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Bulawayo has best formalisation model in Zimbabwe

by Staff reporter
14 Jul 2022 at 07:30hrs | Views
BULAWAYO has exhibited the best model in the country in terms of formalising the informal sector, which should be replicated in other provinces to assist the country in transitioning from informal operations to formal businesses, a senior official has said.

Under the National Development Strategy 1 (NSD1), the Government targets to promote growth of informal businesses to established registered firms, which will also help boost revenue collection, regularising employment and ultimately growing the economy in a more sustainable manner.

Estimates indicate that more than 60 percent of Zimbabwe's economy is now accounted for by informal sector players.

Since the turn of the millennium, when Zimbabwe was slapped with economic sanctions by Britain and her allies in protest over the country's land reform programme, several companies either closed or scaled-down, resulting in a substantial number of formal employees losing their jobs.

The sanctions agenda, which  was meant to cripple the economy, instead created empowered individuals who no longer rely on formal employment for sustenance.

With the bulk of economic activities concentrated in the informal sector, there have been calls for Government to introduce policies that will see the Zimbabwe Revenue Authority (Zimra) harnessing tax from the informal sector to improve revenue inflows.

As part of efforts to regularise the sector, a one-day national formalisation strategy and implementation validation workshop was held in Bulawayo on Tuesday with informal traders drawn from four provinces - Bulawayo, Matabeleland North and South and Midlands.

In a keynote address on behalf of the Ministry of Public Service Labour and Social Welfare, Permanent Secretary Mr Simon Masanga by a ministry official Mr Langton Ngorima, the senior Government official said Bulawayo had the best prototype of formalising the sector.

"I'm happy that the informal sector in Bulawayo has become the best model that other provinces are going to copy," he said.

"You have shown the rest of the country that it is possible to provide decent working space for those operating in the informal sector."

In his speech, Mr Masanga said it was critical to have a well-crafted evidence based national strategy, which will lead to the improvement in fiscal revenue, increased social protection coverage, improvement in productivity and economic growth.

"Under the NDS1 strategies for decent work, the Government prioritised the development and implementation of a national action plan to address the most perverse decent work deficits in the informal economy," he said.

"This is evidenced by the growth in the informal economy where over 70 percent of our labour force is employed according to the fourth quarter 2021 labour force survey report compiled by Zimstat."

Mr Masanga said the ministry was mandated by Cabinet to come up with a formalisation strategy and a draft document was crafted after nationwide consultations.

The involvement of all Government ministries and informal sector stakeholders will ensure ownership and buy-in for the implementation of the strategy document, he noted.

Speaking at the same meeting, UNDP Zimbabwe, senior economic Advisor, Mr Ojijo Odhiambo, said the informal economy is undoubtedly an important contributor to the country's wealth and jobs and, thus, play a key role in reducing poverty and improving livelihoods.

He said the ongoing formalisation process should be desirable, affordable and profitable, noting that there must be adequate and sufficient incentives and rationale.

Chairperson for Beitbridge Informal Cross Border Traders Association, Mr Mafios Macheka, said despite skepticism on formalisation, members are warming up to the move.

"Our members are willing to formalise but some are skeptical about issues of taxes. Their feeling is that once they register their businesses Zimra is going to charge taxes that would leave one bankrupt, and that is a major challenge we face," he said.

"However, since the formalisation strategy programme workshop done in Beitbridge in December last year, many people are now warming up to the idea."

Traders from Hwange and Gwanda said their major challenge is the lack of proper infrastructure to carry out their businesses.

They appealed to local authorities to erect conducive trading places in order for informal traders to embrace formalisation.

Prior to the pandemic, about 57 percent of the working age population in Zimbabwe were outside of the labour market and among those working, 80 percent were in informal employment.

The Covid-19 pandemic exacerbated the deteriorating labour conditions with informal economy workers, women and youth most adversely affected, he said.

Source - The Chronicle