Zimbabwe: One vast informal business

The collapse of the economy has seen thousands of traders flooding into Harare

Downtown Harare. PHOTO Sadat Sanhehwe

Zimbabwe’s economy has seen a drastic collapse since 2000. Once a fairly highly industrialised country, Zimbabwe is now a vast informal economy after the collapse of its once-thriving manufacturing and agricultural sectors.

Industry is operating at 30% of its capacity. Since 2011, more than 6,000 companies have closed shop, rendering hundreds of thousands unemployed, according to a 2016 Confederation of Zimbabwe Industries (CZI) study. The CZI is the umbrella body of the manufacturing industry.

Hundreds of thousands of school leavers are graduating with no hope of formal employment, the CZI says. Unemployment now hovers around 85% and for many, the only hope is now in the informal sector.

With the late President Robert Mugabe holding onto power for 37 years, the chances of any respite are next to zero even under President Emmerson Mnangagwa. Mugabe is credited with lording it over a dying economy rife with corruption, fraud and tenderpreneurs, who are mostly politicians and well-connected party supporters.

Harare, Zimbabwe’s capital, has historically prided itself as being Africa’s “Sunshine City”; its once- gorgeous First Street Mall was often referred to as “little London”. Its infrastructure and service provision were without comparison in the region outside South Africa.

Harare was a functional and hopeful city; it was peaceful, safe and pretty, especially with its jacaranda trees in full purple bloom. But no longer. The sun still shines, but more likely in anger as it looks down on an unsightly mess. Thousands of desperate informal traders, or vendors, have flooded into the city centre to sell all manner of goods in front of high-street shops. It’s only a matter of time before grinding mills – used for grinding maize into the staple, mealie meal – line up along First Street, adding their roar to the dissonance of vendors’ competing megaphones, touting underwear and affordable perfumes.

All this informal and largely unregulated activity, which offers all manner of products and services, including toiletries, motor vehicle spares and basic foodstuffs for sale to passersby, is seen as the “dark side” of the economy. Yet for many Zimbabweans it is a crucial resource for survival, given the collapse of formal employment.

“The best thing that ever happened to me is this stall,” says Marjorie Kandawa, a clothing vendor in her early thirties, who runs an informal business near Harare’s Copacabana bus terminus, in the central business district. Her selection of used clothes is spread out on the street, half of which she and her fellow vendors have taken over.

 

Vegetable seller Shorai Kavhute, Harare © Sadat Sanhehwe

Kandawa says she used to be a clothing designer for a leading retail group, but cheap clothes from China and elsewhere had rendered her industry redundant. “But when the going gets tough, the tough get going,” she says with a smile.

As she is interviewed, she continues to shout out the prices of her wares to passersby, competing with the din of traffic and hooting motorists – as well as the voices of fellow vendors calling out the virtues of their own offerings. Along the street, the goods and services on offer include clothes, agricultural produce, electronic goods, cosmetics, kitchen utensils, spices, fast foods, street photography and even farm implements.

Michael Hodobo, a young man barely out of his teens, is busy roasting fresh mealies (corn cobs) in the city centre. He says he has a bachelor’s degree in marketing from the University of Zimbabwe, but has never had a formal job. “My brother,” he says, “the only marketing I am now doing is of these mealies. But I am making a living from it!”

Another graduate, Hazel Mujuru, also in her early twenties, a psychology major, runs a thriving car-wash enterprise nearby with eight colleagues. Near the Machipisa Business Centre in Highfield, Emily Chikide, in her late forties, keeps a stall selling chickens, in competition with 12 others. Even so, she says, she earns about $400 a month from her business, after costs.

According to Stanley Zvorwadza, president of the Vendors Association of Zimbabwe, studies have shown that around 50% of the informal businesses are owner-run, with the other 50% staffed by employees. About 45% of the business owners earned $400 a month, 30% between $251 and $399, 15% between $100 and $200, and 10% less than $100 from their informal business activities. The cash is used for education, remittances, rent and buying food. About 50% earned enough to sustain their household needs.

The Zimbabwe Revenue Authority describes an informal trader as an “individual who carries on a trade for his own account from which he derives gross income of less than $6,000… This includes a hawker, street vendor, a person who sells articles at a peoples’ market or flea market, and a person who manufactures or processes any articles in or from residential premises”.

Confederation of Zimbabwe Retailers president Denford Mutashu says retailers are grappling with the challenges posed by the mass of vendors in the city centre. They have asked local authorities to ensure that vendors operate in designated trading areas, rather than occupying space in front of formally registered businesses, which they see as unfair competition.

“Harare has literally legalised vending carts. These, with illegal street vending, have given the retail business nightmares,” Mutashu says. He added that night-time vending was also “rampant” in other cities.

Across town in the sprawling high-density suburb of Highfield, a different type of informal business is underway. Here the clanking of hammer on metal is everywhere. Car mechanics, panelbeaters, wood and metal fabricators thrive here. “I run my own carpentry shop here,” says Laxon Zvakavapano, 37. “I employ five young men who help me out. Business is booming. Even if the economy were to change for the better, I will not seek employment elsewhere.”

This section of Highfield is called Engineering, a reference to the range of engineering or manufacturing trades underway here. Zvakavapano sells his products to the big furniture shops in the city. “The big companies which used to manufacture furniture have long ceased to exist,” he explains. “But we, the carpenters, are still around. Now we are producing the same quality products, but at less cost.”

Technology-savvy young men have ventured into new industries created by innovation. Computer and cellular phone sales and repairs, internet cafés and pirated music discs for resale, thrive.

Photographer Britho Musara, Harare © Sadat Sanhehwe

According to a recently released BSA Global Software study, Zimbabwe has the highest percentage of pirated software on the planet. At virtually every corner of the capital, millions of pirated movies, music and pornographic videos and CDs are on sale.

Remembrance Dzapita, who lost his job last year, now manufactures and sells toiletries. “I started my business after realising that I could not get a new job but that I could earn more by developing a new line of toiletries to sell to local hotels,” he told Africa in Fact.

A 2016 study by the CZI found that at least 2.7 million people were making their living in the informal sector. According to economist John Robertson, Zimbabwe’s unemployment rate is more than 85%. Fewer than 900,000 people are formally employed, out of a population of 13 million. An estimated 200,000 jobs have been lost since 2004, as government has failed to stimulate the economy or to foster job creation.

The Zimbabwe National Statistics Agency (ZIMSTAT) pegs the country’s unemployment rate at 10.7%. But perhaps conveniently, ZIMSTAT defines unemployment as lack of any means of contributing to the country’s gross domestic product. Industry officials say the informal sector is thriving because it faces fewer regulations or taxes compared to the formal sector.

“In the informal and black market there are fewer regulations or taxes, so costs are low,” Mutashu says. “The formal sector is overtaxed and laden with rules, regulations and red tape. That’s why it is shrinking while the informal sector is flourishing.”

A 2016 study of the sector by the Bankers Association of Zimbabwe and the Zimbabwe Economic Policy Analysis and Research Unit found that although people active in the informal sector had few resources in isolation, they could become a formidable source of resources when combined.

“Banks should thus engage informal sector players and embrace the idea of fostering partnerships and clusters,” according to the study. “Under this arrangement, informal sector players, through the assistance of banks, pool their resources by bringing their capital and expertise together to make a meaningful investment. This also allows them to gain more knowledge and skills from their partners than when operating as individuals.”

According to the African Development Bank (AfDB), organising the informal sector and recognising its role as a profitable activity may contribute to economic development. This can also improve the capacity of informal workers to meet their basic needs by raising their incomes and strengthening their legal status. According to the AfDB, little attention has been paid to the role of the informal sector in fostering growth and creating jobs.

In fact, the informal sector contributes about 55% of sub-Saharan Africa’s GDP and 80% of the labour force. “Nine in 10 rural and urban workers have informal jobs in Africa and most employees are women and youth. The prominence of the informal sector in most African economies stems from the opportunities it offers to the most vulnerable populations such as the poorest, women and youth,” the bank says.

The Zimbabwean government has finally realised the importance of the informal sector, and is making moves to tax informal traders. In his national budget last year, Finance Minister Patrick Chinamasa announced government plans to tax the informal sector by levying a presumptive tax on landlords whose premises are leased by the traders.

Respected economist Witness Chinyama, however, doubted the efficacy of the move. “The problem with trying to formalise the informal sector is that the informal sector will simply go underground and the economy will go down as well,” Chinyama told Africa in Fact.

Another economist, Francis Mukora, urges caution. Taxing the informal sector might sound like a great idea to the broke Zanu-PF government, he says, but there are no quick fixes to the country’s multi- faceted crisis.

BARNABAS THONDHLANA has worked for Dow Jones and Bloomberg newswires as their Zimbabwe correspondent. He is the publisher of three community newspapers and a national daily, and a media trainer in investigative journalism. He has been instrumental in the formation of several independent newspapers, including the Zimbabwe Independent, The Daily News, The Daily News on Sunday, Newsday and The Observer.

Manipulating local government for political ends

Participatory democracy, transparency and decentralisation are important elements that determine the level of service provision from Zimbabwe’s local authorities

A Highfield, Harare, resident disposes of refuse at a street corner. PHOTO CYRIL SANHEHWE

Zimbabwe has 92 local authorities, 32 of them urban and 60 rural. These local authorities draw their power and functions from the Constitution of Zimbabwe (in particular Chapter 14), the Rural District Councils Act (Chapter 29: 13), the Urban Councils Act (Chapter 29: 15), and the Regional, Town and Country Planning Act (Chapter 29: 12).

The preamble to Chapter 14 of the Constitution says: Whereas it is desirable to ensure: (a) The preservation of national unity in Zimbabwe and the prevention of all forms of disunity and secessionism; (b) The democratic participation in government by all citizens and communities of Zimbabwe; and (c) The equitable allocation of national resources and the participation of local communities in the determination of development priorities within their areas; there must be devolution of power and responsibilities to lower tiers of government in Zimbabwe.

Unlike in other countries such as South Africa, Uganda and Tanzania, local government in Zimbabwe does not enjoy autonomy as it performs the functions conferred on it by central government. The functions, while defined in law, are open to central government variation and reassignment to other state agencies.

In this regard, central government determines the birth, growth and death of local government, something that greatly compromises the function of the latter. Pre- and post-independence policy and structural developments have sustained centre-local relations that undermine the emergence of sound local governance.

Davison Muchadenyika,  an urban specialist at the World Bank Group, argues that in both pre-and post-independence Zimbabwe, local government is a  political  reality  that the ruling regime manipulates,  associates with, and uses to advance political interests.

“Politics continue to shape and destabilise a functioning,  independent, and autonomous form of urban governance in Zimbabwe. Urban governance remains under incessant threat from central government. Central-local government contestations are leading to poor service delivery; a development that is affecting social change,” Muchadenyika says.

Harare Mayor Herbert Gomba, who will lead the council for the next five years, said he is working on a programme to transform the capital city. “I have a transformation agenda for the city, which I am going to be implementing with my councillors,” he said. “This includes the rehabilitation of roads; we want to put in spaghetti roads and make service delivery a priority for the citizens of Harare in the next five years. We hope that government is also going to help us as councillors to bring these services to our residents.”

Local authorities perform a variety of functions, chief among them the provision of water and sanitation, housing, refuse collection, road maintenance, and health and education services. Key service-delivery challenges emanate from internal governance systems in local authorities; relations with other key stakeholders such as citizens, civil society and the private sector; and the political and economic environment. A synopsis of such challenges points to innovation on the part of local authorities so as to “insulate” service delivery from a debilitating operating environment.

Local government performs legislative and executive functions. Mandatory and permissive functions such as development, forward planning, financial management, governance and regulatory functions form the basis of local authority operations.

In Zimbabwe, the onset of the 21st century was marked by the beginning of unbridled socio-economic and political deterioration. Subsequently, Zimbabwe’s local-governance crisis resulted in both local public administration and service delivery failure.

A number of factors account for the local government crisis. Broad issues like restrictive planning laws, outdated planning approaches and antiquated institutional systems are other explanatory factors.

Raw sewage, Dzivarasekwa, Harare. PHOTO Sadat Sanhehwe

According to Shingirayi Mushamba, in his paper The Powers and Functions of Local Authorities (2010), the local government system’s basic problem lies in centre-local relations. Present local government challenges of corruption, inefficient revenue systems, conflict, low citizen participation and poor public service delivery are ameliorable by changing the nature of centre- local relations.

A grouping operating under the banner “21daysOfActivism” last year issued a statement on service delivery in local authorities, saying it was “in a quagmire and much can be done to address fundamental challenges bedevilling that sector”.

“Current local government problems arise from the structure and nature of centre-local relations,” Muchadenyika says. “The capacity of local governments has been severely affected by conflict, political interference, bankruptcy, decentralisation without transfer of resources, competencies and decision-making authority to local level, corruption, low citizen participation and lack of accountability. This background necessitates the need to redefine and change centre-local relations.”

Muchadenyika argues that due to the new Constitution and the poor state of service delivery in Zimbabwe’s local governments, which is largely attributed to lack of autonomy, local government reforms should be premised on changing centre-local relations.

“Post-2000, centre-local relations saw central government attempting to recentralise local government,” Muchadenyika says. “This resulted  in the weakening of local authorities, rendering them ineffective and inefficient in delivering their service delivery mandate. The relations between the state and local authorities became that of master and servant, with the former usurping most of the powers of the latter.

“The current state of local government services such as poor transport and road infrastructure, a massive housing backlog, weak water and sanitation systems, weak financial management systems, and inefficient management systems and competencies, all point to the centrality of changing  centre- local relations.”

The 21DaysOfActivism grouping accused the ministry of local government and housing of failing “dismally” to provide policy direction to enable a better working environment for local councils and boards. The city authorities were not spared either.

“They are to blame for failure to provide clean and safe water for drinking despite residents paying bills. We call upon the city of Harare and all councils and boards to ensure that ratepayers come first before awarding themselves hefty salaries,” the group said.

They also said it was disheartening to note how public officials in charge  of public service delivery like refuse collection, water treatment, roads management, and public health are abusing public service delivery institutions to fill their pockets and have turned all taxation systems into fundraising schemes for their hefty and out-of-this world salaries. “The continued antagonism between the ministry of local government and local government authorities has fulfilled the adage that says, ‘when the elephants fight, the grass suffers and when they are making love its suffering continues unabated’.”

The group listed the following as priority areas: Quality and safe water for the people as enshrined in section 77 of Zimbabwe’s Constitution; the resurfacing of roads; refuse collection and dumping sites far away from residential areas.

“In   the   modern   world,   central-local   relations    are    governed    by the principles of local self-government, subsidiarity, delegation and general competence,” the group said. “In essence, a new vision of local governance is imperative for urban areas and cities to survive 21st century challenges. The new vision has to be informed by several theories that advocate for a local government system anchored in participatory democracy, transparency, decentralisation and less bureaucracy.

“Participatory democracy, transparency and decentralisation are important elements that determine the level of service provision from local authorities. In African countries, the failure of most central governments to provide adequate services to citizens has left local governments at the forefront of local service delivery,” the group said.

Potholed road, Highfield, Harare. PHOTO Sadat Sanhehwe

Moving forward, centre-local relations should be focused on reforming planning, budgeting and finance, human resources, and expenditure and service functions. This is mainly because there are operational challenges in these four pillars which are rooted in how central govenment relates to local government.

The aforementioned four reform areas are important pillars for an effective and efficient local government system. Funds allocated to local authorities should not be disbursed through the local government ministry but accessed directly from the treasury. This shift is expected to speed the disbursement process and reduce control and abuse of local authorities by their parent ministry. Conditions of service for local authority workers should also be improved as a way of luring experienced and well-qualified staff.

Former Harare Mayor Bernard Manyenyeni concurred with this view when he conceded the council was deceiving residents by offering poor services, which he described as “service deceivery”, as salary and benefits gobbled 80% of the city’s revenue. In his third and last state of the city address last year, Manyenyeni decried the calibre of prospective councillors, saying he did not think they had what it took to turn the city’s fortunes around. The council, he said, could fix the city by getting its priorities straight, by focusing on the basics and by paying attention to the bread and butter issues of service delivery.

Clean water at Kudzanayi Primary School, Harare. PHOTO Sadat Sanhehwe

Local authorities’ service functions have been weakened due to institutional inadequacies. Development and forward-planning functions need further capacity building and to embrace strategic spatial planning, new land administration and registration approaches, comprehensive infrastructure development planning, and participatory urban planning systems.

Reforms focused on planning functions should therefore address major current and emerging urban challenges, especially climate change, rapid urbanisation, poverty, informality and safety.

 Regulatory functions should move from assuming that local authorities control how development should take place to recognising that other stakeholders such as the private sector, residents’ organisations, academia and research institutes, and civil society organisations have a role in planning future development trajectories.

Local Government Minister July Moyo said councillors should put service delivery ahead of receiving allowances or amassing ill-gotten wealth from their councils. In line with Manyenyeni’s observation, he said local authorities must introduce capacity-building programmes for councillors, mayors and other local government employees.

The Zimbabwe Institute (2005:20) has said the central government must introduce a policy which insists on the training of councillors on the value and importance of shared leadership and the general qualities of a good and effective leader. Most councillors and mayors lack the knowledge and competencies required in the field of local government management. The introduction of training programmes for councillors would, therefore, help improve their participation in council affairs and, hopefully, improve service delivery.

BARNABAS THONDHLANA has worked for Dow Jones and Bloomberg newswires as their Zimbabwe correspondent. He is the publisher of three community newspapers and a national daily, and a media trainer in investigative journalism. He has been instrumental in the formation of several independent newspapers, including the Zimbabwe Independent, The Daily News, The Daily News on Sunday, Newsday and The Observer.