Opinion / Columnist
The futility of Zimbabwe's crackdown on the informal sector
2 hrs ago | Views
The Zimbabwean government has once again embarked on a futile mission to regulate the informal sector, a behemoth that has long outgrown the state's capacity to control it.
In a desperate bid to rein in the rapid informalization of the economy, authorities have introduced new measures designed to level the playing field between formal and informal businesses.
Yet, history provides a compelling argument that these efforts will be as ineffective as previous attempts.
The informal sector has become the dominant force in Zimbabwe's economy, fueled by years of economic decline, company closures, and an increasingly unstable currency.
While formal retailers such as OK Zimbabwe, Spar, Choppies, and NR Richards struggle with near-empty shelves and dwindling customer numbers, informal traders thrive by exploiting regulatory loopholes.
They are not bound by tax obligations, do not adhere to official exchange rates, and avoid many of the overhead costs that burden formal businesses.
To directly receive articles from Tendai Ruben Mbofana, please join his WhatsApp Channel on: https://whatsapp.com/channel/0029VaqprWCIyPtRnKpkHe08
The result is an economic landscape where smuggled goods, street-side vending, and cash transactions dictate commerce, leaving established retailers in a precarious position.
The government's latest response to this crisis includes mandatory point-of-sale machines, tighter tax compliance measures, and a crackdown on smuggled goods.
In theory, these policies should create an equitable business environment.
But in practice, the informal sector has repeatedly evaded such regulations, adapting to each new attempt to control it.
Zimbabwe has a long history of failed efforts to regulate informal trade.
The introduction of the Intermediated Money Transfer Tax (IMMT), which sought to capture revenue from digital transactions, only drove more businesses towards cash dealings.
Attempts to force informal traders to accept the local currency and use official exchange rates resulted in widespread non-compliance.
Even efforts to bar manufacturers from dealing directly with unregistered traders have failed, as illicit supply chains continue to thrive.
At the heart of the government's failure is a fundamental contradiction: the informal sector is not merely an economic challenge; it is a political construct.
The ruling ZANU-PF government has, for decades, relied on informal traders as a crucial support base.
This relationship dates back to the early 2000s when Zimbabwe's formal economy was in freefall.
As companies shut down and unemployment soared, the informal sector was actively encouraged as a survival mechanism.
At the same time, formal retailers were vilified as economic saboteurs, accused of hoarding goods to incite public unrest as part of some imagined "regime change agenda”.
In this environment, street vending and backyard enterprises became not just tolerated but celebrated.
It is therefore no surprise that informal traders are overwhelmingly aligned with the ruling party.
ZANU-PF has gone as far as creating an official affiliate, Vendors 4 ED, to cement this political alliance.
The ZANU-PF party has historically played a direct role in determining who receives vending stalls and trading spaces, ensuring that these operators remain loyal to the ruling establishment.
With this in mind, how does the government expect to suddenly impose harsh regulations on the very sector it depends on for political survival?
President Emmerson Mnangagwa, who is already maneuvering to extend his rule beyond the constitutional limit of 2028, is unlikely to risk alienating this vital constituency.
Any aggressive enforcement of taxes and regulatory compliance on informal traders would be seen as an attack on a core base of ZANU-PF supporters.
This creates an inherent contradiction: while the government seeks to protect formal businesses, it cannot afford to antagonize informal traders who form the backbone of its grassroots support.
Even if authorities genuinely sought to enforce these regulations, the state simply lacks the capacity to do so effectively.
Zimbabwe has neither the institutional efficiency nor the resources to police the sprawling informal sector.
Previous crackdowns on illegal vending, currency manipulation, and tax evasion have amounted to little more than short-lived campaigns that quickly fizzled out.
The informal sector is deeply entrenched, with sophisticated networks that allow traders to circumvent regulation with ease.
Ultimately, the government faces a stark choice: either continue allowing the informal sector to operate with minimal oversight, leading to the further collapse of the formal economy, or adopt policies that enable formal businesses to compete on a level footing.
If the state is serious about preventing the collapse of formal retail and wholesale businesses, it must abandon the fantasy of controlling the informal sector through unenforceable regulations.
Instead, it should permit formal traders to use market-driven exchange rates and reduce the bureaucratic burdens that make compliance so costly.
Without a drastic policy shift, more supermarkets and wholesalers will close their doors, worsening an already dire unemployment crisis.
And with each job lost in the formal sector, the informal economy will only grow stronger, feeding into the same vicious cycle that the government now claims to be fighting.
The reality is inescapable: Zimbabwe's informal sector is not just a symptom of economic distress; it is a political creation that cannot be undone by mere legislation.
© Tendai Ruben Mbofana is a social justice advocate and writer. Please feel free to WhatsApp or Call: +263715667700 | +263782283975, or email: mbofana.tendairuben73@gmail.com, or visit website: https://mbofanatendairuben.news.blog/
In a desperate bid to rein in the rapid informalization of the economy, authorities have introduced new measures designed to level the playing field between formal and informal businesses.
Yet, history provides a compelling argument that these efforts will be as ineffective as previous attempts.
The informal sector has become the dominant force in Zimbabwe's economy, fueled by years of economic decline, company closures, and an increasingly unstable currency.
While formal retailers such as OK Zimbabwe, Spar, Choppies, and NR Richards struggle with near-empty shelves and dwindling customer numbers, informal traders thrive by exploiting regulatory loopholes.
They are not bound by tax obligations, do not adhere to official exchange rates, and avoid many of the overhead costs that burden formal businesses.
To directly receive articles from Tendai Ruben Mbofana, please join his WhatsApp Channel on: https://whatsapp.com/channel/0029VaqprWCIyPtRnKpkHe08
The result is an economic landscape where smuggled goods, street-side vending, and cash transactions dictate commerce, leaving established retailers in a precarious position.
The government's latest response to this crisis includes mandatory point-of-sale machines, tighter tax compliance measures, and a crackdown on smuggled goods.
In theory, these policies should create an equitable business environment.
But in practice, the informal sector has repeatedly evaded such regulations, adapting to each new attempt to control it.
Zimbabwe has a long history of failed efforts to regulate informal trade.
The introduction of the Intermediated Money Transfer Tax (IMMT), which sought to capture revenue from digital transactions, only drove more businesses towards cash dealings.
Attempts to force informal traders to accept the local currency and use official exchange rates resulted in widespread non-compliance.
Even efforts to bar manufacturers from dealing directly with unregistered traders have failed, as illicit supply chains continue to thrive.
At the heart of the government's failure is a fundamental contradiction: the informal sector is not merely an economic challenge; it is a political construct.
The ruling ZANU-PF government has, for decades, relied on informal traders as a crucial support base.
This relationship dates back to the early 2000s when Zimbabwe's formal economy was in freefall.
As companies shut down and unemployment soared, the informal sector was actively encouraged as a survival mechanism.
In this environment, street vending and backyard enterprises became not just tolerated but celebrated.
It is therefore no surprise that informal traders are overwhelmingly aligned with the ruling party.
ZANU-PF has gone as far as creating an official affiliate, Vendors 4 ED, to cement this political alliance.
The ZANU-PF party has historically played a direct role in determining who receives vending stalls and trading spaces, ensuring that these operators remain loyal to the ruling establishment.
With this in mind, how does the government expect to suddenly impose harsh regulations on the very sector it depends on for political survival?
President Emmerson Mnangagwa, who is already maneuvering to extend his rule beyond the constitutional limit of 2028, is unlikely to risk alienating this vital constituency.
Any aggressive enforcement of taxes and regulatory compliance on informal traders would be seen as an attack on a core base of ZANU-PF supporters.
This creates an inherent contradiction: while the government seeks to protect formal businesses, it cannot afford to antagonize informal traders who form the backbone of its grassroots support.
Even if authorities genuinely sought to enforce these regulations, the state simply lacks the capacity to do so effectively.
Zimbabwe has neither the institutional efficiency nor the resources to police the sprawling informal sector.
Previous crackdowns on illegal vending, currency manipulation, and tax evasion have amounted to little more than short-lived campaigns that quickly fizzled out.
The informal sector is deeply entrenched, with sophisticated networks that allow traders to circumvent regulation with ease.
Ultimately, the government faces a stark choice: either continue allowing the informal sector to operate with minimal oversight, leading to the further collapse of the formal economy, or adopt policies that enable formal businesses to compete on a level footing.
If the state is serious about preventing the collapse of formal retail and wholesale businesses, it must abandon the fantasy of controlling the informal sector through unenforceable regulations.
Instead, it should permit formal traders to use market-driven exchange rates and reduce the bureaucratic burdens that make compliance so costly.
Without a drastic policy shift, more supermarkets and wholesalers will close their doors, worsening an already dire unemployment crisis.
And with each job lost in the formal sector, the informal economy will only grow stronger, feeding into the same vicious cycle that the government now claims to be fighting.
The reality is inescapable: Zimbabwe's informal sector is not just a symptom of economic distress; it is a political creation that cannot be undone by mere legislation.
© Tendai Ruben Mbofana is a social justice advocate and writer. Please feel free to WhatsApp or Call: +263715667700 | +263782283975, or email: mbofana.tendairuben73@gmail.com, or visit website: https://mbofanatendairuben.news.blog/
Source - Tendai Ruben Mbofana
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