The Zimbabwe National Chamber of Commerce (ZNCC) says nearly half of the informal sector players engage in corrupt activities to sustain their businesses, showing the extent of graft in the economy.
The chamber last Friday launched a survey — The Dynamics and Characteristics of the Informal Sector In Zimbabwe — with a goal to generate evidence and provide insights on the manner in which the informal sector operates in the southern African nation.
“Nearly half (45.6 percent) of the informal sector players engage in corrupt activities to sustain their businesses,” ZNCC Chief Executive, Chris Mugaga told a business conference while presenting the results of the survey.
New president Emmerson Mnangagwa has made tackling endemic graft a priority, and the ZNCC survey shows the extent of the challenge he faces as the informal sector makes up 70 percent of Zimbabwe’s economic activity and contributes more than 50 percent to the gross domestic product according to official estimates.
“The informal sector is fuelled by policy and regulatory loopholes. The government should prioritise fighting corruption, especially at the border where imported products find their way without paying duties to unfairly compete with those that are legally produced,” said Mugaga.
The elimination of the loopholes would ensure an even playing field with the formal sector establishments, he added. Calls for formalisation of the sector based on taxation scares away the players in the informal sector.
“There is need for highlighting other formalisation advantages to the informal sector players more than the taxation advantages that the government would enjoy whenever government is trying to promote the formalisation agenda,” he said.
However, he added that the informal sector should operate in an organised manner as it also contributes to the formal production system of the economy.
The survey shows that about 44 percent of the informal sector businesses who earn above $1 200 a month are in the manufacturing sector, while about 41 percent are in the retail sector and 15 percent are in the services sector.- The Source