$7bn circulates in informal sector

Minister Nyoni

Minister Nyoni

Zvamaida Murwira Senior Reporter
At least US$7,4 billion is circulating in the informal sector and Government has taken a deliberate move to formalise operations in that market in fulfilment of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation provisions, a Cabinet Minister has said.
Small and Medium Enterprise and Co-operative Development Minister Sithembiso Nyoni said the fiscus was losing substantial amounts of money from this untapped sector and formalising such activities would go a long way in achieving this objective.

She said this in the National Assembly while delivering a ministerial statement to update the House on what her ministry was doing to formalise the sector.

She said 5,7 million jobs have been created from 2,8 million small businesses, while 800 000 small business had employed 2,9 million people, according to an SME survey conducted in 2012.

“At least US$7,4 billion is circulating in this sector. Just imagine if the 2,8 million people were to pay US$1 per month, what that would contribute to our fiscus.

“The informal sector comprises unregistered and unregulated people who chose to avoid registration and therefore taxation,” said Minister Nyoni.

She said registering the informal sector would allow them to enjoy some benefits which they had not been getting.
Formalising the sector, she said, entailed registering, licensing of their economic activities, ensuring that they have addresses, registering them as private limited companies and sole traders or partnerships.

This, she said, would also mean they pay statutory obligations such as National Social Security Authority and the Zimbabwe Manpower Development Fund, among others.

Minister Nyoni said all these efforts were consistent with a major Key Result Area of Zim Asset.
A national steering committee comprising all relevant Government ministries had since been set up.

In response legislators, while commending the Minister, expressed concern on issues of corruption, absence of inclusivity of the process and how the rural population would benefit.

Southerton MP Mr Gift Chimanikire (MDC-T) said there was need to stem corruption and gave an example of Zanu PF youth leader, Cde Jim Kunaka whom he said was ripping off SME operators in Mbare.

Acting Speaker of National Assembly, Cde Reuben Marumahoko asked Minister Nyoni to respond to allegations that Cde Kunaka was ripping off SME operators in Mbare and she said she had she had not received any complains to that effect but would investigate should there be a formal report.

Cde Chimanikire said SMEs were at times handled in a partisan way.
But Minister Nyoni said her ministry was there to help SMEs regardless of their political affiliation.

Hurungwe West MP, Cde Temba Mliswa (Zanu-PF) said the ministry should consider taping into agriculture particularly on the rural folk who make the bulk of agricultural output.

Non-Constituency MP, Ms Thokozani Khupe said there was need for a women’s bank using the US$100 million that was set aside for the 2014 national budget.

Minister Nyoni said they would be grateful if her ministry was to receive the US$100 million as the tendency was to have an allocation in the budget which would not be disbursed.

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  • Ndareva

    Rather than trying to formalize the informal sector, gvt should be putting its energy into why people are leaving the formal sector in the first place. Address that issue and people would gladly participate.

    • truth0001

      RUBBISH!!! informal or formal sector is all semantics!!! the key word is enterprenuership, and thats what we want. and massive increase of our people getting into interprenuership is what we need. we need to manage those entreprenuers for the better of the economy

    • rukudzo

      I think its common knowledge. People are NOT leaving the formal sector. The formal sector is dying due to a variety of variables one of which is sanctions. However given that our people are innovative, they have come with various strategies to survive. So government should ensure that our people who have risen to make sure Zimbabwe never dies, are not taxed but are strengthened.

  • Zvakwana

    Wishful thinking, this government is a joke.

    • denny

      They dream a lot these guys!!

  • Mike

    The informal sector will not go away for Avery long time. We r joining them. Easier to do business!!

  • Zvarevashe

    Register, pay taxes, statutory obligations NSSA & ZMDF dues, from informal starvation level earnings with no benefits supplied by Government in return? Basically fill government corrupt pockets with more dollars and we’ll leave you alone?
    First, how about some confidence building measures providing non-existent essential services from Government to show they care about the people, before squeezing the last cent out of the povo if they have any? Continued inaction to recover assets from numerous ignored corruption scandals delays the long awaited funding!

    • rukudzo

      You should have come with a good suggestion sir. You chose to be negative. Our economy has moved from the traditional sector to this informal sector. How do we integrate this economy into main stream but without letting it lose its “informalness”.I like you, am against taxing them using Mr PASI’s tax bands, I am also against forcing them to contribute to NSSA & ZMDF because they are already making payments to the fiscus albeit in an indirect way. Take for instance a Kombi. It ranks at the rank officially with 2 workers- the driver & conductor. However there are three other “unofficial” employees. The whindi who will load goods, the rank marshall who will be shouting “Chitungwiza 10 rand Chitungwiza 10 rand etc”, Then there is the one who collects money for allowing the Kombi to load passengers from that designated area. Those 4 un officially employees are a form of tax in my view. Then there are those “right of passage” fees that are paid at roadblocks. If you take all that into account, the informal sector is contributing immensely to the stability of our country. Let them continue as they are now, until our economy shifts back into the formal sector.

  • Sly

    Hanzi registering the informal sector would allow them to enjoy some benefits which they had not been enjoying
    such as paying NSSA, so that those CEOs get hefty salaries. Iwewe wonzi you only get NSSA contribution after retiring at age of 64. Vanhu vangani vanosvika 64 vachishanda.

    • elpal

      vanhu vangani vachiri kusvika 64 mu zimbabwe

  • truth0001

    now i wonder how many comments are sensered!!!?? i wrote stinging critique of mugabe’s cabinet and that comment has been blocked

  • Marz

    This govermnent has become a joke 7bn? so how many millionaires has the informal sector produced? If that amount of money circulates then why are the people poor

  • Fishaz

    In my opinion for a change this clearly illustrates how parliament should work. No hyperbole but a concisely and sequentially outlined account of real on the ground factual data which the generality of many Zimbabweans are aware of and easily identify with. The question begging now is why the generality has now taken this route rather ? Therefore the new fear now is that since an articulate Minister presiding over arguably adept technocrats has somehow now correctly encapsulated the real Zimbabweans’ survival mantra what abodes the future ? Will Government like the python it has become spin a Web around the informal livelihoods and suffocate the life out of it or will the generality rather assume the porcupine mode and perforate the state and hemorrhage it to death.

  • Dr Know

    Most small scale businesses are operating on a hand to mouth budget,taxing them will only force them to shut down. They are operating not of choice by because they need to eat.

  • Tendekayi Machivenyika

    Mliswa should leave the rural folk alone, they are suffering too much as it is, probably more than anybody else. This money which the Minister is talking about is the money which is sustaining the country. Those in high places who are close to the real economy do their shopping in SA, Malaysia, China etc, dumping our hard-earned cash outside the system.

  • jonso

    This is rubbish, this ministry is useless

  • Onini

    Dear Minister,
    This cannot be accurate! Ecocash is pushing less than $2billion Annually and that’s the bulk of your informal sector transactions. Don’t look to formalize the informal sector, it exists because the formal sector is dead so you need to work to revive the formal sector and grow the informal into formal. The informal sector should be a bonus for the economy and not for a whole ministry to give us nonsense that we need to formalize it. We are tired of politicians whining about issues and not doing anything about it. Put your act together and lets work to revive this economy.

    • zolani banda

      Ecocash is still in it’s infancy and is growing rapidly by 80% every month Ecocash is not the only mobile operator there is also telecash

      I hate zimbabweans who rubbish their own country just to oppose zanu
      you probably in the diaspora cleaning old peoples butts
      I am in the informal sector with my business which makes $50000 per year

  • Don Wezhira

    The shadow economy is a permanent feature of contemporary economic activity globally. I expected, however, the technocrat in Cde Nyoni’s office to unpack the subject for her presentation. So now we have a thumb-sucked figure, so what?

  • Mbada Murenje

    Rather end up grabbing everything for failure to register. Otherwise what is formal are people not these operations in which 90% are likely to be on the police wanted list busy operating under names of some officials. Just tell us you are doing away with this informal organisation thing like smith used to do period.

  • ginger brown

    madam minister, her majesty, how did you manage to quantify that amount of money, especially if we look at most of the merchandise that these guys in informal sector are selling, we are looking at $ for 3 may those are t-shirts, ladies skirts $5 and so on, sure to come up with $7.5 bln, I think we wouldn’t be as poor as we are and even the liquidity crunch that is prevailing shouldn’t b there bcuz some merchandisers will end up lending to the banks hence the banks lend out to the final consumer, I doubt this figure madam, xx

  • trueBrit

    If 5.7 million jobs have been created, and $7.4 B was in circulation then unemployment would be a non-issue in ZW. This govt. operates from under a rock, SMH!

  • Muneyinazvomupunzarima

    The government will kill the informal sector by trying to make it formal. There is need to understand how the informal sector acquired its flexibility and matching of customer needs instead of just eyeing the money in a predatory way. What are the benefits that the informal sector is missing?

  • tonderai

    one thing i have noted is people didnt understand this , when we say money circulating it means money is exchanging hands not profits ,