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World Bank calls on Zimbabwe to develop insurance scheme for informal workers

by Staff reporter
31 Dec 2023 at 14:48hrs | Views
The World Bank, a global financial institution, has urged Zimbabwe to establish an insurance scheme for workers in the informal sector. The recommendation includes utilizing the mobile money ecosystem as a safety measure to protect vulnerable groups in the country.

An analysis revealed the diverse poverty levels within Zimbabwe's informal economy, with an estimated 34% of informal workers facing extreme poverty. Notably, informal communal and resettlement farmers experienced a higher incidence of extreme poverty at 42%, compared to 15% for other informal workers.

After the 2019 economic crisis, extreme poverty rates for all informal workers increased by 10%, leading to 52% of women entering the informal sector. The study highlighted the constraints on productivity in informal jobs, particularly affecting individuals with limited access to finance, markets, skills, and land ownership. Women in the informal economy faced lower income, poor working conditions, and limited access to social protection.

The World Bank emphasized that only 12% of informal workers lived in households benefiting from government safety nets or humanitarian assistance. This coverage dropped to 6% for informal workers who were not farmers.

To address the challenges in the informal sector, the World Bank proposed solutions, including leveraging Zimbabwe's advanced mobile money ecosystem to promote financial inclusion and engage informal workers in social assistance. The institution recommended developing a social insurance scheme for informal workers who, while not meeting the criteria for social assistance, remain highly vulnerable to shocks.

The report acknowledged the government's focus on designing and piloting a pension system for informally employed individuals, considering it a positive step toward ensuring the protection of informal workers.

On a positive note, the report highlighted the organization of Zimbabwe's informal workers into associations, serving as platforms for policy dialogue and acting as safety nets during emergencies. Additionally, the widespread use of mobile money in urban areas presents an opportunity for enhanced financial inclusion among informal workers.

Source - newzimbabwe