Farai Mabeza, Senior Staff Writer 
THE country’s informal sector is set to expand even further as business struggles to survive the competition, a new report by the Zimbabwe National Chamber of Commerce (ZNCC) says.
The 2023 ZNCC annual state of industry and commerce report said it was therefore critical for policymakers to start viewing the informal economy as the normal economy.
“The informal economy is indeed a pool of entrepreneurial talent that can be harnessed to fuel economic growth,” the report, presented by University of Zimbabwe economics professor, Albert Makochekanwa, said. It is estimated that the informal sector accounts for about 65 percent of Zimbabwe’s gross domestic product.
The International Monetary Fund estimated in 2018 that almost 5,2 million people were trading in the informal economy. Some of the economic sub-sectors where, according to the report, informality is high include retail, distribution, the foreign currency parallel market and services. Workers in the informal sector however, lack legal recognition, secure contracts, worker benefits and social protection but their earnings sustain many lives and livelihoods.
Distribution of informal workers by employment activity.
“In itself, the informal sector has exhibited a lot of resilience, surviving against a lot of unpredictable shocks and challenges,” the report said. The report traces the genesis and significant rise in informality in Zimbabwe to 1991 when the country adopted and implemented the Economic Structural Adjustment Programme.
This resulted in the liberalisation of the economy in the 1990s through reviews of laws and regulations that restricted competition, like labour and wage laws, as well as import, pricing, and distribution controls.
“A few unofficial sectors, including those in the transportation industry, abused the market as a result of this liberalisation. Small businesses were able to enter the transportation sector because of liberalisation, which made it simple to get operator licences for commuter omnibuses. “In addition, people started entering various sectors and operated as informal players. Thus, informality at a massive scale was born,” the report said.
“(Since then) the informal economy has been on the rise, and the fast-track land reform programme of 2000, which triggered the closure of some owned foreign-owned enterprises across various economic sectors, added to the growth of informality over the years,” the report added.
The informal sector also emerged as a strategy of generating income during the economic crisis of 2000 to 2008 as a result of hyperinflation and public service cuts. The necessity for households to augment revenues from the formal sector kept the informal sector alive after the crisis.
“One could argue that the informal sector should expand since it is just as important to the expansion and improvement of the economy as a whole,” the report said.
The Covid-19 pandemic has (also) seen a rise in informal sector activities as people have struggled to eke out a living. This also comes as the country continues to have high levels of formal unemployment with some sources indicating rates of above 80 percent.
“Whatever the unemployment rate figure one can use, the fact remains that unemployment is very high in Zimbabwe. Due to this high unemployment rate, most able-bodied people end up resorting to various economic activities in the informal sector for their survival,” the report said.
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