Contribution of Informal Sector Underrated

Zimbabwe’s informal economy has been an important source of resilience over the past decades, as successive financial crises, the collapse of commercial agriculture, and deindustrialization have forced workers out of formal employment.

It is estimated that between 80 to 90 percent of Zimbabweans are engaged in informal economic activities, and that the sector, which is also linked into supply chains and the formal economy, accounts for 40 percent of Zimbabwe’s Gross Domestic Product.

Speaking during a webinar hosted by Chatham House Africa on Thursday under the theme, Innovation and Inclusion: Policy priorities for Zimbabwe’s informal economy, country Director for Zimbabwe International Labour Organisation, Hopolang Phororo said the informal economy is a vibrant and productive sector and should not be considered as a residual or marginal phenomenon.

“Sadly, there are still a lot of negative connotations associated with the sector and the ILO has been looking into challenging this narrative,” she added.

In his submission on the policy priorities for supporting and rebuilding the vendor economy, Michael Ndiweni, Executive Director of the Bulawayo Vendors and Traders Association said there is need to zero in on the institutional complexities that govern the informal economy.

“Are the laws governing the sector in line with the 2013 Constitution? Is the Town Planning Act aligned to the Constitution of Zimbabwe and does it speak to the aspirations of the informal sector and the right to work as enshrined in section 24 of our Constitution,” Ndiweni quizzed.

“There is a need to recognise the informal economy and its contribution to the GDP. We need laws that recognise the sector. We need to eliminate issues of stigmatisation and criminalisation of the sector.” he added.

The BVTA boss stressed on the need for proper vending spaces to counter effects of harsh conditions such as rain. He added that the spaces must also be secure and lighting must be provided at the vending spaces.

“Access to proper trading infrastructure is a priority for the informal economy. We need to have decent trading spaces for the sector that are also gender-sensitive. For example the ablution facilities must at least have a nappies changing space for women with babies,” he said.

Charles Dhewa, Chief Executive Officer at Knowledge Transfer Africa said in Zimbabwe a new economy which is a fusion of the informal and formal sectors is emerging. According to Dehwa, the informal sector is a front for the formal sector. While underscoring the importance of the informal sector, Dehwa cited a few corporate giants in the formal sector that are selling their products via the informal sector.

Dehwa said the formal sector is overrated at the expense of the vibrant informal sector that affords ownership for entrepreneurs.

“Farmers, as informal actors, are employed by their own businesses. They don’t emphasize employment creation but asset ownership. We have young people who graduated from the universities and they have never been in the formal economy,” said Dehwa.

The KTA CEO took a swipe at authorities who criminalise the informal sector while turning a blind eye on its sustenance of livelihoods. He challenged policymakers to take the sector seriously, study it and support it as befitting an alternative economy.

“It’s wrong to criminalise the sector that is accommodating many Zimbabweans with a potential to be innovative. We need to profile the entire ecosystem, for instance 3 500 traders in Mbare are very organised in the so-called ‘disorganisation.’ The policy makers must look closely into this alternative economy. People are leaving the Central Business District to where the informal business is being conducted,” he said.

Dehwa further argued that formalisation is a colonial legacy and that the accusation that informal traders do not pay tax does not subsist since they do pay tax in the form of mobile tax.

Esinath Ndiweni, an academic concurred with Dehwa, saying there is a “disconnect” in the business model that is overdependent on the colonial system. She urged the country to build on the informal sector.
“Commercial banks are not relevant when it comes to the informal sector. Policymakers have to take cues from the informal sector. It is better to set up community banks. Our people have proved their mettle in handling and managing finances in burial societies and other means of fundraising. We have to change our mindset and embrace our ways,” she said.

While addressing concerns on the politicisation of trading spaces, Annamarie Kiaga, an officer at ILO said her organization is trying to proactively minimize opportunities for politicians to politicise the informal sector.

“We try to minimize the politicisation of the sector by meeting the needs of informal traders ahead of the politicians. By the time the politicians come, they will have nothing to dangle for the informal traders,” she said.
The ILO says it is currently renovating work spaces for informal traders in Bulawayo and Harare.

Source: Community Podium

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