Harare Slashes Business Licence Fees, Faces US$500,000 Revenue Shortfall

The City of Harare has halved business licence fees to boost entrepreneurship, but the decision leaves a US$500,000 revenue gap, prompting concerns over service delivery and fiscal sustainability (image source)

HARARE – The City of Harare has cut business licence fees by 50 percent in a bid to stimulate economic activity and ease the burden on struggling entrepreneurs. However, the move will create a US$500,000 shortfall in municipal revenue, sparking debate over how the city will sustain essential services amid growing financial pressures.

The announcement came on Thursday during the presentation of the 2026 municipal budget, where Finance and Development Committee chairperson Councillor Costa Mande unveiled a US$690.8 million spending plan — a 19 percent increase from the 2025 allocation. Mande said the fee reduction represents a deliberate shift to support small and medium enterprises (SMEs), many of which have struggled to survive under Zimbabwe’s volatile economic climate.

“We are aware this will reduce our revenue, but we believe the long-term benefits of a more vibrant business sector outweigh the short-term loss,” said Mande.

The revised fee structure is expected to benefit thousands of informal traders and small business owners who have long complained that the previous costs were prohibitive and inconsistently enforced. In past years, many operators ran unlicensed businesses, citing unaffordable fees and bureaucratic delays.

City officials hope the reduced charges will encourage formalisation, broadening the tax base and improving compliance. The decision also follows sustained pressure from business associations and civil-society groups advocating for more inclusive local economic policies.

However, the policy comes as Harare struggles with chronic infrastructure decay, water shortages, and waste management challenges. Critics have warned that without alternative revenue sources or improved collection efficiency, the budget gap could undermine already strained service delivery.

Urban economist Dr. Tawanda Zinyama said the success of the plan hinges on the city’s ability to convert informal traders into paying businesses.

“If the city can increase compliance and reduce leakages, the net effect could be positive. But if enforcement remains weak, this could simply mean less money for service delivery,” he noted.

The 2026 budget prioritises road rehabilitation, water infrastructure upgrades, and waste collection, with significant funding reserved for capital projects. Councillor Mande said Harare will also explore public-private partnerships (PPPs) and donor support to fill funding gaps.

Business leaders broadly welcomed the move, describing it as a sign of renewed engagement between the council and the private sector.

“This is a relief for many of our members,” said a spokesperson for the Harare Informal Traders Association. “We hope it marks the beginning of a more collaborative approach between the city and small businesses.”

As the city prepares to implement the new budget, attention will now turn to whether the fee cut delivers an economic boost or deepens Harare’s fiscal strain.