HARARE, July 21 (The Source) – Like Psychology Maziwisa trying to fill potholes with mud in peak rainy season in Highfield, glorifying the informal market is a poor attempt at covering up failure.
Over the past week, debate has raged over Maziwisa’s claim that his ZANU-PF party had never promised 2.2 million formal jobs. The party meant any jobs whatsoever, such as washing his car.
This week, a state media columnist came out in support, saying all these informal jobs are “what runs an economy like ours.”
A year ahead of polls, there will be many such attempts to cover up the gaping holes in ZANU-PF’s 2013 manifesto, especially on jobs.
One such defence, which Maziwisa used, is one that ZANU-PF has fed Zimbabweans for close to two decades now; that it is OK to lose your formal job and go trade on the street.
To sell the lie, they dressed it up in a fancy name; “entrepreneurship”. It is one of the biggest cons of our time.
“You have to be entrepreneurial,” President Robert Mugabe told the unemployed at a rally recently. “I encourage you to keep chickens, grow mushroom and keep quails instead of folding your arms and saying there are no jobs.”
In truth, nobody wants to be an “entrepreneur” in the sense sold by government. It is out of survival, not out of some entrepreneurial spirit, that graduates sell sneakers and jeans out of Honda Fits outside Harare Post Office.
This call to “entrepreneurship” has always been a political message meant to mask the failure of the formal economy.
Speak to your handyman, your tailor or your mechanic, and they will most likely have a similar story to tell. Your mechanic was probably once employed at a thriving dealership. It was shut down, and now he is chasing after cars on Kaguvi Street in Harare, selling fake car parts and begging to change filters.
The man pestering you to buy a kitchen cabinet at Glen View home industries probably worked down the road at Tedco, once the country’s largest furniture maker. He would regale you with tales of making furniture for Nyore Nyore and Radio Ltd, until one day they told him to go home.
They are everywhere. The backyard tailor once handcrafted Van Heusen shirts at Bernstein in Ardbennie, who lost his job because Truworths began looking downmarket as its traditional high end market collapsed.
If you asked these skilled people where they would rather be, back in the security of formal work or fighting for scarce clients on the streets, their answer would be obvious. Yet, the government would have them believe they are better off.
Finance Minister Patrick Chinamasa has stood in Parliament and proudly declared: “The old economy is dead; a new economy has arisen.”
The idea that a country can kill off its formal economy and survive only on its informal sector is a lie.
A working paper, done this July for the IMF by Leandro Medina, Andrew Jonelis and Mehmet Cangul, says the loss of jobs in the formal market “has a statistically significant and negative effect on informal economic activity”.
It is easy to see why.
“We believe this may be caused by a complementarity between informal economic activities and formal economic activity” because those that lose jobs in the formal economy “could be the largest consumers in the informal economy.”
The income for those working in informal markets is nowhere near what is claimed. A 2013 government-FinScope survey found that just 36 percent of small business owners earned more than $200 per month. SMEs are unable to match the scale of large industries that are able to call on capital and diverse skills.
Besides, the glorification of SMEs would carry more weight if government actually knew enough about the industry it is selling as a saviour. It doesn’t seem to know.
The evidence is the wide disparity in government estimates on the size of the informal economy. While central bank believes $2,5 billion is circulating in the informal market, the Ministry of SMEs has put the figure at $7,4 billion.
Besides this, over 85 percent of SMEs are unregistered and only 14 percent of business owners have bank accounts, according to official data. The vast majority do not pay tax, despite Zimra’s many desperate carrot-and-stick ploys.
The SME sector would only be a sign of progress if Government had a working plan to drive it forward. Right now, there is no such coherent plan for it. It is only good for rally slogans and easy money for the well-connected “space barons” who run downtown markets.
With job losses rising, the informal scene is getting crowded, meaning incomes there will only fall lower, and faster.
The FinScope survey estimated that there were 2.8 million small business owners in Zimbabwe, running about 3.5 million businesses. In total, there were some 5.7 million people in the informal job market; a stark figure if true, seeing as the same survey put Zimbabwe’s adult population at 5.9 million.
Another survey, by Zimstat, said 3.7 million Zimbabweans have some sort of involvement in informal trade.
Each year, universities spill 20,000 new graduates onto the streets. Unable to find work, they too join the “entrepreneurship” ranks. When human resources experts Industrial Psychology Consultants asked jobless graduates — in a survey — how they were earning a living, most graduates “responded by indicating some form of buying and selling. Many ideas were pointed out, like chickens, cellphones or some form of services they are offering to people.”
Government also wants to package “artisanal mining”, a euphemism for illegal gold panning, as progress. In reality, it is a business fraught with smuggling and often deadly violence over claims. According to the Zimbabwe Miners Federation, the country may be losing 10 tonnes of lost gold production per month due to disputes over claims.
Many “makorokozas” are workers laid off by failed mines. Those mines once provided them with some safety nets. Now, many are dying in collapsed shafts and being forgotten. Their relatives never get to mourn them or give them decent burials.
Small miners are digging up river banks and emptying mercury into water sources. And yet, Government ministers tout this sort of mining as the priority over formal, regulated mining.
Chinamasa has asked the nation to stop complaining about the collapse of the formal economy, and to instead embrace the growing informal sector.
In Belmont, Bulawayo’s once buzzing industrial hub, a former textile factory was shut down and the shell is now home to Enlightened Christian Gathering, a church led by Shepherd Bushiri.
To Chinamasa, Mugabe and Maziwisa, we must not moan about the closure of this key garment factory. It is after all a relic of the “old, dead economy”. We must instead cheer the fact that, where once stood a factory that employed hundreds, now stands a church led by a man who claims to walk on air.