The Role and Value of the Small Business Sector in Zimbabwe

When that shadowy organisation called the “Joint Operations Command” met on the 18th of May, they took the decision to clear the small informal traders out of the central business areas of the main towns and Cities. This was followed by the Minister of Local Government issuing an ultimatum to the effect that all street traders should be relocated by the 8th of June.

For various reasons this was cancelled and a new ultimatum issued with a date of 27th June. I personally doubt that this will have any force or effect and feel sure that the authorities who issued these ultimatums will again back down. The situation today is very different from those dark days in 2005 when the armed forces, in the middle of winter, forced the destruction of 300 000 homes and the displacement of over a million people into the rural areas without any real opposition. The attitude of the authorities was best described by the name they gave the operation “Murambatsvina”.

Clearly there are conflicting views on this issue in Government but the motivation is quite clear, these hundreds of thousands of small scale business people are a constant threat to the monopoly of control that Zanu PF aspires to establish over all sectors of society in Zimbabwe.

But their existence and operations are about the only thing holding Zimbabwe from total collapse and perhaps it’s time we all took a long hard look at why this sector has grown so rapidly when everything else is in steep decline.

Perhaps the first and most important reason has simply been necessity. In 1997 Zimbabwe provided paid employment for 1,2 million people, supporting directly or indirectly over 7 million people or the entire urban population at the time and a substantial proportion of the rural community in the Tribal Areas. Today, with a much expanded population (our total population including the Diaspora is probably about 18 million – double what it was in 1997) but our formal paid employment numbers have declined by half.

The reality is that people had no choice; it was either return to your tribal or ancestral home, or take up land in the former commercial farms or leave for the Diaspora or go into the small scale business sector and operate informally. People made their decisions quite rationally – if you were young, had some education or skills, you migrated to somewhere where you had relatives already or where you thought you might find work. South Africa was the choice for perhaps 4 million Zimbabweans. Another 400 000 went to the UK and perhaps the same number to North America.

This vast and rapidly growing Diaspora now sends home every month, about $200 to $250 million in cash – 40 per cent by open bank means in money transfers and the rest informally. Without these transfers associated with our extended family system, our social and economic situation would be very much worse than it is.

If you did not have those options – you were a woman with children who depended on you, or you had little education or skills, you resorted to retail vending (over 2 million people are engaged in this activity) or you became a tout on a mini taxi, or you joined a gang for protection and a living from petty crime. If you were a woman with reasonable looks and health, you became a sex worker.

If you were male, had little education and skills but good health, you might go into small scale mining, either for Chrome ore or gold. Some 500 000 people have taken up this activity and they produce and market the majority of the gold produced in Zimbabwe – nearly all of their production going into the shadowy world of gold traders, official and unofficial. Many make quite a decent living.

If you have some skills that are in demand you might go into a trade or start up a small manufacturing business, every roadside shows the products of their enterprise. If you want a job done at home all you have to do is to ask someone to find someone with the skills and in a couple of hours they are at your gate. If you want something made – just take a drawing or design to a small scale manufacturing area in Mbare or some other Township and they will make it for you at half the cost.

Many tens of thousands have taken up cross border trading, this started when the formal economy collapsed in the decade up to 2008 and has continued. It is now possible to import just about anything you want via this system which is fast and efficient. Formal traders find it almost impossible to compete with the street today and they conduct a third of our foreign trade flows.

The magnitude of these activities is impossible to measure but the fact that they are considerable is reflected in the following: our trade deficit has been about $3 billion a year for the past 6 years. This can only be explained by adding up the possible contributions of the informal sector - $2 billion a year in transfers, $1,5 billion in gold sales for a start. Then the fact that bankers estimate that there is $7 billion in cash circulating in the non banking system. Today probably 70 per cent of our urban population makes it livelihood from small scale business and informal trading systems.

But it’s the wider implications of all of this activity that gets me excited. All of the individuals who are operating in this sector are in fact small scale and sometimes not so small, business persons. They are fiercely independent, know their trade inside out and are street wise and well informed. They all carry smart phones and use them in their business, they make contacts and operate networks that seek and exploit opportunities. They are all gaining business skills, sometimes very sophisticated skills in electronics, mechanical engineering and manufacturing. The quality of work is often very competitive.

The world has many examples of men and women who started out in the informal sector and rose to become major business operators and success stories. The small scale business sector in Zimbabwe, created by hardship and poor Government decisions, could become one of our most valuable assets. What is needed is an administration that does not seek to chase them off the streets where they operate, but to organise them, facilitate their operations, given them both legal and physical protection and then provide support so that the rising stars in this new business phenomena can grow and expand into the future.

All of us would benefit from such a change of heart in the corridors of power in Zimbabwe. In the mean time I salute our small business men and women and regard them as one of our keys to the future we all want to see in Zimbabwe.

E G Cross
Harare 29th July 2015