….as 600k Zimbabweans own retail cubicles in CBDs across ten towns-Research
…..We can’t wish away informal economy takeover-Analysts
By Perpetua Murungweni/Beverly Bizeki
Over 600 000 Zimbabwean entrepreneurs across ten towns now ply their trade from partitioned mall retail units, a situation that has marked the death of departmental and hyper stores in the country, much to the benefit of property owners, real estate investors and tax collectors.
In a research conducted by liberal thinktank COMALISO, lettable partitioned mall retail entrepreneurs have taken over most Central Business Districts (CBDs) across the country, responding to property owners who convert shops into retail cubicles generally not more than 20square metres.
In Masvingo CBD, departmental stores such as Meikles, Tsungai, Truworths, Clicks among others have long been closed, with the properties now partitioned into these small informal retail units.
Government and other commercial buildings like Great Zimbabwe University Heritage Centre, (now Dzimbahwe Mall) ZimParks Building, Kyle House, Mutangiri Building, Victoria Hotel and ZimPost Building now follow the same model.
Attracting this breed of entrepreneurs are new buildings that include Commercial Centre, MUSA Enterprises, Masvingo Trade Centre, Sunrise Mall, among others in Masvingo town.
Masvingo’s Tsungai Complex which is one of the biggest spaces letting out partitioned retail units has about 310 cubicles with spaces averaging US$80 rentals upstairs while spaces downstairs cost about US$110 per month.
The Zimbabwe Statistics Agency (ZimStats) says almost 86 percent of Zimbabwe’s adult population is into informal trade, an indication of decimating formal industry, and according to COMALISO, wishing away these mall retail units, which it called Lettable Partitioned Mall Retail Units (LPMRUs) is mere delusion.
“To hallucinate that this is a passing phase and that departmental stores like Haddon and Sly, H.M Barbours, Meikles, Bradlows will resurrect is nothing but self-delusion,” reads part of COMALISO’s press statement.
Analysts have said that through necessary support, the informal sector can drive economic growth, if only government could come up with policies that regulate taxation, insurance and access to capital.
Economist Collen Jonasi said the informal sector could help eradicate unemployment if properly regulated, however adding that taxation of the informal sector makes it detrimental to the economy, and with a lot of tax evasion by these entrepreneurs, government does not benefit much to a thriving informal sector.
“Informal sector activities are difficult to integrate into the formal economic activities because these people do not want to pay taxes yet tax is one of the major revenue sources for government and since the informal sector is very illusive it then becomes difficult to tax,” Jonasi said.
The informal traders themselves brought up what they said was double taxation by Zimbabwe Revenue Authority (ZIMRA), because at ports of entry when they are importing goods for resale they pay customs duty, and are required again to pay an additional monthly tax for each retail unit, which they said perpetuates smuggling and tax evasion.
“I find the taxing system burdensome as we are expected to declare our goods at ports of entry while at the same time, you have to pay tax at the end of the month. I think this contributes to the continuous smuggling of goods through borders,” said one trader.
Tsungai Traders Association Chairperson Simon Mungate bemoaned the economic environment in the country which he said was influential to the operating conditions for most traders.
“The economy in Masvingo is largely based on the existence of tertiary institutions that form a fair part of our market. Business was viable when the economy was performing well but now that the economy is not doing well, business only peaks during civil servants’ pay days and when tertiary institutions open.
“We have access to bank loans but the interest rates are quite high for us. New traders also find it difficult to access loans due to either lack of collateral in form of stock or the backing of the association hence they get smaller amounts than required. The payback period is short because paying back in a period of six months is not always favorable,” said Mungate.
Economic analyst Professor Talknice Saungweme said more could be done to equip the informal traders with skills, so they can diversify into manufacturing and other trades, other than just selling imported goods.
“They lack skills and the country needs to take a holistic approach in terms of trying to equip these young people with skills through programs like vocational training, while they are also given space,” Prof Saungweme said.
Research conducted by World Bank Groups, shows that there is little growth in the private sector and this is due to a limited number of quality jobs. Only 33 percent of workers in Zimbabwe receive a salary, well below peers in the region and globally suggesting a limited share of quality jobs despite workers possessing relatively higher skills.
Moreover, competition from informal firms has tended to lower the productivity of formal firms by around 24 percent on average, compared with firms that do not face such competition.
The apathy of economic growth in Zimbabwe, via the formal sector, since the 1980s and more so after the introduction of ESAP in 1991, has led the informal sector to become a key producer of goods and services, becoming a safety net for the jobless. The sector curbs poverty, promotes the concept of self-reliance and inevitably contributes to the economic growth of the country.
