Online Reporter
EVERYONE agrees that the informal sector in Zimbabwe needs to be included in the formal business world, paying taxes and buying licences.
These small businesses, while generally starting off on the bottom rung of the ladder, can then progress upwards and grow.
There is also the need for most informal businesses to upgrade their worker safety and at least give those they hire, even when these are all members of a single family, at least some of the basic rights of workers.
Those pressing hard for formalisation tend to think only of the financial and licencing aspects, and forget that many small unlicenced businesses also employ people.
But even a one-person business needs to be able to access decent advice on safety.
We have seen in the gold mining sector that almost all deaths and injuries are among the artisanal miners, not the large workforces of established mines where safety rules are rigidly enforced and no one is allowed to take chances or shortcuts.
This perhaps divides the two sectors more than anything else.
The Second Republic has been keen on being inclusive, wanting to bring in the small informal businesses rather than close them down.
Their contribution is recognised both as a source of employment for so many and their general contribution to the national economy, which is large when everyone is added together.
Formalisation has not been that easy since it usually goes beyond buying a licence from the local authority and registering with Zimra, even if the sole trader does not earn enough to pay tax.
Licences, for example, are bought annually, requiring a large lump sum, and as established businesses can testify, in the past the paperwork could be horrific.
Several sets of Government policies are now making formalisation a practical option, and giving practical benefits.
For a start, the licencing regime is being radically overhauled, often just to produce a single licence and suggestions have been made that this fee could even be paid daily as part of the rent of a properly organised and recognised market.
Information Technology should make monthly licences easy to buy online and defaulters followed up.
The Government has now drawn and adopted a national formalisation strategy, approved by Cabinet this week, that seeks to make formalisation far more inclusive and, critically, make it something desirable to small businesses.
The strategy starts incorporating improved practical access to social security, labour rights, safety and financial services.
Unsafe practices hit both the business and its customers, so helping the small businesses operate more safely seems essential.
Again we can look at artisanal gold mining to see the worthwhile effects when someone persuades a group of miners to follow safety rules.
The Government is also aware of the need for even simpler and cheaper procedures for formalisation and licencing than given in even the reformed licencing regime now being brought into operation in the general commercial and industrial sectors.
It would be far better if all businesses were formalised even if the smallest were exempted from some of the requirements.
Zimra already operates like this.
It knows that a lot of businesses are too small to pay tax, since the profits to the sole trader are in the zero tax bracket, but it still wants them on the list and for owners to post nil returns every three months and keep basic accounts.
Then as the business grows, Zimra already knows who they are and in the meantime has helped them operate formally.
Handling large numbers of small businesses is easy with databases and proper online sites that can accessed with a phone.
We do not want a situation where the licence fees and taxes of these small businesses cost more to collect than they bring in, but modern technologies can avoid that risk.
There will be a need for some inspections, mainly concerning safety, but one inspector can check out a long list of businesses in a day, especially those using machinery or preparing and selling food, and make sure health and safety rules are followed.
Meanwhile, the special schemes being rolled out by Government to help youths, women and others access basic finance will be successful if limited to registered businesses, so everyone knows who is in charge and where the business is located.
That sort of incentive will help persuade the more reluctant to climb aboard earlier rather than later.
The new strategy appears well-thought-out, combining all essential requirements and making sure that formalisation is easy, costs almost nothing, and brings benefits to everyone.
