HomeBusiness DigestThe Burgeoning 'dark' Side Of The Economy

The Burgeoning ‘dark’ Side Of The Economy

DESCRIBED as the “dark” side of the economy, there are no definitive statistics on the informal sector, which markets everything from toiletries, basic commodities, fuel, cash and electrical gadgets.

The Confederation of Zimbabwe Industries (CZI) does not have a defined figure as to how much of the country’s population constitute the informal sector. The Zimbabwe Congress of Trade Union however estimate unemployment at 80%.
Against this background, analysts believe employment in the informal sector has far surpassed that of the formal economy, where only about 20% of the working population is still said to be employed.
Five years ago the informal sector acted as a buffer for cyclical trends in the formal sector by providing a ‘dumping ground’ for retrenched labour and a waiting station for job seekers.
Today many formally employed workers are leaving jobs to join the “more rewarding” informal sector.
The Zimbabwean government last month said it had “serious concerns regarding the country’s joblessness and negative economic growth”.
The government also said it was concerned about the mushrooming growth of underground businesses and the resulting loss in tax revenues. The informal economies have been defined as economic activity not included in a nation’s data on gross domestic product, and not subject to formal contracts, licensing, and taxation.These businesses generally rely on indigenous resources, small-scale operations, and unregulated and competitive markets.
According to CZI, formal employment levels last year dropped by 12,2% from the previous year.
According to the results from the sampled firms by CZI, there was no change in working hours. The industry’s mother body said on average most employees were earning a gross salary equivalent to between US$10–US$50 per month using the yesterday’s street parallel market rate of 1US$ to $400 000.
The salaries are now a far cry from the Consumer Council of Zimbabwe (CCZ) latest monthly basket for a family of six, which is now pegged at US$280.
Most shops that have foreign currency trading licences are charging exorbitant prices for their imports, disregarding advice by the central bank that they put a mark-up of 30% after factoring in transport and other related costs.
CCZ executive director Rosemary Siyachitema said there was need for businesspeople, most of whose prices were not justified, to consider the plight of consumers.
“As CCZ, irrespective of whether basic commodities are charged in rand, local currency and US dollars, consumers should get a fair price. Prices are too high.
“The policy is there to stay and our expectations are to generate sufficient foreign currency so that we can produce our own goods.”
Siyachitema said the bigger part of the work force was underpaid and could not access foreign currency.
“Fuel prices have dropped to US$0,80-US$0,90 per litre in the region, but our public transporters have increased the transport fares to shocking levels of about $100 000-$150 000,” she said.
“The business community should stop exploiting the situation in our economic environment,” said Siyachitema.
The consumer watchdog, however, expressed concern that prices of most basic commodities had been increased by worryingly wide margins as compared to the prices charged in South Africa, Mozambique or Botswana where most of the products are being sourced.
However, there is pressure on industry to remunerate workers in hard currency on the back of ballooning inflationary pressure.
Food shortages and food inflation is becoming worse, such that more people are absconding from work because of the high cost of living and transport.
A lot of the workers spend the whole day hungry and their work output was continuously deteriorating. Transport costs are now more than gross monthly salaries.
The reasons for a drop in employment levels are because of less work, less people/low capacity utilisation. Positions are not being refilled and capacity is reduced.
Voluntary retrenchments are becoming commonplace as people earning less than a living wage opt out of the formal system.
Meanwhile the Institute of Chartered Accountants of Zimbabwe (ICAZ) this week said it had been affected by the brain drain as most of its members were leaving the country for greener pastures.
Speaking to businessdigest this week, Lungile Ndlovu, the Registrar of the Institute said: “Although the political and economic meltdown have not directly affected us, we are not an island, everything that happens to the economy also affects us,” said Ndlovu.
“The economic crisis has made transactions and payments difficult just as it has been for other institutions, sectors and industries but our main concern has been the loss of our members to other jurisdictions while some have simply left the country for greener pastures.”
 “We have been trying to grow our membership to fill the void created by those leaving for greener pastures by training new members but we have faced challenges. Youngsters are not opting for training and those who manage to start training cannot afford to finish and those who manage to finish training offer their services elsewhere,” he said.
“Other limitations include remuneration. There has been a serious mismatch between expenditures and salaries earned thus we have come up with the conference to address all these challenges,” Ndlovu said.


By Paul Nyakazeya/Jeslyn Dendere

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