The Zimbabwean government has implemented an adjustment to the strategic fuel levy, a move outlined in Statutory Instrument 50 of 2025. This legislative instrument amends Section 22H of the Finance Act, resulting in notable increases in levies for both petrol and diesel. Petrol now faces a levy of US$0.2470 per litre, marking a 19.3% rise, while the diesel levy has been increased by 27.2% to US$0.1870 per litre. The government posits that this adjustment is likely to stabilize fuel supply and prices in the long run.
However, the National Competitiveness Commission, in its latest report, cautions that this measure could have significant repercussions for businesses and consumers alike. The immediate impact is anticipated to be an increase in operational costs across various sectors. Fuel being a fundamental input for transportation, logistics, and production, these elevated costs are likely to be passed on to consumers, potentially leading to a higher cost of living and reduced disposable income for households.
For businesses, particularly those heavily reliant on fuel, the increased levies present a direct challenge to their cost structures. This could erode profit margins and potentially hinder expansion plans. The National Competitiveness Commission highlights the risk of a decline in Zimbabwe’s overall national competitiveness as businesses grapple with higher input costs compared to their regional counterparts. This disparity could make Zimbabwean goods and services less attractive in both domestic and international markets.
The commission’s analysis points to a potential “revenue and development trade-off dilemma.” While the government may see short-term revenue gains from the increased levies, the long-term economic benefits could be limited or unevenly distributed if the increased costs stifle economic activity and productivity. The report explicitly warns of a likely widening of the regional competitiveness gap for Zimbabwe.
To mitigate these adverse effects, the National Competitiveness Commission urges the government to consider implementing supportive measures for fuel-intensive industries. These could include targeted incentives or tax breaks designed to help businesses absorb the immediate shock of rising fuel costs.
Furthermore, the commission recommends a more gradual approach to future levy adjustments, allowing businesses sufficient time to adapt and minimize potential productivity losses. This phased implementation would provide a buffer against sudden economic shocks and enable businesses to adjust their operational strategies accordingly. The interplay between the government’s objective of stabilizing fuel supply and prices and the potential negative consequences for businesses and consumers will be a crucial dynamic to monitor in the coming months.