Nkosana Moyo, a respected economist and former minister, said this week Zimbabwe’s Treasury is stifling businesses with overbearing tax demands, undermining their capacity to drive economic growth.
Speaking to the Zimbabwe Independent at the third edition of the In Conversation with Trevor (ICWT) Ideas Festival in Nyanga, Moyo stressed that the government’s approach to taxation risks choking economic expansion rather than fostering it.
The four-day festival, which kicked off on Tuesday, brings together some of the nation’s prominent people to share ideas that can help boost Zimbabwe’s economy.
“If we look at the structure of our economy and look at my perception of the Ministry of Finance at the moment, I would argue that the only job that I see is to raise taxes for the government,” he said.
“And they keep squeezing harder and harder. They are not incentivising players to grow the economy. Even if it's a smaller fraction of a bigger economy, it will be more money than what they are getting at the moment. So, instead of growing the economy, they are strangling the economy.
“There would need to be a clear decision to facilitate the growth of the economy so that the government becomes dependent on a growing economy, as opposed to the government trying to increase its revenues in spite of a shrinking economy.”
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Moyo said the government was cutting a bigger slice of a shrinking cake and soon there would be nothing left.
“I haven't seen any policy aimed at growing the economy. Everything is about taking more and more, rather than fostering growth, which would require the government to address its own expenditure,” he said.
Moyo observed that government expenditure was heavily tilted toward consumption rather than investment, with funds directed toward salaries, bonuses and procurement of vehicles instead of infrastructure or industry revitalisation
“Sadly, it’s not even investing expenditure. It’s consumptive expenditure. They are paying salaries, they are giving bonuses, they are buying vehicles,” Moyo said.
“Nothing, no investment. Unless I am missing something, I don’t sit in the cabinet, so I don’t know how this works. I don’t see how it can work.”
He also expressed scepticism about the Zimbabwe Gold currency, introduced in April, suggesting it lacks sufficient governmental support and public confidence to sustain its value.
Zimbabwe’s manufacturing industry, once a mainstay of the economy, contributing to GDP and formal employment, has been hamstrung by macro-economic instability, steep operational costs, currency shortages and minimal investment.
This has led to pronounced de-industrialisation, with high import reliance, widespread layoffs, and productivity often falling below 50%.
Despite these hurdles, Zimbabwe’s industrial sector remains broad, encompassing 94 sub-sectors producing around 6 000 goods across industries, such as food and beverages, metals and electricals, chemicals, packaging, textiles and furniture.
Alpha Media Holdings chairperson Trevor Ncube said the taxation policy should prioritise economic growth and development over mere revenue generation.
“Taxation ought to be guided by what our long-term growth strategy is, our economic development strategy is, our industrialisation strategy is,” Ncube said.
“What do we want to achieve? My sense is that what we want to achieve is an (upper) middle-income economy by 2030, and we need to understand what we need to do. We need to make sure that productivity goes up.
“So, what do you do to make sure productivity goes up using taxation as an instrument? It means you take off the foot from the accelerator as far as taxation is concerned to attract investors — local and foreign — who come in and invest in the sectors where you need economic growth to take place.”
Ncube said the festival was a success.
“For me, seeing young entrepreneurs with bright startup ideas come through this year's festival, that is a big paycheck for me — to hear the doors that we are opening for these young people, the opportunities that we are opening for these young people, the quality of the discussions that are going to result in real improvement in the quality of lives and the quality of our engagement. So, my heart is full,” he said.