Indigenisation contributing to low GDP – LEDRIZ

The government’s indigenisation drive is greatly contributing towards the country’s low gross domestic product (GDP) because most informal sectors are evading paying taxes, an economic expert has said.

A development economist at the Labour and Economist Development Research institute of Zimbabwe (LEDRIZ), Prosper Chitambara, revealed that the dominance of the non-formal economy triggered by indigenisation has heavily impacted the GDP. Chitambara said the non-formal economy consisted of three sectors: informal, rural subsistence and underground. He further underscored that the indigenisation drive had failed to translate into the country’s net value.

“With the current indigenisation exercise most beneficiaries are evading taxes, yet this is a sector that can play a very big role in the GDP. There is a great deal of tax evasion and avoidance in this sector. I think this one of the major challenges we have in Zimbabwe because of the complicated tax regime. It’s simple to evade it,” he said. Chitambara added: “GDP in Zimbabwe is only focused on activities within the formal economy, but if you go to the hidden economy that is where the money is. It is controlled by cash barons.”

Chitambara said there was great need for a policy framework that guaranteed a dual economy and a uniform and simplified tax regime.

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