daniel chigunwe
Note from ZNCC
The 2024 ZNCC Annual Congress held in Victoria Falls from June 26 to 28 brought together a distinguished panel of experts to discuss the hot topic “New perspectives on dealing with informality: A focus on the Zimbabwean context.”
The discussion was driven by the stark reality that Zimbabwe’s informal economy, estimated at 64,1 percent of the country’s GDP, represents approximately $42 billion at purchasing power parity levels.
With almost 5,2 million people engaged in informal trade, many of whom are women and youths, the panel sought to explore pragmatic solutions to the challenges and opportunities within this sector.
National economist at UNDP Zimbabwe, Ethel Bangwayo, opened the discussion by highlighting the pervasive nature of informality across Africa and its significant impact on Zimbabwe.
She emphasised the need for a tailored policy approach that considers Zimbabwe’s unique context, advocating for models that create linkages between the formal and informal sectors to promote inclusive growth and resilience.
Bangwayo’s insights set the stage for a critical exploration of the systemic issues plaguing informal traders, including the lack of social protection, decent working conditions and access to finance. She underscored the importance of initiatives like the African Continental Free Trade Area (AfCFTA) in providing opportunities for the informal sector to transition into the formal economy.
Executive director of the National Competitiveness Commission (NCC), Phillip Phiri, expanded on Bangwayo’s points by addressing the regulatory landscape in Zimbabwe. Phiri highlighted how existing frameworks inadvertently drive many businesses into informality, citing the negative correlation between informality and global competitiveness.
Drawing from the experiences of Rwanda and Mauritius, Phiri underscored the need for comprehensive regulatory impact assessments and differentiated fee structures that accommodate small enterprises. He advocated for targeted policies that incentivise formalisation and remove financial barriers, stressing the importance of collective action to reduce Zimbabwe’s high informality rate.
Following Phiri’s regulatory insights, CEO of First Mutual Holdings Ltd, Douglas Hoto, called for a paradigm shift in perceptions of the informal sector. Hoto emphasised the significant contributions of informal players to the economy, highlighting their roles in driving economic activities and paying taxes.
He proposed a nuanced approach to engaging with informal enterprises, citing South Korea’s subcontracting models as examples of integrating informal players into value chains. Hoto challenged the notion that successful economic stabilisation can occur in highly informalised economies, urging a re-evaluation of policies to foster inclusivity and resilience.
Group marketing executive at Old Mutual Zimbabwe, Lilian Mbayiwa, affirmed the potential of the informal sector while stressing the necessity for interventions that promote formalisation. She highlighted the role of large corporations in setting basic requirements for their suppliers and partners, advocating for regulatory flexibility and simplified tax and registration processes.
Mbayiwa’s call for inclusive policies and support programmes resonated well with the panel, emphasising the need for collaborative efforts to educate and raise awareness about the benefits of formalisation.
Group CEO of Edgars Stores Ltd, Sevious Mushosho, echoed similar sentiments emphasising a comprehensive, multi-faceted approach to addressing informality. He highlighted the importance of infrastructure investment, digital platforms and incubator hubs in supporting small-scale businesses’ transition from informality to formality.
Mushosho announced Edgars Stores’ initiative to reintroduce Express Stores, aimed at integrating informal sector players and facilitating their formalisation processes.
Marketing and corporate communications executive at the National Social Security Agency (NSSA), Tendai Mutseyekwa, addressed the distinction between the informal sector and SMEs, emphasising the need for comprehensive social protection frameworks.
He noted the significant resistance among informal sector participants to formalise despite clear benefits, citing the challenges faced by artisanal miners. Mutseyekwa called for innovative solutions and investments to expand social security coverage, highlighting the importance of safe work environments and occupational health standards.
CEO of the Zimbabwe Investment and Development Agency (ZIDA), Tafadzwa Chinamo, provided insights into the economic policies driving informality in Zimbabwe. He emphasised the historical policies aimed at regulating economic activities that have inadvertently pushed a significant portion of the economy towards informal practices.
Chinamo’s remarks underscored the need for policies that balance regulatory order with support for inclusive economic participation.
The question and answer session provided additional perspectives on the informal sector. Delegates highlighted challenges in regulatory compliance, the tax burden on SMEs and the distinction between the informal sector and SMEs.
Discussions also touched on the necessity of transforming economic transitions, the complexity of addressing entrenched issues and the need for proper workspaces for SMEs. The contributions collectively underscored the complex dynamics and policy imperatives surrounding Zimbabwe’s informal sector and SMEs, signalling a call for comprehensive reforms and inclusive economic strategies.
In conclusion, the panel discussion at the 2024 ZNCC Annual Congress highlighted the multifaceted nature of informality in Zimbabwe and the need for a collaborative, inclusive approach to addressing its challenges.
The insights provided by the panelists underscored the importance of tailored policies, regulatory reforms and supportive frameworks in fostering the formalisation and resilience of the informal sector.
This article was prepared by the Zimbabwe National Chamber of Commerce for Business Weekly
Bongani Ndlovu