The announcement of a new tax on fast food items like pizza, burgers, French fries, and doughnuts, presented in November 2024 by Zimbabwe Finance Minister Professor Mthuli Ncube as the 2025 National Budget Proposal, stood out among the numerous proposals as both ridiculous and concerning. It also suggested that the odd fixation on taxing almost everything might be signalling a serious economic crisis in Zimbabwe.
Income tax, value-added tax (VAT), capital gains tax, property tax, excise duties, import and export taxes, dividends from state-owned enterprises (SOEs), and royalties from the exploitation of natural resources are the main and most reliable sources of funding for governments worldwide. These conventional revenue sources are intended to support national security, social services, infrastructure development, and civil servants.
Nonetheless, the Emmerson Dambudzo Mnangagwa government appears to be spending as little as possible, as evidenced by Zimbabwe’s recent budget’s reliance on taxing fast food. This is not only a show of indifference toward a population already experiencing extreme poverty, but it also shows that the government is running out of viable sources of income with an estimated 70% of the population living below the poverty line.
Insufficient revenue from traditional sources asks, “Why can’t the Mnangagwa regime generate income through established means like income tax, VAT, or SOE dividends?” The answer is the systematic collapse of these sectors, which has been fuelled by years of misguided policies, corruption, and economic mismanagement.
A complete mess
The government’s main source of income, income tax, is in terrible shape because only around 10% of Zimbabweans have formal jobs. Given the high unemployment rate, it is not surprising that income tax contributions have decreased to almost nothing. Income tax collection is now all but impossible due to the informalization of the economy.
The government cannot effectively monitor or tax the informal sector, which currently accounts for about 90% of the economy, because it is largely unregulated. Despite plans to tax small grocery stores, boutiques, and auto parts dealerships, as well as announcements that informal traders must register with the Zimbabwe Revenue Authority (Zimra), enforcement is still absurd because of the state’s inability to handle the situation. The difficulties also affect VAT, another important source of income.
Poverty and inflation have severely reduced Zimbabweans’ purchasing power, leaving little left over for sizable VAT contributions, which has been further weakened as the majority of the African country’s economic activity takes place informally.
The traditional channels for collecting VAT have essentially dried up in a situation where high taxes, inconsistent policies, unstable currency, and ongoing power outages have caused formal businesses to either close or reduce their operations. The informal sector’s dominance has also had a negative impact on customs revenues, import and export taxes, and excise duties. Bypassing standard import procedures, informal cross-border traders frequently deny the government customs duties.
The finance minister has threatened to crack down on this practice, but these threats are meaningless because the state cannot enforce such measures. A larger economic collapse, where even the most basic controls over trade and commerce are ineffectual, is reflected in Zimbabwe’s failure to regulate its informal sector. An equally bleak picture is presented by the dividend issue from state-owned businesses.
Formerly thriving businesses such as Zimbabwe Iron and Steel Company (ZiscoSteel), Zimbabwe United Passenger Company (ZUPCO), Zimbabwe Electricity Supply Authority (ZESA), and National Railways of Zimbabwe (NRZ) have been severely damaged by decades of corruption, poor management, and illegal financial activity.
These SOEs are ongoing liabilities to the state, despite the fact that they ought to be generating substantial revenues. Their collapse, which left the government with few dependable revenue sources, serves as a stark reminder of Zimbabwe’s systemic problems with leadership and governance.
As per the social justice advocate and writer Tendai Ruben Mbofana, “The natural resource sector in Zimbabwe has also not made a significant contribution to the state coffers, despite its enormous potential. Gold, diamonds, lithium, and platinum are among the most sought-after minerals in the world that can be found in the nation.”
“Corruption and smuggling, however, have seriously damaged this industry. The “Gold Mafia” documentary on Al Jazeera revealed senior officials and their associates engaged in money laundering and gold smuggling,” he added.
The severity of the issue was recently highlighted by the arrest of Wicknell Chivayo’s brother, a controversial businessman and convicted criminal, in South Africa for smuggling R15 million worth of gold.
Tax terror
According to reports, mineral smuggling costs Zimbabwe more than $2 billion a year, with many of the smugglers being connected to the wealthy and influential. Because of this, royalties from these resources—which ought to be a substantial source of income—rarely reach the state’s coffers.
In light of this, the extent of the economic collapse is demonstrated by the government’s reliance on taxing regular people, such as by imposing duties on fast food and raising tolls and taxes on necessities.
“The desperation of a regime unable to produce revenue through conventional, sustainable means is reflected in this strategy, which disproportionately targets a population already experiencing poverty and hardship. It is an indictment of poor leadership that puts survival ahead of the welfare of its people,” Mbofana mentions.
Zimbabwe’s economic problems have been made worse by erratic policies, high inflation, and an unstable currency. These elements foster an atmosphere that is unfriendly to official business operations, deterring investment and impeding economic expansion. The situation is further worsening due to ongoing power outages, which make it practically impossible for businesses to operate effectively.
“The Zimbabwe Chamber of Mines estimates that ongoing power outages will cost the mining industry $500 million this year alone. The economy has been severely damaged by this, and the government is now frantically looking for new sources of income, no matter how extortionate or unrealistic,” Mbofana noted.
The traditional foundations of economic stability—regulated trade, strong state-owned enterprises (SOEs), formal employment, and efficient resource management—have all but collapsed due to corruption, poor management, and failed policies.
Therefore, regardless of the social or economic repercussions, the government has started taxing everything. Fast food taxes on items like pizza, burgers, French fries, and doughnuts are a sign of a more serious problem.
It shows a government that has lost its way and is fighting a long-term structural collapse with short-term, unsustainable solutions. In addition to failing to address the underlying causes of the economic crisis, this strategy runs the risk of making Zimbabweans’ suffering worse every day.
Deep economic woes
To sum up, Zimbabwe’s “pizza budget” serves as a sobering reminder of the country’s economic woes. The government’s incapacity to generate income from conventional sources is indicative of a more general breakdown in governance and leadership.
The Mnangagwa administration has decided to tax the most vulnerable people into even greater poverty rather than tackling the structural problems that caused this collapse.
The regime is desperate to survive in an economy it has systematically destroyed, and this is not a sustainable solution.
Zimbabweans deserve better—an administration that puts the welfare of its people, transparent governance, and sustainable economic growth ahead of exploitation-focused, short-sighted policies. Meanwhile, with the highest interest rate in Africa, Zimbabwe is expected to close out the year.
After the monetary policy committee decided to maintain the same borrowing rates at its last meeting of the year, the interest rate in the Southern African nation is currently at 35%. Bloomberg claimed that this would make it the highest interest rate in Africa.
“To ensure that inflation expectations remain well anchored, the MPC resolved to maintain the current tight monetary policy stance,” John Mushayavanhu, the governor of the country’s central bank said.
According to a Bloomberg report, the hardline stance taken by the Reserve Bank of Zimbabwe has helped the nation’s bullion-backed currency gain strength and regain some of its value in relation to the US dollar.
In April 2024, Zimbabwe became the first country in the world to use ZiG, or “Zimbabwe Gold,” a new currency backed by gold.