ZimNow Analysis Desk

The 2026 National Budget contains some major shifts that will affect Zimbabwean businesses long after the headlines fade. Some reforms will genuinely improve the operating environment. Others will tighten pressure on firms already battling thin margins. And a few signal deeper structural problems the country will continue to drag into NDS2.

Here is the ZNyaya breakdown — the good, the bad, and the ugly of the 2026 Budget if you are running a business in Zimbabwe.

THE GOOD

IMTT finally becomes fairer — and cheaper

The reduction of IMTT on ZiG transactions from 2% to 1.5%, coupled with Treasury’s decision to make IMTT tax-deductible, is arguably the most meaningful pro-business reform in the Budget. It will free up significant working capital while making digital, formal payments less punitive  and improving confidence in the local currency.

Devolution money is real at last

Treasury’s allocation of ZiG 14.4 billion to devolution is a major win for provincial businesses. For years, devolution existed as a constitutional aspiration with little financial backing. Now, provinces will have substantial resources to contract builders, engineers, transporters, and inject life into SMEs. This shifts economic activity away from Harare and helps rebalance national development.

A pathway to a 24-hour economy

The Budget introduces targeted tax incentives for companies running extended operational hours, including additional deductions and accelerated depreciation for machinery. If rolled out properly, this could lift manufacturing throughput, boost logistics efficiency, expand BPO operations and keep more value-addition inside the country. Hopefully local authorities like City of Harare will come up with complimentary by-laws to regularise the already thriving informal night markets.

Gold becomes a legal investment class

By allowing individuals to legally hold, exchange and transact in certified gold bars, Treasury has opened a new, regulated savings and investment avenue. This is good for financial-sector innovation, for jewellers and refiners, and for citizens looking for alternatives to cash under mattresses. The move is a building block for a more modern, diversified investment ecosystem.

Infrastructure remains a priority

Roads and airports received ZiG 4.6 billion, with specific focus on completing the Harare–Masvingo–Beitbridge highway and upgrading the Bulawayo–Victoria Falls corridor. These routes underpin tourism, logistics and agriculture. Businesses dependent on transport will benefit from reduced maintenance costs, shorter turnaround times and a more reliable national distribution network.

THE BAD

VAT goes up in a low-margin economy

The increase of VAT from 15% to 15.5% may seem modest, but for businesses operating on thin margins — especially retail, clothing, household goods, and food — this is a direct squeeze on profitability. It also tightens the cost of living at a time disposable incomes are flat or falling. Companies will face pricing pressure and rising compliance complexity, especially those pricing in dual currencies.

ODA declines by 30% — and the private sector will feel it

Development assistance falls from US$500 million to US$350 million in 2026. This is a blow to Zimbabwe’s social sectors and to the thousands of local suppliers, contractors and SMEs that depend on NGO and UN procurement. Reduced donor liquidity will ripple into health, education, agriculture projects and humanitarian programs. Businesses selling goods and services into the aid ecosystem must brace for fewer opportunities.

Fiscal space is extremely limited

With public and publicly guaranteed debt at US$23.4 billion (44.7% of GDP), the Budget has no room for bold incentives, industrial subsidies or major economic shocks. Companies should not expect large new tax breaks or state-supported credit. Treasury is signalling a commitment to fiscal discipline, but this also means the private sector must finance its own growth in an environment where domestic credit remains expensive.

THE UGLY

Security spending dominates — shaping economic power structures

The allocation of ZiG 46.8 billion to the security sector makes it one of the biggest winners in the 2026 Budget. This entrenches the securitisation of public works and engineering projects. Military-linked units will likely be taking major civil-works contracts — roads, housing, logistics — raising concerns about competition fairness. For the private sector, this reduces space in key tenders and signals continued overlap between economic and security priorities.

Transport costs remain high — despite promised reforms

Although the Budget notes that Cabinet has approved transport sector reforms, details are missing. Until the new fees are gazetted, operators remain stuck with old, overlapping, punitive licensing structures. The sector desperately needs rationalisation, but for now, businesses must operate under the existing high-cost framework. Without rapid implementation, logistics will remain one of Zimbabwe’s most expensive economic inputs.

Rising taxes + shrinking donor support = pressure on consumers

The combined effect of higher VAT, a modest IMTT relief, and reduced donor inflows will push more economic pressure onto households. For businesses, this means weaker demand, slower sales cycles and tighter spending across the market. Companies should expect consumers to trade down and prioritise essentials. The Budget tries to stabilise the macro picture, but its structure places much of the adjustment burden on ordinary Zimbabweans.

The Verdict

The 2026 Budget is a mix of cautious wins, unavoidable compromises and worrying trends. For business, the key is to move early: leverage the IMTT relief, position for devolution tenders, prepare for a 24-hour operating environment, and adjust pricing models for VAT. But remain alert — shrinking donor flows, limited fiscal space and heavy security spending will define the risk landscape for the year.