BY STAFF REPORTER
LEGISLATORS have called for policy reforms that lead to formalisation of artisanal mining and the informal sector to ensure they play a major role in stimulating economic growth and promote a flexible labour market.
Since the 1990s, Zimbabwe’s growing informal sector has contributed over 60% to the country’s gross domestic product (GDP), and it also boasts almost US$5,2 million trade, with 65% of persons in the sector being women.
Moving a motion in the National Assembly on Tuesday, Headlands MP Christopher Chingosho (Zanu PF) said because the Zimbabwean economy was dominated by the informal sector, there was need for its formalisation in the long term.
“The informal sector is at the bottom of the economic pyramid and they often face challenges in accessing financial support from mainstream financial institutions, yet their development is vital to employment creation, poverty alleviation and economic development,” he said.
“The artisanal and small-scale mining sector is a source of livelihoods for several mining communities and has been producing more through gold deliveries to Fidelity Printers and Refiners. There is need to formalise the sector and create decent work for these communities in an effort to promote sustainable development.”
Chingosho said the recent hike in mining fees would have negative implications on the participation of locals in the minerals value chain.
In 2020, government gazetted Statutory Instrument (SI) 95 of 2020 which increased mining fees, and among the increases were registration fees for base minerals like lead, copper, nickel, and the cost in dealing with precious stones range from $2 000 to $100 000.
Such high fees will force artisanal miners to continue operating illegally, he added.
Chingosho said formalisation should include moving informal workers to formal jobs, registering, taxing them and providing business incentives, among others.
He said a case study of Ghana revealed that the benefit of formalising the underground economy was the creation of incentives for those operating informally to see the value of becoming formal.
Chingosho said Zimbabwe could also follow the Rwandan formalisation model, where the Small and Medium Enterprises ministry and local authorities were engaged in the formation and formalisation of informal traders’ blocs for ease tax administration.
“Policy changes that are targeted at introducing flat tax rates or flat tax amounts for informal traders are needed as well as tailor-made education workshops and specialised training for revenue authority staff in handling different categories of taxpayers.”
As a starting point for Zimbabwe, he said a database of informal traders can be obtained from local authorities where informal traders pay levies.