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Mr Sundararajan

Happiness Zengeni in New York
The Sharing Economy trend could transform the informal economy as it enables multiple people to have access to markets, which are generally not accessible to them in a formal set up, US economic analysts have noted.
Sharing Economy is used to describe an economic model based on sharing, swapping, bartering, trading or renting access to products as opposed to ownership.
It takes a variety of forms, often leveraging information technology to empower individuals, corporations, non-profits and government with information that enables distribution, sharing and reuse of excess capacity in goods and services.

An economist from the Fiscal Policy Institute Mr James Parrott noted to journalists in New York that Sharing Economy had provided additional sources of income to US citizens at the time the economy was in recession.

“The US economy has recovered from a recession, but this has been the weakest recovery on record. During that period, unemployment was high while the income lines fell in low wage sectors.

“The Sharing Economy has grown against this backdrop. Periods of low economic growth make people open to more innovation.”
Arun Sundararajan, Professor of Information, Operations and Management Sciences, Stern School of Business, New York University, said the Sharing Economy model represents new capitalist economic activity at scale.

“Before the model, commercial transactions were based on big brands and organisations, while at the same time use was tied to ownership. The Sharing Economy breaks these assumptions as multiple people can access it with no one exclusively owning goods.”

Where the economy is highly informalised as in the case of Zimbabwe, the Sharing Economy could be used to break monopolies held by bigger companies, some of which are not performing at the moment as it allows for the pooling of anything from ideas, assets and services under one umbrella market.

“Such a model reduces the cost of transaction and at the same time increases economic activity as there is better use of financial capital, labour and physical assets.
“So it would definitely represent opportunities in economies where people are self-employed. It creates intermediaries to help people have access to goods and income for the providers,” said Professor Sundararajan,

One of the success stories of Sharing Economy globally is Airbnb (an accommodation provider), now present in 192 countries including Zimbabwe.
It is set to become the largest provider of accommodation in the world after it recently hit 425 000 rooms/night.

Airbnb recently received a $10 billion valuation, and startups like Lyft, Poshmark, fitmob and Uber, which received a $17 billion valuation in its last round, are gaining traction while consumers benefit from lower prices, higher quality, and unprecedented convenience.

The rise of the sharing economy is, however, dependent upon access to the necessary technologies, which many people in the developing world lack. Recently,
Econet Wireless Zimbabwe chief executive Mr Doug Mboweni noted that the penetration rate for smartphones was low at 10 percent so the group would be aggressive in the push for such phones as they drive usage.

Mr Mboweni said: “Smartphones are generally hungry for bandwidth and as such drive usage. And this is a trigger for healthy revenue streams. We are pushing smartphones towards the $50-$60 mark. After which we can now drive content, local content.”

Speaking at an economic symposium in January this year, Finance and Economic Development Minister Patrick Chinamasa said the informal sector was now a dominant force of the economy and people should accept that reality.

World Bank country economist Ms Nadia Piffaretti also said it was high time that Government started paying attention to the sector, constituting 46 percent of Zimbabwe’s economy.

This constitutes a significant proportion of the economy compared to South Africa at 17 percent and Malawi at 13 percent. Ms Piffaretti said that SMEs constituted 60 percent of the economy after dollarisation in February 2009.

According to a study done by the Zimbabwe National Statistical Agency, the employed population aged 15 years and above, was estimated to be 5,4 million, with 84 percent of them in informal employment, 11 percent in formal employment and 5 percent in employment not classifiable.

According to a Small and Medium Enterprises (SME) survey conducted by Finscope in 2012, a total 5,7 million jobs have been created from 2,8 million small businesses, while 800 000 small business had employed 2,9 million people.

The study also established that US$7 billion was circulating in the informal sector in the country, which is reeling from a liquidity crisis.