Government descends on rogue manufacturers

Source: Government descends on rogue manufacturers | The Sunday Mail

Government descends on rogue manufacturers

Bulawayo Bureau

THE Government has issued a stern warning to manufacturers who are directly supplying goods to the informal sector, as the practice is undermining formal businesses and causing distortions in the market.

The warning follows an emergency meeting chaired by President Mnangagwa, who cut short his annual leave to address urgent economic issues.

Speaking to our Bulawayo Bureau, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said manufacturers need to refrain from bypassing wholesalers and distributing goods directly to informal retailers.

“I want to discourage suppliers from supplying directly to the informal sector, circumventing the wholesalers and formal retail sector.

“We are insisting on a 5 percent withholding tax as the charge for those who are not compliant with the tax requirements,” he said.

Prof Ncube also outlined a series of interventions introduced by the authorities aimed at levelling the playing field for formal businesses, which continue to struggle with competition from unregulated informal traders.

The excessive informalisation of the retail sector, he said, has placed formal businesses at a significant disadvantage as they have to comply with regulatory requirements and statutory obligations.

“The formal sector is unable to compete successfully given some of the regulatory burdens they face.

“So, the statement I issued on Friday has to do with how we can deepen formalisation of the economy, making sure that anyone operating in the sector is appropriately licensed,” he said.

As part of this effort, the Government is mandating that all businesses operating in the retail sector obtain the necessary licences.

This will involve coordinated licensing efforts between local authorities and Central Government.

Additionally, every operator will be required to have a point-of-sale (POS) machine to formalise transactions and improve revenue collection.

Banks are also being directed to issue POS machines to all new account holders, as opening a bank account will become mandatory for businesses.

“Banks must make sure that as they open their (informal sector) accounts . . . because we are also making the opening of bank accounts a mandatory issue, they should issue them with POS machines to make sure we can formalise transactions within the sector,” he said.

These measures signal a renewed commitment by the Government to formalise the economy, boost revenue collection and create a more equitable business environment for formal businesses struggling to compete with the burgeoning informal sector.

The Government believes these interventions will help stabilise the economy and promote sustainable growth.

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