and medicines pose serious dangers. CPC’s market surveillance found some smuggled goods contain toxic ingredients or are expired, raising fears of food poisoning and long-term health effects.
Dr Johannes Marisa, a public health expert, cautioned: “Counterfeit or expired products can cause organ failure and other severe conditions. Authorities must act swiftly to safeguard consumers.”
In response, the government has initiated a coordinated crackdown on smuggling networks and non-compliant businesses. A taskforce led by the Ministry of Industry and Commerce includes Zimra, the police, the Reserve Bank of Zimbabwe (RBZ), and the CPC. During the 2024 festive season, Zimra seized contraband worth US$2.4 million at border checkpoints.
New laws now require importers to provide proof of duty payments for 19 categories of goods — including beverages, clothing, cement, dairy products, and electrical appliances — or risk seizure and penalties under the Customs and Excise Act.
To help formalise the informal sector, the RBZ has instructed banks to provide point-of-sale (POS) machines to all business account holders, including informal traders. RBZ Governor Dr John Mushayavanhu said, “The goal is to ensure all businesses are connected to the banking system via POS machines, enabling Zimra to track transactions and bring traders into the tax net.”
The smuggling crisis has exposed a complex web of illegal financial flows that are draining Zimbabwe’s economy, threatening public health, and deterring investment. Authorities have pledged to escalate their efforts to dismantle the shadow economy and restore balance and fairness to the formal retail sector. – News Day
