Outlook for informal economy in Zimbabwe is dire after harsh Covid-19 response

Zimbabwe’s informal workforce, which comprises 85% of the country’s total number of workers, is struggling to recover from Covid-19 lockdown measures after authorities cleared traders from the streets for three weeks from March to April.

Working hours continue to be limited by a curfew, while street vendors have been squeezed by dwindling disposable incomes in the country.

Despite contributing 40% of GDP before the pandemic hit, its leaders are locked out of government decision-making, while workers are often treated like criminals by local authorities.

“Whenever there is a disaster in the economy or the country, the informal economy becomes a target as [the government] tries to fight the disaster,” Wisborn Malaya, secretary-general of the Chamber of Informal Economy Associations, told an online panel hosted by Chatham House on Tuesday.

Since April, the government has waged a crackdown on informal street vendors, criminalising their activities and tearing down their stalls. According to the Vendors Initiative for Social and Economic Transformation (Viset), a local union, the campaign destroyed the livelihoods of more than three-million vendors.  

Even before the pandemic, the country was grappling with the devaluation of the Zimbabwean dollar, which has ravaged incomes since its reintroduction in 2019. Salaries are now worth just 10% of what they were two years ago.

While the government unveiled a $720m (Z$18bn) stimulus recovery package in May, many of Zimbabwe’s informal workers remain unprotected, with the number of extremely poor expected to rise by one-million in 2020, according to the World Bank.

As inflation soars to 800%, the World Bank also expects the economy to shrink between 5% and 10% in 2020, and the fiscal deficit to widen to 5.6% of GDP.

Like the private sector, participants in the informal economy should be treated as partners to help solve the economic crisis, not enemies, Malaya insists. 

“The sector needs to be recognised as important players in the economy. They should take important measures to respect the operations of the informal economy. It’s an economy where a lot of livelihoods are feeding from.”

Since the collapse of industry due to the hyperinflation crisis of the 2000s, the informal sector has formed the backbone of the economy. Almost 5.2-million trade in the informal economy, 65% of whom are women.

“The informal economy is the economy of Zimbabwe. It requires a separate ministry that should focus on developing the people in the informal economy to becoming part of the mainstream economy who contribute to taxes and improve their livelihoods to become part of the decent work agenda.”

“There is a lack of political will in our country to support the informal economy or small and medium-sized enterprise (SME) initiatives, and this is resulting in policy inconsistency and improper policy development. There is fragmentation of ministerial approaches to the informal economy.”

The country has recorded 7,298 confirmed Covid-19 cases, including 5,455 recoveries and 210 deaths according to figures released on Monday by the ministry of health and child care of Zimbabwe. Given the state of healthcare in the country, this is likely to under-represent the true number of cases.

• This article first appeared in African Business magazine.