Informal employment sustains Zimbabweans
Introduction of a multi-currency system has made Zimbabwean products uncompetitive on the international market
HARARE, 11 April 2013 (IRIN) - Five years after Zimbabwe’s political and economic crisis peaked in 2008, the economy continues to perform poorly, with the manufacturing sector still shedding jobs and unemployment estimated at 75 percent. But the real level of unemployment is almost impossible to gauge as countless Zimbabweans are making a living in the informal sector.
Kumbirai Katsande, President of the Confederation of Zimbabwe Industries (CZI), told IRIN Zimbabwe has become a “nation of traders”. The municipal markets in Mbare, a sprawling low-income suburb of Harare, the capital, are overflowing with people selling goods. Trading space and the money to rent it are scarce, so entrepreneurs have set up shop outside markets and in other open spaces.
The police crack down on them every once in a while but Robert Guveya, who sells pirated DVDs, thinks it’s worth the risk. “I cannot get a job and am just trying to earn an honest living,” he said.
Informal trading is not limited to low-income areas. Harare’s city centre has its fair share of sidewalk salespeople and flea markets, one of the largest of which is located behind a shopping centre in middle-class Avondale. Rumbidzai Gava, who quit her job as a dental assistant and now imports second-hand clothing from Mozambique for $250 a bale, rents a stall there for US$10 per day. “I make gross more than $700 per bale and sometimes the clothes go very quickly. I am making much more than the $250 [a month] I got at the dentist’s,” she said.
The Zimbabwe Cross Border Association represents traders who import goods for resale, primarily from South Africa, but also from as far afield as Hong Kong, Taiwan and Britain. Killer Zivhu, the president, estimated that at the peak of the economic crisis - when the informal economy supplied almost everything that could not be found on supermarket shelves - up to three-quarters of adult Zimbabweans were involved in some form of trade.
Low wages mean that many Zimbabweans continue to live off the proceeds of informal trade. They import car parts, electronic goods, clothes and even cars, and often employ other people to sell the goods, thus creating jobs. However, they are not recognized legally and face harassment and arrest by local authorities and the police. Zivhu said their lack of legal status also limits their access to capital.
Shrinking manufacturing sector
Before the Zimbabwe dollar was replaced in 2009
by a multi-currency financial system using the US dollar, Botswana pula and the South African rand, many Zimbabweans were forced out of formal-sector jobs because hyperinflation had made their salaries almost worthless. Tapfumaneyi Tirivanhu left his job at a furniture factory in 2007 when he could no longer make ends meet and moved to Botswana for several years. He returned to Zimbabwe in 2011 and started a carpentry shop in a bay at the Harare Home Industries shed in Mbare with some tools and machinery he had bought in Botswana.
“It was slow in the beginning, as I had little money to buy materials with,” he told IRIN, but after his former employer went bust in 2012 and an ex-colleague joined him, they started supplying the old company’s customers. “There are four of us here and three upholsterers, so I am providing employment for seven people including myself,” Tirivanhu said.
In a good month they each take home as much as $300. “It’s much more than I would earn working for a company, and though I do not have benefits such as medical aid and a pension, I am doing alright,” he said.
CZI’s Katsande said the manufacturing sector had been shedding jobs since a slump started around August 2012. “Some of the companies that are still operating are introducing shorter working weeks so they can manage the wage bill. In a lot of instances they would retrench if they could afford to pay the workers off, but they do not have the money to do so.”
He noted the lack of government and infrastructural support. “We need new technology, as in some factories everything is obsolete, which makes production inefficient and expensive. Too many people are employed, it’s very wasteful.”
Replacing the Zimbabwe dollar with a multi-currency system has been a double-edged sword, he said. “We now have stability, but are at the mercy of the fluctuations of the currencies of wherever we are importing materials or machinery from. We cannot devalue the US dollar, which we could do with our own currency. As a result, our products can be uncompetitive on the international market.”
The high cost of manufacturing in Zimbabwe means that some local goods are more expensive than imported ones, which the government could remedy by levying higher duties on imports, Katsande said, warning that without more government support, the manufacturing sector would keep shrinking.
In contrast, the mining sector is growing rapidly and now employs some 43,000 workers, up from less than 3,000 at the height of Zimbabwe’s economic crisis. “There has been substantial growth in the sector and we expect it to keep growing,” said Edward Mubvumba, of the National Employment Council for the Mining Industry. He added that thousands more unregistered artisanal gold and diamond miners are operating illegally.
Informal sector crucial
Agriculture remains the largest sector in the economy. Zimbabwe National Statistics Agency (Zimstat) figures put the number of people employed in agriculture in 2010 at 815,000 - more than double the pre-crisis figure, which peaked at 355,000 in 1997. Prof Tony Hawkins, the head of the University of Zimbabwe’s business school, said this was partly because up to 2009, the figures only took into account employees in the commercial farming sector, but since then they have included communal farmers in resettlement areas, and those who work for them.
Hawkins said Zimbabwe’s informal sector was playing a crucial role in reducing poverty and unemployment. He argued that current unemployment estimates ignored the role of the informal sector, and put the true unemployment figure at less than 50 percent. “Half of the economy is informal but it’s difficult to measure,” he said. “They don’t pay taxes, so they contribute little to the fiscus but… [the sector] definitely has a positive impact on poverty levels.”