Bulawayo leads Zimbabwe in business formalisation

Bulawayo has emerged as Zimbabwe's top-performing province in terms of formal business establishments, according to new data from the 2023 Economic Census conducted by the Zimbabwe National Statistics Agency (ZimStat). The city's formal business rate far outpaces the national average and surpasses all other provinces, highlighting its growing role in the nation's economic transformation.

The preliminary findings show that 40.4% of Bulawayo's 15,840 businesses are formal, the highest in the country. In stark contrast, the city has the lowest percentage of informal businesses at 59.6%. Nationally, only 23.9% of the 204,798 total business establishments are formal, while a staggering 76.1% remain informal.

This trend marks a significant shift in Bulawayo's economic landscape, with formalisation playing a key role in the city's development. It reflects a robust culture of regulatory compliance and positions the city as a model for the Government's push to formalise businesses as part of its devolution policy aimed at decentralising economic activities.

Economic commentators are attributing this positive trend to Bulawayo's industrial heritage and targeted efforts by both central and local government to promote investment, business registration, and regularisation.

"This is a very strong signal that Bulawayo is responding to formalisation drives and institutional support," said economist Alice Chikonzi. "With over 40% formal businesses, the city is better positioned to attract structured investment, ensure decent jobs, and contribute to the tax base."

Chikonzi highlighted Bulawayo's strategic advantages, including its geographic location and its historical industrial base. "Bulawayo sits at the heart of regional trade corridors linking Zimbabwe to South Africa, Botswana, and Namibia. It has a legacy industrial base, existing infrastructure, and a skilled labour pool. With the right investment and policy support, the city can drive manufacturing growth, boost exports, and anchor the country's re-industrialisation agenda."

Vendors within formalised trading spaces are also reaping the benefits of compliance. Mrs. Prisca Ncube, a vendor, expressed her satisfaction with the formalisation process. "Being a formal trader gives me peace of mind. I no longer worry about running from municipal police. I can apply for small business loans, stock my stall properly, and even get receipts for rent, which helps when I need to prove my business income. Formalisation is not just about rules; it's about building our businesses and planning for the future."

Economic development expert Allan Mthunzi explained that formalisation not only provides benefits to traders but also to local authorities. "A higher number of registered businesses means more reliable tax collection for local authorities. This in turn funds public amenities such as markets, roads, waste management, and utilities. It's a win-win for both traders and municipalities."

Mthunzi emphasized that formal businesses are essential to unlocking Zimbabwe's full economic potential. "We cannot grow a modern, resilient economy based on informality. Formal businesses contribute to GDP, pay taxes, create secure jobs, and are easier to monitor and support. Formalisation provides the structure needed for long-term planning and sustainable development."

However, the formalisation trend in Bulawayo starkly contrasts with other provinces, where informality remains the norm. Mashonaland Central (13.9%), Mashonaland East (17.8%), Midlands (18.8%), and Matabeleland South (20.5%) recorded the lowest formalisation rates, with more than 75% of businesses in each province operating informally. Even Harare, the country's economic hub with the largest number of establishments (83,267), had only 23.8% of its businesses formally registered, just below the national average.

The findings also shed light on the regional disparities in capacity utilisation across key sectors. While Bulawayo showed strong performance in mining and quarrying, with a capacity utilisation rate of 56.6%, it lagged in manufacturing, with a rate of only 42.8%. This points to ongoing challenges, including outdated equipment, inadequate retooling, and limited new investment, despite the city's industrial heritage.

Matabeleland North, home to rich resources like coal, methane gas, and gold, recorded a low capacity utilisation rate of 44.7% in mining and quarrying, though its manufacturing sector showed a modest 46.9% capacity utilisation. Matabeleland South, by comparison, posted a relatively better performance in both sectors, recording 48.9% in mining and quarrying and 47.0% in manufacturing, ranking fourth nationally in the latter.

These statistics illustrate the mixed performance of the Matabeleland region and highlight the growing role of small and medium enterprises (SMEs) in the economy. Experts argue that government support for local industrialisation through the devolution programme is key to improving capacity utilisation and fostering sustainable economic growth.

Nationally, capacity utilisation in mining and quarrying ranged from 44.7% in Matabeleland North to 68.1% in Masvingo, while manufacturing utilisation varied from 40.9% in Midlands to 51.9% in Manicaland. The Government continues to emphasize the need to improve productive capacity across all provinces as part of the National Development Strategy 1 (NDS1) and the country's broader goal of re-industrialisation and value chain development.

With Bulawayo's position as a critical regional trade hub, officials believe that accelerating infrastructure development, energy provision, and value chain financing will be essential to unlocking the city's full industrial potential. As the country aims to reach its Vision 2030 goals, Bulawayo's formalisation success provides a promising model for the rest of the nation to follow.