Duduzile Nyathi
Harare, Zimbabwe – In an effort to address the complexities and challenges posed by the informal sector, the Zimbabwean government has announced new measures aimed at mitigating the economic impacts of informalization.
This announcement was made through a press statement released by Minister of Finance, Economic Development and investment promotion.
The informal sector in Zimbabwe, which accounts for a significant portion of the country’s economic activity, has been a double-edged sword. On one hand, it provides livelihoods for millions amidst high unemployment rates; on the other, it complicates tax collection, regulatory oversight, and economic planning. The government’s recent statement indicates a proactive approach to this issue, emphasizing collaboration with key stakeholders.
“Government, in consultation with business and industry, and the Ministry of Industry and Commerce, is proposing additional measures to address the impact of the informalisation of the economy,” the statement read. This move signals a recognition of the need for a more integrated approach between formal and informal sectors.
The informal sector’s dominance, with some estimates suggesting it makes up to 60-70% of the economy, has led to significant revenue loss for the government due to the sector’s largely cash-based and unregulated nature. The proposed measures come at a time when formal businesses are struggling to compete with informal traders, who often bypass regulatory and tax obligations, operating in US dollars amid the local currency’s instability.
The reaction from social media and local experts has been mixed. Some users on X have expressed skepticism about the effectiveness of these measures, with one user stating, “Wrong diagnosis, wrong prescription, ‘Informal traders’ have been there since time past and the formal businesses have existed together with them. Incentivizing the economy such as tax breaks, lower taxes, less regulation, stable currency not forced currency is what helps, Not this.”
Others see potential in these initiatives, suggesting that integrating informal traders into the tax system could lead to economic benefits, such as increased revenue for public services and infrastructure development. There’s also a call for the government to consider the unique needs of informal traders, many of whom are women and operate under different economic constraints than formal businesses.
The government’s strategy appears to involve not just enforcement but also creating incentives for informal traders to formalize their operations. However, the success of these measures will hinge on their implementation, the balance between enforcement and support, and how well they address the root causes of informal trading, such as unemployment and lack of access to formal business opportunities.
As Zimbabwe navigates these economic reforms, the dialogue between government, business leaders, and the informal sector will be crucial. The outcome of these proposed measures could significantly influence Zimbabwe’s economic landscape, potentially fostering a more inclusive economic framework that benefits all sectors of society.
