Oliver Kazunga
Senior Reporter
THE Zimbabwe National Defence University (ZNDU) has called for an inclusive approach to formalising the informal sector to strengthen economic stability and protect national interests.
In an interview after a business indaba held at the ZNDU campus in Harare on Friday, Brigadier-General Lindiwe Ngwenya said effective formalisation of informal businesses could contribute to economic growth, improved consumer protection and national stability.
Brig-Gen Ngwenya, from the university’s Centre of Defence and Security Studies, said the institution had brought together key business and consumer organisations to explore practical ways of supporting the formalisation drive.
The engagement brought together the Zimbabwe National Chamber of Commerce (ZNCC), Confederation of Zimbabwe Industries (CZI), Consumer Council of Zimbabwe (CCZ) and Confederation of Zimbabwe Retailers.
She said the informal sector is an important component of the economy and needs a formalisation framework that recognises the different circumstances of small businesses.
“The message from the business community is one that lets formalise the informal sector, but we must have a system of formalising the informal sector so that they don’t shun the policy that the informal businesses should formalise,” said Brig-Gen Ngwenya.
She said a simplified and affordable system could encourage more informal operators to register their businesses and contribute to the fiscus.
“If you make the formalisation very expensive and if you don’t have a one-stop shop where they can go and try to formalise their businesses without having to go to many places, then it can become attractive,” she said.
Policy measures, Brig-Gen Ngwenya said, should recognise the distinction between micro-enterprises and large corporations.
“You should be able to compare that this is a small business — a one-man business is trying to formalise his operations, and you cannot compare him to OK Zimbabwe, Delta Beverages and so forth,” she said.
Brig-Gen Ngwenya said the university’s interest in the subject was also informed by the relationship between economic conditions, public welfare and national security.
“As a centre that runs the National Defence Course, we want to understand how the Government can prevent such things from getting out of hand,” she said.
Brig-Gen Ngwenya noted that ensuring that consumers were satisfied and that businesses could operate within a predictable regulatory environment was important for maintaining social and economic stability.
In a separate interview, ZNCC chief executive officer Mr Christopher Mugaga said formal businesses faced competition from operators who were outside the formal tax and regulatory framework, making formalisation important for creating a more level operating environment.
“Most of the formal businesses we have in the country remain victims of the informality within and around their doorsteps.
“So, the topic could have not come at a better time, actually we have to congratulate the university itself for such a very warm interesting and exciting topic and the quality of questions come out of the students actually made us understand the sector more when we thought we are coming and knowing it better,” he said.
“When we listen to the calibre of questions coming out of the students, they will tell you there are students who are learning, who have sound knowledge coming from different countries.
“Most countries in Africa, you go to Cameroon, you go to South Africa; we even spoke about the USA despite it being the largest economy or the richest in the world; if you see their informal economy is almost seven percent of the GDP, it tells you that informality is a reality.”
Mr Mugaga said the business community believes working together with academia, in line with Education 5.0 and the Heritage-Based Curriculum, is a good platform for influencing even the curriculum within the university to see how leaders could be produced to deal with the scourge of informality
He said informality was a regional phenomenon and required cooperation between Government, business, academia and other stakeholders.
CCZ chief executive officer Ms Rose Mpofu said formalisation could simultaneously improve revenue collection and strengthen consumer protection.
She said formalisation would enable businesses to participate more fully in the economy while encouraging compliance with standards designed to protect consumers.
“We need to make sure we encourage everyone to join the formal sector, not necessarily wiping them out, but for them to be incentivised, to be motivated, to also register formally and participate,” said
Ms Mpofu.
She said formalisation was particularly important in sectors where poor compliance with standards could expose consumers to health and safety risks.
Therefore, the indaba emerged as a call for a practical formalisation framework that brings informal businesses into the mainstream economy while recognising their scale and circumstances.
The stakeholders agreed that making the transition simpler and more accessible could encourage greater participation, broaden the tax base, improve consumer protection and create a more inclusive formal economy.
