Informal sector: The major challenge

via Informal sector: The major challenge | The Financial Gazette by Nelson Chenga 26 Sep 2013

TWO lines consisting of hundreds of vendors selling wares meander for more than a kilometre. The lines stretch from the heart of Harare’s densely populated suburb of Mbare into Harare’s central business district (CBD) where hundreds more vendors line the pavements and street sidewalks like busy ants.

Hundreds more vendors are tightly packed in a flea market the size of a football field on the border of the same suburb and the CBD. The flea market, called Mupedzanhamo or poverty reliever, when loosely translated, is the country’s most vibrant and densely populated open market.

Outside the market’s dirty and damaged precast wall, thousands more people everyday set up shop to eke out a living in a trade where competition is tough and stiff among merchandisers of both imported and locally produced goods.

Besides the cutthroat competition, the vendors have to endure endless cat and mouse battles with both the Harare Municipality Police and the Zimbabwe Republic Police, who appear determined to bring sanity on the streets where the law of the jungle now rules in the wake of the country’s unprecedented unemployment rate which has forced many into the informal sector.
About 90 percent of Zimbabweans are said to be unemployed.

Harare streets are a typical example of the dangers of an unbridled informal sector. Because the informal sector is not answerable to anyone, it thrives on chaotic governance to a point that the speed with which vendors return back to the streets each time they are driven away by police indicates the extent of Zimbabwe’s economic crisis and how this crisis is taking its toll on ordinary citizens.
But still, because of the poor remuneration among the employed, members of the police force have taken advantage of the situation to also protect vendors at a fee; at times goods confiscated by the corrupt police officers end up being sold in the suburbs, where officers’ wives or relatives and friends also operate market businesses to survive.

Half a kilometre east of Mupedzanhamo market is Siyaso, a massive informal industrial shanty where hundreds upon hundreds of people have set up an intricate web of businesses that deal in anything one can imagine — wood, metal, synthetic or plastic based products, furniture, fence, steel products, engine repairs, timber and metal supply as well as new and second hand hardware and spare parts can all be found here.
It has become the norm that if in Harare and you cannot find anything, head for Siyaso and you will get it.

This is the reality of Zimbabwe’s economy. This is the state of the economy that has been replicated across the southern African nation’s towns and growth points. This state of affairs is a factor of a decade-long economic and political crisis that effectively shrunk the formal sector to such a point that re-establishing the formal economy will not be as easy as everyone would wish.
Because the informal sector is neither taxed nor monitored by government nor included in the gross national product (GNP), which is the market value of all products and services produced in a year by a country, it has been one of those areas the Zimbabwe government has had serious challenges trying to control.
In 2000, Zimbabwe’s informal sector was estimated to be worth US$4,2 billion, representing 59,4 percent of GNP. And with formal employment having shrunk to a measly 10 percent it is no longer clear what the exact size of the sector is today.
“At best, government policy towards the informal economy has been ambivalent, vacillating between tacit support and open revulsion,” a book titled Beyond The Enclave notes. The book, which attempted to unravel the contradictions of Zimbabwe’s rich and diverse resource base and its endemic poverty, further points out that the 2005 Operation Murambatsvina was Zimbabwe’s surprise attempt to try and bridle the out-of-control informal sector.

Siyaso and other illegal set ups in Harare and across the country, including thousands of illegally constructed homes, became history in the blink of an eye after a clampdown by government. A United Nations report estimated that 700 000 people across the country lost their homes and sources of livelihood in a development that indirectly affected 2,4 million other people.
Siyaso has since then re-emerged along the banks of Harare’s Mukuvisi River as the informal sector continues to present an escape route for the country’s jobless and poverty-stricken people. Three quarters of the country’s 12,9 million people are considered poor.

Despite the economy having stabilised during the four-year-long tenure of the country’s inclusive government, that stabilisation did not help to revive the formal sector but instead the process merely strengthened the informal sector.
Former finance minister Tendai Biti points out that “…the major challenge facing this country and the economy in particular, is that there needs to be a fundamental rethink of the State, economics and development. Such a major rethink demands an honest appraisal of the record of the last 33 years, an honest introspection of the keeps and drops, and an articulation of a way forward defined in clarity and alacrity.”

Urban planning expert Percy Toriro believes it is possible to bring back sanity in urban areas and ultimately the entire economy, although he concedes that it would not be easy.
“It will require a multi-pronged approach that addresses the issues from a regulatory, planning, moral, as well as human relations perspectives,” Toriro said.
He added: “Firstly the authorities must develop people-friendly yet order-promoting policies in the transport and informal trading sectors. One of the biggest weaknesses of urban authorities in Zimbabwe has been lack of policies. As a result there are no formal positions on most key issues.”

“Successful cities, from a livability point of view, have policies to manage every sector including vending, urban agriculture, and urban transport. Managing cities should not be a discretionary function of officials but they should be guided by policies prepared in an open manner.”
“Secondly there must be plans for all these activities. One should go to the city and be shown a comprehensive informal sector plan indicating areas and conditions.”

“Thirdly what the city does to manage any sector must be morally acceptable. If authorities are seen to be too heavy-handed, the public will not support them. This can lead to an unfortunate situation whereby the public support an illegal activity. Lastly any successful and sustainable programme must be supported by a strong human relations or public relations exercise. People will only appreciate that which they have been convinced in a public relations strategy that is respectful.”

In other words Zimbabwe’s formal sector must simply dominate and drive the country’s economy. Its further collapse would drive the informal sector out of control and the effect on the country’s ordinary people could be devastating.