This working paper was published by UNU WIDER
This explorative study analyses how the use of tax expenditures affects the fiscal contract in Zimbabwe by focusing on special economic zones (SEZs) in the mining sector. SEZs combine a variety of business-related tax expenditures. Governments use them to attract investment, boost exports, promote employment and create positive spillover effects for the national economy. However, their efficiency is often in doubt. SEZs are frequently seen as a product of lobbying by powerful economic groups, and a source of rent-seeking and corruption. Against this background, the paper analyses the use of SEZs in Zimbabwe from a distributional and governance perspective. Based on document studies and semi-structured interviews, we find that the initial set-up of SEZs has been embedded in consultation processes with stakeholders. In contrast, managing this mechanism, creating new zones, reporting on the use of SEZs, evaluating their costs and benefits and reforming the SEZ policy have largely occurred behind closed doors and most likely with a rather thin evidence base. In the light of these findings, it is not surprising that most stakeholders have a rather critical perception of SEZ use in Zimbabwe.
Citation: von Haldenwang, C., Chigumira, G., Chipumho, E., Mchowa, C.(2025) Tax expenditures and the fiscal contract in Zimbabwe. WIDER Working Paper 2025/108. Helsinki: UNU-WIDER. https://doi.org/10.35188/UNU-WIDER/2025/667-4