Zimbabwe’s corporate sector is facing fresh pressure after the country’s Finance Minister, Professor Mthuli Ncube, used his mid-term budget review to focus more on boosting government revenue than providing incentives for economic growth. This fiscal hard line, analysts warn, could deepen the challenges that companies in different industries are already struggling with.
Instead of providing relief to ease the strain on businesses, Treasury doubled down on tough tax policies and high regulatory charges. Many companies, already grappling with rising wages, unstable electricity supply, and weak consumer spending, now have to prepare for more financial stress in the coming months.
Research firm IH Securities explained that the decision suggests government is not planning to reduce taxation or loosen regulations soon. They predict that more businesses will move into the informal sector to escape the high costs, while those that remain in the formal economy will see continued pressure on profits. This, they say, will choke bottom-line earnings for listed companies and other formal enterprises.
Before the review, corporate leaders were hoping for measures to stimulate growth and help offset the impact of inflation and reduced consumer purchasing power. However, the budget framework focused on fiscal consolidation — essentially tightening government finances — instead of offering stimulus packages or tax breaks to support business expansion.
Government revenue reached ZiG101.2 billion in the first five months of 2025. Most of this came from improved tax collection methods, not from wider economic growth. As part of its measures, Treasury removed some VAT exemptions and introduced new levies, including a sugar tax. Industry stakeholders say the sugar levy has added another burden to companies that are already facing rising production costs.
Treasury is projecting the economy will grow by 6% this year. This forecast is based on favourable conditions such as high global gold prices, good weather from the expected La Niña climate pattern, and a stable ZiG currency. But on the ground, the economic situation is far from stable. Agriculture shrank by 18.1% last year, informal businesses now make up over 76% of all enterprises, and consumer demand remains weak.
Zimbabwe’s public debt was US$21.5 billion as of March 31, with nearly 60% owed to foreign creditors. After rebasing GDP to US$45.7 billion, the debt-to-GDP ratio dropped to 46.5%. However, analysts at FBC Securities caution that this improvement is more of a statistical change than real progress. They stress that external debt arrears still block the country’s access to concessional funding, making debt sustainability a serious challenge.
Development partner funding has also fallen short of expectations. Only US$148 million came in during the first half of the year, forcing Treasury to cut its annual forecast by more than a third. Meanwhile, government spending hit ZiG98 billion within the same period, with salaries for public workers taking up nearly half of the budget. Certain sectors, such as transport, have overspent heavily — using 116% of their annual budget in just six months — raising concerns that such spending patterns could limit opportunities for private sector investment.
On the currency side, the introduction of the ZiG has helped calm inflation, which averaged just 0.5% monthly between February and June. It has also reduced the gap between the official and parallel market exchange rates to 20%, down from 136% in 2024. However, this currency stability has not yet translated into a more friendly business climate.
IH Securities concludes that the rest of 2025 will remain challenging for Zimbabwean companies. High taxation, expensive regulatory compliance, and unstable electricity supply will continue to frustrate operations. Analysts believe that while government’s revenue drive is meant to address fiscal imbalances, the unintended consequence could be slower business growth and reduced private investment.
For now, companies must navigate an environment where government’s push for more revenue may ultimately cost more than it saves.
