Volume 9, Issue 3, March – 2024 International Journal of Innovative Science and Research Technology

ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24MAR1414

Development, Informal Sector and Policy Making:

An Assessment of the Role of Policy Formulation in the
Operationalization of Informal Groups in Harare Urban
James Mundende

Abstract:- The major thrust of this paper is to understand I. BACKGROUND AND INTRODUCTION OF THE
an interaction between development and its major STUDY
irreducible determinants; that is public participation and
policy formulation. Development is a term that has a Development refers to any activity that can transform
multifaceted forms and definitions (Rodney 1982; Saul people’s living conditions and community’s potential
2006). It is a process of bringing about desirable change resources for the benefits of the inhabitants (Crisci, 2006;
and citizenry participation is critical in such processes that Cawthra,2010; Prebisch, 1984). This definition is rudimentary
bring positive changes in the socio-economic lives. From an and accurate but it hides the complexity of the term and other
Interactionist perspective, it can be argued that, human critical issues that surround development. Todaro (2003);
relations from a micro-view point are characterized by Mhango (2018); Bracking (2009); Sandberg (2018) are among
multidimensional interactions imbedded in various a host of scholars who hold a perspective which demonstrates
symbiosis. Such explains the interaction between citizens development as a term which has a contestable meaning
and institutions of power and ideology. Conventionally, among scholars since it appears to have many facets. Some
disparities in terms of development are due to natural associate it to the politics of natural resources of the countries
distribution of resources (Weiss 2007; Okupu et al 2018), while others link it to international affairs and capital flows
but this paper conceptualizes it largely as a neglection on (Todaro, 2003; Smith, 2005; Manyanya & Bond, 2003).
the part of institutions, dearth of unity among the citizens Rodney (1972); Wallenstein (1982) concur that, development
and also limited interaction between the development is a process that brings positive change in the society at both
agencies and the people. Development remains a individual level and macro-society. Neoliberal researchers
peculiarity within boundaries of the propulsive growth such as Dugan (2003); Winston (2006) demonstrate that,
poles while some parts are lagging behind due to lack of development has to be understood in terms of human rights
positive symbiosis between citizens and institutions. and freedom to participate in the issues that govern people’s
Contemporary researches demonstrate largely that policy daily economic affairs where the government suspends its
formulation and implementation lack correlation and the seemingly inherent regulatory functions. Sibanda (2021);
intended development is jeopardized to the detriment of Okupu (2018); Mlambo (2009) argue that, development is a
the welfare of the people. Saliently, there is need for the multisectoral process that requires a lot of interaction among
prioritization of the citizen participation in policy making institutions of power and the population. Policy making is key
so that implementation would be feasible and easier. The in the development of communities because the human
reciprocity between the infrastructure, (physical enablers behavior and activities are regulated by policies (Mundende
and population) and the superstructure (decision makers, 2023). Since development is the prime aim of governments
intellectuals and researches) must be explored with much with a full coverage on their blueprints and election
consistence and coordination. In Zimbabwe, particularly manifestos (Smith, 2007; Ranger, 2004), many people
in the Harare’s informal sector and in deed in many participate in its (development) processes largely unaware on
African countries such is missing, thus, making poverty the part of the general populations. And the general population
levels cyclical, structural and endemic. is classified by the Neo-Marxist scholars as a fraction of
infrastructure and not superstructure, Bates (1980) postulates
Keywords:- Development, Poverty, Operationalization, that the public is among physical factors since they are not
Informal Sector, Policy formulation, Harare. decision makers.

Thus, this article has an argument which suggests that the

importance of the people in development is noticed when they
participate and their participation is determined by the
feasibility of the policies and regulations. Therefore, there is
need for a systematic interaction among institutions and the

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Volume 9, Issue 3, March – 2024 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24MAR1414

public for a meaningful development to be achieved. Issues of the flag independence. Informal sector expansion came as a
development are common and supranational (Ekekwe, 2008; result of tough economic conditions that were associated with
Gunn; 2018; Mawere, 2016; Todaro, 2005). Some post-independence policies which were underpinned by pro-
contemporary scholars such as Wright (2012); Weber (2017); Marxist-Socialism in the case of Tanzania, Mozambique,
Taylor (2008); Nhemachena (2020); Mhango, 2018; Bracking Zimbabwe, Ghana among others. In Zimbabwe such policies
(2009) would want to digress from such view and argue that, were informed by the internal realities including random
since the general masses are classified as part of physical infrastructural devastations by years of war and also the Cold
infrastructure in the same manner as land, roads, energy and War struggles (Sibanda,2021). Upon adoption of Economic
raw materials needed for development, there is no need for Structural Adjustment Program (ESAP) in 1991, such Bretton-
them to be consulted or at least informed. To Neo-Marxist Woods remedies did not help the ailing economy drained by
historians such as Gramsci (1988); Adorno (1975) whose ‘Welfarist’ social policies (Moyo, 2010; Mlambo, 2009;
perspectives subsist overtime hold that, labor input is a critical Mundende, 2023), instead more challenges were witnessed
and cognitive infrastructural requirement for sustainability of resulted in turning more urban dwellers into informal activities
the economy. However, informal sector growth is part of while others opted to migrate to South Africa, Botswana and
development in any country since it creates employment, oversees to earn a living.
availing goods and services, contributing to the national
income accumulation among others. It is a sector of the From then and currently in Harare urban, over 50% of
economy that is inclusive and non-discriminatory as common the working population belongs to the informal sector as
men and women are both workers and are also decision formal unemployment is reported to have reached to 95%
makers from a microcosm to macrocosm. In the Less according to 2022 National Population and Housing Census
Economically Developed Countries (LEDCs) and in the (Newsday, 2022). Recent studies suggest that economies in
emerging economies which include blocs such as BRICS the third world countries have morphed into unrecorded
(Brazil, Russia, India, China and South Africa) and Asian market systems (World Bank Report, 2022), and the same
Tigers, many young people are venturing into the informal report speaks more on the Zimbabwe’s economy post Covid-
sector activities contributing immensely to the national Gross 19. The informalized economy is subjected to a myriad of
Domestic Product (GDP) (Chang, 2003; Okupu, 2018; external factors which of late include Covid-19 pandemic,
Sandberg, 2010; Harrison, 2015; Moyo, 2007). Literature global recession, stagflation among others(ibid). Policy
demonstrates that, despite a number of challenges which inconsistence and lack of policy clarity have been noted as
include the lack of adequate funding, the informal sector has major obstacles that affect many entrepreneurs in Harare
been on an upward spiral since the beginning of the 21st particularly vendors and informal businesses at Siyaso area in
century courtesy of the furtherance of globalization of formal Mbare which are into craft industry. The livelihoods of the
economies, a shift from orthodoxy education systems and people who are conducting business at Siyaso working area
international migration (Mhango, 2018; Ruhanya,2020; and Harare Central Business District (CBD) are underpinned
Mlambo, 2009). This article argues that interventions by the by such informal activities. Ekekwe (2008); Pattillo (2006)
government into the informal sector are viewed as an note that, the operations of business depend on the nature of
institutional interaction with both complications and policy making, and this appears to be a valid argument
advantages on both sides. The success of developmental considering the situation obtaining on the ground in Harare’s
processes is imbedded in the nature of the interaction among informal sector. The rise of informal economy is a
key participatory agents, institutions and individuals. supranational issue but there are variations in its quantitative
Sociologists and other contemporary development and qualitative contributions to the mainstream economy such
practitioners hold the perception that, interaction among as job creation, inflationary controls and infrastructural growth
institutions or individuals with symbiosis underpinned by (Okupu, 2018; Sandberg, 2018; Global Entrepreneurship
reciprocity is key to a meaningful development (Giddens, Monitor Report, 2017; Lan & Gunn, 2005; Sen & Velde,
2007; Song, 2003; Bates, 1981). Entrepreneurial activity in 2012). Policy makers, the line ministries and the City Council,
Africa and other third world countries increasingly grew soon have been for long time found it cumbersome to bring sanity
after the attainment of independence from 1960s because a and order in the informal sector since it is difficult to get them
modicum of democratization processes was given more registered and regularly collect tax revenues from such
priority by leaders who were pro-nation building (Fanon, untraceable activities in which some of them are described as
1961; Bates, 1981; Momoh, 2003; Lewin, 2019). Another ‘flight-by night entities’ denoting their fluidity in nature of
notable reason behind informal sector growth by then at an operations. Classical researchers demonstrate that informal
exponential rate is that the once colonized structures did not sector business is an underground economy since it is difficult
decolonize in terms of the fundamentals of their economics to determine the value of cash-flows, wage rates and labor
(Fanon, 1961; Mhango, 2017; Rodney, 1982; Smith, 1990; mobility. Writing about the underground business operations
Nyakudya, 2015; Ndlovu-Gatcheni, 2010). Colonial structures in Zaire during Mobutu’s era, MacGaffey (1987) outlines in
and their economic ideology subsist (Lumumba, 2019; his publication entitled, Entrepreneurs and Parasite, that lack
Nhemachena, 2019; Mlambo, 2008), therefore some quarters of experience on the part of entrepreneurs and negative
of thought describe African liberation in euphemistic term as influence of the political agents limit the possible expansion of

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Volume 9, Issue 3, March – 2024 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24MAR1414

informal business in Africa and beyond. And as a result, there enterprises, labor and capital (Bracking, 2009; Berg, 2002;
are a lot of complexities encountered in an attempt to Manyanya & Bond,2003; Mlambo, 2009). This area is one of
conceptualize it, that is how it functions, where it derives its the cores, growth poles of informal activities in Harare where
motives and how operational issues are dealt with. This paper a host of activities are undertaken by people of average
agrees with such perspectives from classical school of thought academics (Herald, 2010), contrary to the claim, this article
because a rigorous observation of the informal activities in argues that even the degreed people are among the people who
Harare CBD and Siyaso illustrates that, the value output in own small to medium businesses following the shrinkage of
terms of money and physical goods, wage rate, pricing, the formalized economy.
exchange rate and compliance to taxation are all difficult to
establish rather figures available in the literature are highly II. METHODOLOGY
based on assumptions and estimations. The government of
Zimbabwe and the city of Harare have made some deliberate This study was undertaken under the guidance of two
overtures to bring sanity and to stir growth in the economy research philosophies or paradigms; positivism and
through employment creation and revenue collection from constructivism. Positivism is the philosophy which in
these small firms and individual traders, though tax evasion is substance argues that reality is known and fixed and the
common according to the Auditor general’s report. Such purpose of research is to check the level of compliance or
efforts were executed through policy formulation and deviance of human or non-human activities from the known
implementation and they have with some detrimental impacts reality (Amaitya, 2000). While interpretivism/social
on the operationalization of the informal business (Okupu, constructivism is of the contrary perspective which seem to
2018; Sandberg, 2018). It is against this background that this understand research as a continuous process that seeks to
study was undertaken to understand the relationship between establish reality since it varies from person to person, time to
policy formulation and informal sector operationalization. The time and from place to place (Webster, 1990). The influence
researcher undertook a fieldwork in Harare CBD and Mbare of these two made the researcher to adopt the mixed method
(Siyaso) to gather data for the analysis of the imbedded issues approach where qualitative and quantitative data collection
in the informal sector businesses and development. The paper instruments were used to gather data from the target
also discusses the influence of the policy formulation and populations. Madondo (2020) avers that mixed methodology
implementation on the informal sector operations in the is an integrated approach and it is also undergirded by
targeted areas in Harare. pragmatism research paradigm. The methods utilized include
questionnaires, observation, interviews and focus groups. In
 Description of the Study Sites terms of sampling, the study used a multi-stage random
The study areas comprise of Harare Central Business method. Streets where chosen randomly from north to south
District (CBD) and Mbare- Magaba commonly known as and from east to west. A total of 15 participants were from
Siyaso which is on the Southern part of the Harare’s CBD. Robert Mugabe, Nelson Mandela and Kwame Nkrumah on the
The CBD has a characterization of vertical expansion of eastern quadrant of the CBD. On the Western segment, a total
buildings, a reflection of high land value in any urban of 25 respondents was randomly chosen from Rezende, Joseph
structure (Todaro, 2004). The streets are infested by people Msika commonly known as Cameroon street and Mbuya
during the day who are always doing various businesses but Nehanda.
mainly informal. The researcher collected data from people
within the bounds of the major roads in the CBD. From North Furthermore, and in order to compliment data from the
to South, the study’s starting point was Herbert Chitepo street field, the researcher used document analysis as a qualitative
to Kenneth Kaunda while from East to West, the starting point research method to understand an insidious interplay between
was Fourth street (now Simon Muzenda road) to Kaguvi. In informal sector operations, development and policy making.
the CBD, the study focused on a total of 23 streets, 10 from The analysis of the data in qualitative research enables
North to South and 13 from the East to West. On the other researchers to delve into and understand the behaviors,
hand, at Siyaso, there is another heterogeneous group of experiences, and meanings that people attach to the
traders who are into different business ventures to raise phenomenon under study (Sutton et al, 2015). Notable
incomes for survival and it was another study site. Siyaso is a researchers such as Patton (2015); Thomas et al (2015) concur
hub of activities such as fence knitting, welding, tool making, that the major sources of data in qualitative research include
furniture making, candle making, sewing among others. None interviews, observations, documents, and audiovisuals.
of these people operates with proper documentation according Documents are a source of data that a researcher can use to
to the line ministries and government procedures. From an support a study. Necessary and relevant documents are either
observational based estimation done by the researcher, Siyaso in form of electronic or physically printed (Bowen, 2009). The
area accommodates more than 1000 enterprises with an information in documents is not normally produced by the
estimation of more than 5000 workers. These figures are not researcher but may be a compilation of images and texts that
fixed since the informal sector is too micro and ‘grey record issues, experiences, regulations (Bowen 2009).
economy’ whose market structure reflects some form of Document analysis is a process of examining and interpreting
perfect competition where there is free entry and free exit of documents (electronic or printed) systematically to gain

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Volume 9, Issue 3, March – 2024 International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165 https://doi.org/10.38124/ijisrt/IJISRT24MAR1414

understanding and knowledge (Bowen 2009; Altheide & others. Another vendor, 38 years of age, who operates at
Schneider 2013). Analyzing documents involves coding corner Mbuya Nehanda and Robert Mugabe streets, held the
information to develop themes in order to draw realistic view that it is better to be informal as compared to joining the
conclusions or meanings (Bowen, 2009), document analysis is bandwagon of the unemployed people. She remarked,
often used to corroborate findings from other data sources
such as interviews in deemed triangulation. My sources of ‘basa chairo handichatoritsvage kana risingandipi $500
data, as such, were different documents. In keeping with zvichikwira, ini ndinokwanisa kubata mari inopfuura $50
document analysis, I examined the themes that emerge from pazuva’ I am no longer looking for a formal job unless that
the literature, from the documents. job gives me a salary of at least $500 USD, I can manage to
get a profit of over $50 each day.
Secondary sources were also reviewed regularly from the
beginning of the one-month fieldwork in Harare. In terms of This shows that people in the informal sector are seeing
sampling, the researcher used random systematic method themselves as better off than those in the formal sector whom
when collecting data from the informal sector activities in the some of them bluntly described as ‘poverty-trapped people’.
CBD following the street patterns. At Siyaso-Magaba area, the Comparatively, the salaries of the civil servants are ranging far
researcher used random sampling since the target population below that of the informal sectors. Teachers, nurses, soldiers
had been deemed uniform and the area has no proper pattern among others are getting salaries below $300 USD
to follow in terms of structural arrangement as people are just (NewsHawks, 2022). In the informal sector where one is an
clustering disorderly. And a total of 30 people was entrepreneur, the income varies and is tax-free for there is no
interviewed from various activities. Lastly, purposive direct taxation that the customs authority can impose, even if it
sampling was used when official data was collected from the is imposed, the supposed tax-payers would easily evade for
Harare city council, Ministry, Reserve Bank of Zimbabwe they are belonging to what is termed as ‘grey economy’,
(RBZ), Civic organizations among other key institutions. unrecorded systems of trade.

III. RESULTS AND DISCUSSIONS  Availability of Goods and Services.

It has been established that the informal activities in
 Benefits of Informal Sector to People’s Livelihoods Harare CBD provide goods and services to the people which is
This paper found that the informal sector is growing with double benefits, that is to the public and to the business
rapidly and young people are relying on it as well as the ventures themselves. The informal activities are a resemblance
government. Jobs are created for the people and household of perfect competition where business players have no power
incomes have risen over the past 5 years though there was a over price setting but this study gathered that prices are not
deep slump owing to Covid-19 disruptions, that was 2020 to fixed and negotiable. Vegetable vendors on the Eastern part
2021 era. The participants interviewed concurred that their sell their wares at a higher price than those in the western
lives are buttressed by informal activities and 75% of the quadrant of the CBD. It is important to note that the Harare
participants own houses while others are still tenants but living CBD’s market has two segments which this study put them as
in decent housing units around Harare residential areas. two parts divided by Julius Nyerere street. Vendors noted that
However, those who own houses reside in newly established they set prices based on the assumption that vending sites
residential areas notably, Ushewokunze, Granary, Ziko-Dema, beyond Julius Nyerere street eastwards are surrounded by
Domboshava, Hopely, Nyatsime, Nyabira among others, all of people of consistent buying behavior and stable buying power.
these are peri-urban areas. Such areas are without title deeds Such assumption is among the colonial continuities present in
and other housing ownership procedures have not been the Harare urban since the same area of the CBD was
followed. Hence such house ownership is questionable but the commonly regarded as Whiteman’s island during the colonial
worth-noting argument to pick is that these citizens are on the era. Even the land values are also high in that area as
development trajectory since they are now leading a cost- compared to the downtown zone, western quadrant.
reduction lives because accommodation costs have been
removed from their slippery monthly budgets thereby creating  Government Benefits from Informal Sector
the income effect on other itemized budget components such It is the duty of the government to create jobs for its
as food, school fees, energy among others. The point in the citizens as enunciated by the social contract which is a critical
foregoing is that such reflects development because decent underpinning of democracy therefore the growth of the
accommodation is one of the determinants of indices of informal activities in Harare lessens burden from the
individual development according to Human Development government. The possibility of witnessing demonstrations is
Index (HDI). averted since people who could have been mounting pressure
on government for jobs have managed to create their own jobs
This study has learnt that informal sector provides jobs to to improve household incomes. Another group of key
people which helps in poverty reduction since household informants from civic organizations concur that, allowing
incomes have been on the rise from the past 5 years according informal trade to grow is an internal pawn to justify
to the vendors, welders, commuter omnibus operators among government failure to provide employment. But a society

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Volume 9, Issue 3, March – 2024 International Journal of Innovative Science and Research Technology
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devoid of demonstrations has high chances of propelling the government support through initiatives such as Women
processes of development. In addition, the informal sector Empowerment Bank and Post Covid-19 funding schemes.
improves the national income accumulation through indirect These two are some of the interventions by the government to
taxes as the citizens’ expenditure remains constantly high. In boost productivity in the informal sector but this study has
the light of the foregoing, this article argues that, the learnt that such are done as political gimmicks during
government’s reluctance to resolve critical issues and concerns elections cycles to hoodwink the electorate. In a scheduled
of the informal sector is informed by the reality that it benefits focus group discussion with Sayaso group of people, it
from it in so many ways. Some accuse the government and emerged that benefits from government are distributed on
city council of being ‘bystanders’ who are under the illusion partisanship not on equity as purported.
of diffusion of responsibility effect whilst the traders are on
the receiving end. This has been argued to be the highest level ‘Hapana chatinowana kubva kuhurumende,
of ambivalence on the part of the authorities for such tinozvitsvagira tega dzimari dzekuti tishande kune vanhu
undermines the operational efficiency of these informal vanokweretesa, asi kune vanopiwa dzimari idzi
groups. zvichienderana nebato raunotsigira’ (We get nothing from the
government, we self-fund our businesses from money-
IV. MAJOR CHALLENGES IN THE INFORMAL launders, but there are some who are given funds and it is
TRADE based on one’s political affiliations or alignments).

 Financial Constrains and Illiteracy That was the remarks from one the participants, arguing
Financial challenge was ranked among the top problems that whenever there is government support, there are some
affecting the informal sector businesses in Harare since the who are not getting it and they are relying on the borrowed
banks and other financial institutions are not willing to provide funds from those who are in microfinancing and money
loans or any other financial assistance citing that informal laundering businesses. These sources of capital are
activities are not credit-worthy. Banks that have been unfavorable since they are characterized by high interests.
interviewed concurred that they only provide loans to people Apart from funding, the informal sector is facing managerial
who are formerly employed in government and renown firms deficiency and when asked some conventional benchmarks of
to avoid risk of default payments. Except the few, the great running business such as bookkeeping and utilization of
bulk of the informal traders are too small to provide basic profitability and liquidity ratios, the traders in Harare showed
requirements for loan acquisition, some are not yet registered no knowledge of such common fundamentals. The argument
while others are registered but without any tangible asset to in the foregoing and to be noted is that, there is no proper
use as collateral. The argument to hold is that informal traders mechanism for the formality of operation; no vending site in
have no business acumen but they are into business due to Harare CBD or Siyaso.
poverty. This article understands such scenario as that some
informal traders are doing an activity resembling business and This article argues that, the perception that informal
it is a misnomer to classify them as business people. If the sector is less significant is in itself a misguided because the
business cannot borrow funds due to failure to meet prescribed history of economies proffers that, it is the cottage industry
conditions for bank loans then that so-called business ceases to that Indian economy among others had found its foundational
be a business entity because literature demonstrates that growth. It is therefore necessary and instructive that banks and
borrowing is among the features of business operations. The other investors to consider informal traders as serious and
only collateral security they are said to have are their names, genuine business entities in order to spur dynamic efficiency
confidence and the passion which are all intangibles to attract (economic growth) in all sectors of the economy.
trust from the banks. Another microfinancing company
manager interviewed remarked,
 Poor Management; Lack of Financial Planning and
‘We don’t give loans to small business that have no Overtrading
track record, here we mainly cater for civil servants and other Informal sector is characterized by poor management of
formal workers. The main reason is that we as an organization resources leading to financial bankruptcy and fall in the
want to avoid losses since informal business is uncertain and quantity and quality output. Street vendors interviewed
very unpredictable given the volatile situations we are operating in the CBD have no prescribed management
experiencing’ principles they follow due to the nature of their business. It
has been said that vending in Harare has never been an easy
From the above remarks, this article can argue that task as the police and municipal officials constantly raid them
informal activities have no credit lines from the local banks so there is no time to properly do the recording, preparing
and their own source of capital which is a factor considered as invoices. Lack of financial literacy and chaotic situations by
a stumbling block ahead of a possible expansionary drive. The law enforcement agents have been pointed as main causes of
informal activities in Harare CBD and Siyaso area are self- poor business management in the informal sector. Individuals
funded except the few who indicated that at some point got who are into informal business have little knowledge on how

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Volume 9, Issue 3, March – 2024 International Journal of Innovative Science and Research Technology
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to do the planning, accounting, stock valuation and control, has an impact on pricing of their products, thus, a fall in
carrying out market analysis and to enter into growth revenue. The major point in the foregoing is that, shortage of
mechanisms such as acquisition and merging among others. electricity has a multiplier effect on the informal sector
All these require certain intellectual skills on the part of the operations leading to poor customer retention resulting in the
traders who agreed that they are driven and undergirded by the decline of income revenue. In the last quarter of 2022 and the
profit maximization as a fundamental motive behind their better part of 2023, the country has plunged into a serious
operations. Due to such inadequacy, they all agreed that they power outage and the informal traders at Siyaso area recorded
are in many occasions subjected to the problem of overtrading a sharp decline in terms of operations which increases the
which is an unnecessary expansion that is growth rate that costs of production. Such had a negative impact on the
exceeds necessity. It can only be a result of poor planning and operational capacity and profitability.
this study has noted that the problem of overtrading is among
the characterizations of the informal trading in Zimbabwe,  Competition from Big Firms
Harare traders in particular. Informal activities face a challenge from the big firms
that are always have all forms of economies of scale which is
Conventionally, informal sector activity was a business a fall in average cost of production due to a rise in the scale of
regarded as dirty which belong to people who have not been to output. Informal sector groups, being of smaller scale and
school but courtesy of the shifts that characterizes the largely run by individual family members, have no such
economy, even the degreed people are into informal sector benefits associated with large scale operations. These include
running various forms of enterprises. This article concurs with purchasing economies of scale (discount following bulk
the conventional perspective which understands informal purchasing of raw materials), managerial economies (ability to
sector as an underground economy for people with little skill hire experts in managing resources), technical economies
and knowledge of how business should be conducted besides (ability to purchase, install and maintain advanced
them being collectively blanketed as risk takers, perseverant, technologies and machinery) among others. There a general
hard-workers among others descriptions. The response from consensus among the interviewed entrepreneurs that their
the micro-finance companies depicts that there is dearth of ventures suffer an intense competition from large retailers who
good management skills in the informal sector businesses in have enough capacity to wage even price wars against them.
the CBD as one of the managers noted that, as an organization Large firms have a host of economies of scale as highlighted,
they are not willing to finance the informal sector ventures therefore they have an ability to finance what is orthodoxy
through loan facility because there is no good capital literature calls product positioning and visibility through
management which he put as, ‘lack of financial and systematic and regular promotion financing. Vendors and the
managerial intelligence’. So, that lack of trust in their traders at Siyaso have no capacity to offer credit sale to
operations by the banks is the reason for them not getting customers which is another tool used by the well-established
loans. businesses as a customer retention strategy which seem to be
working for them, large retailers. In contrary, small scale
 Energy Crisis businesses have small volumes of stock therefore they are
Energy is among key economic enablers and this is compelled resort to cash sale by the conditions such as; they
according to the very ancient literature in which the dogmas of have no fixed location for identification purposes in the event
economics are imbedded in (Okupu, 2018; Sandberg, 2020; that a customer wants to pay, they are not registered and
Mugano, 2017). And energy crisis is the most talked about without bank accounts, lack of managerial skills to assess
challenge that is crippling productivity at Siyaso since power customer’s creditworthy and to do debt administration.
cuts are frequent in the post Covid-19 lockdowns and in the Despite such fact, they are still operational and profits that are
last quarter of 2022 to 2023, an 18-hour long load shedding realized translating to improved standards of living, small
was rolled out owing to a decline in the water level in Kariba businesses in Harare are battling with competition from large
dam and routinely mechanical upgrading at Hwange thermal corporations that have among other advantages, financial,
generators. The utility company has announced that the managerial and technical economies of scale.
current energy demand is over 3000 megawatts and the
generation at full capacity produces 600 megawatts leaving a IV. POLICY FORMULATION AND
deficit of 2400 megawatts (Newshawks, 2022). This article OPERATIONALIZATION OF THE INFORMAL
through the application of statistical estimations and ACTIVITIES IN HARARE
mathematical calculations established that the energy
consumption per capita is around at 0.0001875 megawatts The operation of the informal trading in Harare is
(current demand per an individual). Furniture making, characterized by many challenges emanating from policy
welding, glue manufacturing, sewing, wire mesh knitting inconsistences on the part of the government and city council;
among other activities require electricity supply and the incapacitation and negligence on the other side of the traders.
current power cuts are hindering work at the site leading to As already demonstrated herein, in the introduction, the
loss of production time. People have resorted to the use of interaction between policy formulation and informal trading is
diesel-powered generators which is an expensive option that negative and asymbiotic which is contrary to the conventional

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conceptualization of development. Development is achievable environmental and labor laws among others. The workers
when there is a positive interaction among the concerned who belong to the informal sector are subjected to a number of
agents, government, policies, firms and people. This article infringements such as unfair wage rate, absence of social
observed that such interaction is missing and both parties are security, unfair dismissal among others. The argument to pick
enduring the burden of such inconsistence and uncoordinated here is that, informal sector is understood as unrecorded or
conduct. On one end the government is losing revenue through underground economy which suggests that its operations are
various leakages as there is no solidity in the policy very much asymmetrical and there is a lot of imperfections.
implementation to plug gaps in the informal economy. In Therefore, since such type of economy is known for
theory, the informal is assumed to have a complimentary unorthodoxy operations with unnoticeable records, traders
effect on the mainstream economy which if actualized would wantonly abuse general regulations, labor laws and authorities
turn country’s fortunes and pull it out from the gnawing are intransigent as it is reflected on high order level of policy
shocks of stagflation. Similarly, the informal trading itself is inconsistence.
left vulnerable to such maladministration leading to uncertain
and unstable operations which results in the traders evading However, the following table presents the policy
taxation, operating without proper documents, becoming regulations identified as critical in the operations of the
violent towards law enforcement agents, non -compliance to informal sector in Harare and Zimbabwe as well.

Table 1 An Assessment of the Impacts Policy Regulations on the Informalized Economy

Policy Regulations Strength(s) Weaknesses
 Acquisition of Operating License  Regularization of the operations  Some informal traders have no licenses.
 There is no mechanism to ensure compliance
 Taxation  Generation of national income  Tax evasion by over 75% of small-scale traders.
through revenue collection.
 Proposed Vending Sites  Bring order in the city  No ablution facilities at the designated sites
 For vendors, CBD is their niche market site
 Environmental Management Act  Raising of environmental  Environmental negligence behind prioritization
of 2002 and Environmental consciousness and awareness of socio-economic issues by both policy makers
Impact Assessment and the public

This table was created by the researcher as an illustration to strengthen their efforts to decongest the CBD but informal
of the policy regulations cited by the participants that govern vending has increased in Harare after the crushing of the local
operations of the informal sector economy in Harare currency in November 1997 (Mlambo, 2008; Bond &
Manyanya, 2003), and the situation has been worsened post-
As demonstrated, it has emerged that the small -scale Covid-19 era. The city council has set its sub-organ called
traders mostly vendors are required by the law to acquire Small-Medium Enterprises Committee (SMEC) responsible
operating license for them to be legal and to operate properly for the allocation of trading sites in the CBD but recently the
without interruptions from irregular and unforeseen municipal Ward 16 councilor who is the chairperson of the committee
raids. With a license it would be easier for revenue collectors noted that politics has overtaken the mandates of the
to identify operators easily and even to accurately calculate committee leading to sprouting of more vendors along the
estimated value in liquidity which is circulation in that micro- streets in Harare. According to him, the Zimbabwe African
economy. Such calculations are of importance since they assist National Union Patriotic Front (ZANU PF), the ruling party,
policy makers in ascertainment of the contribution to the tax linked people have ganged up against his committee and
revenue and GDP, national income. Contrary to the issue of started parceling out vending sites to their supporters.
licensing, vendors who participated in the study noted that it is
costly to get that vending license from the city council which In that scenario, the revenue authority has no mechanism
is pegged at $600 -$1200 United States Dollars and it expires to collect taxes from informal traders who are not registered
after 12 months. There is also another unspecified amount of and always in transit. Unregistered operations in an informal
money to be paid to those in offices of authority for quick economy is difficult to control or even to estimate its market
acquisition of the license; it is now an invisible business value, wage rates, pricing systems. 2022 World Bank Report
expense which cannot be found even in the books of accounts. as cited in some sections of this article outlines that
The major problem cited on that one is lack of working capital Zimbabwe’s economy is 65% informal therefore it is set to
hence many of them operate without licenses which is contract given the situation that its growth rate is vacillating
compromising their possible functions since the municipal between 3.5 to 4.5% for the past two years. It is the lack of
police routinely conduct raids on the vendors’ wares which positive interaction between revenue collection authority,
disrupts revenue generations. In some instances, the municipal Zimbabwe Revenue Authority (ZIMRA) and the direct tax
police engage the Zimbabwe Republic Police (ZRP) officers payers in this context (Informal traders) that has compromised

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the possibilities for smooth operationalization and Report, 2022). Further, there are vendors who are selling
development. ZIMRA issues garnish orders to non-compliant perishable foodstuffs such as fruits and vegetables and they
tax payers by instructing the banks to debit money from cannot be put into any of these malls which are looking
client’s account but informal traders largely have no bank suitable for goods such as mobile phones, laptops, television
accounts and are not in the systems so it is very easier for the sets, clothes and groceries. The vendors are still in every street
traders to evade taxation without a trace. Therefore, there is to an extent of blocking road users and their number increases
limited contribution from the informal traders in terms of from 3 pm as they want to access market when many people
taxation since the revenue collector seem to have no proper finish work.
alignment that enhances tax compliance.
On the same note, the City Council has set a large
Apart from the issue of taxation and licensing, the vending site close to a km from the city Centre along Seke
enforcement of the Environmental Management Act by road but the structure is still under construction. But even if it
Environmental Management Agency (EMA) has been is complete, vendors and customers are not willing to leave the
described by informal traders as a blockade to their city Centre for these new sites. Informal traders who
expansionary drive which characterizes entrepreneurism. participated in this study, have noted with concern that, it is
However, it helps to develop ecological consciousness and better for them to risk continue operating in the CBD than
awareness among the traders and the public largely and it is a going to any of these new proposed vending sites which they
positive step towards sustainability and effective response to disregarded as inconvenient. An argument from their
climate change. At Siyaso area, there is serious degradation responses is that, CBD is convenient for business and it has
and pollution of the environment as well as water poisoning people (customers) from all residential areas in Harare
due to constant disposal of chemicals by the informal including affluent suburbs such as Glen Lorne, Borrowdale,
manufacturers. The area is noisy (noise pollution), smelly (air Mt Pleasant, Chisipite among others. At the proposed site
pollution) and dirty (land and visual pollution) due to outside the CBD, vendors will have a limited market since it is
uncontrollable waste management; some respondents cited accessible to those traveling to Chitungwiza, Hatfield,
lack of bins as the source of pollution at their workplaces. Epworth, Sanningdale only. It is a valid argument because
Such is a reflection that EMA is not consistent in enforcing its there is no logic for shoppers who reside in Dzivarasekwa,
regulations and on the other hand people are negligent to Kuwadzana, Westgate, Mabvuku, Greendale, Ruwa, Tafara to
comply at the same time. Hence the blame is shared between go to Granite-side area to buy fruits and vegetables then come
the policy makers and the informal operators at Siyaso. This back to CBD to enroute to their places of residence. Such is
article notes that over 75% of the informal traders in Harare cost-ineffective on the part of shoppers who are subjected to
are not conscious and are unaware of the environmental ethics the impacts of stagflation which has led to loss of value of the
as their key priorities emanate from profit maximization, local currency.
expansion and survival. In terms of operations of the informal
sector, EMA was named among the challenges that impact V. COLLATIVE ANALYSIS AND CONCLUSIONS
business in this ‘grey economy’, the traders are regarding OF THE FINDINGS
EMA as business expense. Some traders were fined for
polluting the water and land and such inflates costs of Development is a systematic process that brings positive
production and it has a multiplier effects including the decline change which has multiplier effects on the lives of the people
in the quantity of goods produced, an increase in market in a sustainable way that upholds principles of environmental
pricing of goods and services, factory closure among others. beneficence. In the economy, basically, there is an interaction
All these are impacts of the dearth of coordination between between the institutions of power, ideology and citizens. As
key institutions involved in development, in this context, the World Bank (2022) proffers, the Zimbabwean economy has
informal traders and EMA policies which have been deemed tilted towards informal trading with an index of 65% and such
incompatible. economy is understood as an underground or unrecorded for
there is no mechanism to accurately measure and regulate its
Lastly, it is noteworthy that, the City of Harare has performance. This article lucubrates and demonstrates that in
earmarked some areas as vending sites outside the CBD as a Harare, the informal traders which constitute, vendors,
method to decongest the city. There are also some vending carpenters, distributors, runners, welders are benefiting from
sites that are now housed in the shopping malls dotted across such activity since employment has been created and
city such as the Kwame Mall along Kwame Nkrumah street, household incomes have risen in the past 5 years. Some have
Galaxy Mall, Home gate Mall, Central Mall, J-Way Mall managed to purchase residential stands and have built houses
among others. Vendors with licenses are entitled to rent some in the newly sprouting areas on the Harare’s margins such as
areal space of 1m by 60cm in the malls with a cost range of a Ushewokunze, Hopely, Southlea Park, Churu farm among
minimum of $200 and a maximum of $400 per month. There others. This according to this article can be hailed as
is some semblance of order in the city but these malls are not development since people have now in possession of
enough to accommodate all vendors in Harare given the fact accommodation which made them reduce monthly
that the economy is said to be 65% informal (World Bank expenditures as accommodation is regarded as the top budget

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item that consumes close to 50% of urban dwellers’ income irreducible and such role is imbedded in territoriality,
who belong to the category of lower to middle income earners. sovereignty, nationality and law. The informal traders must be
In terms of the operations of the informal sector in Harare, compliant to the laws and they must be regularized so that
there is no coordination between policy makers and the they can get funding from financial institutions.
entrepreneurs and such inadequacy is understood from what Regularization of the informal activities means that the
has been indicated herein in the introduction. The government would be getting taxes which improves the
superstructure which in this context means policy formulation national income and GDP, therefore it is key for government
and regulations, must be in accordance with the infrastructure to put efforts that ensure proper operations in the informal
that is the physical factors that are pro-production and, in this sector. A regularized sector is good for government’s revenue
case, infrastructure refers to entrepreneurs themselves and authority to monitor operations with clarity and efficacy;
their tools of trade. There is no superstructure-infrastructure garnish orders would be issued easily if happens that there are
interplay which is put in this paper as positive interaction. delays on the payment of taxes or evasion. On the issue of
Policy regulations parceled out by the City Council and the taxation, tax education must be prioritized by the relevant
government have affected the operations of informal activities stakeholders to make the public aware of their role in the
in the CBD and Siyaso area. The law enforcement agents, economic performance of the city and ultimately of the
municipal police conduct systematic raids on traders in the country.
undesignated vending sites. The business is hampered largely
because the vendors are always in a defensive mode and are The traders must embrace new technologies for the
situationally set in transit. Some resort to violence against the analysis of business conditions and other components of the
law enforcement agents which turns the CBD to be a external environment. The other aspects which merit
threatening environment, while others opt for corrupt routes mentioning herein is the issue of record keeping and financial
which makes corruption a 21st century business expense. It has intelligence. This study discovered that most of the informal
emerged that some vendors in the CBD bribe the police and traders are not circumspect when it comes to financial matters
municipal officers for protection during mass raids and an which makes their enterprises to grapple with liquidity
argument is that since corruption is thriving, the efficacy of constrains always. There is need to improve on that aspect in
policies remains elusive. order to achieve systematic development in the informal
economy. The government and other authorities of interests
The net-effect of lack of positive interaction between the should come up with some interventions to regulate the price
institutions of authority and the public in this informal sector mechanism used in the informal economy since there is no
is that poverty and living conditions are soaring up. The control, a situation that jeopardizes the general populace
majority of the people since are the victims in this intricate which has to be protected against profiteering. Profiteering
web of institutional interaction as the authorities are suffering often characterizes the informal sector simply because the
from what social psychologists proffer as, bystander effect and private sector is motivated by profit maximization without
diffusion of responsibility effect (Piliavin et al, 1969), where considering the financial ability of the community. Besides the
those in need for support (the informal sector) usually suffer issue of pricing, there is another aspect which has been
despite the presence of the helpers (authorities, government identified as an anomaly in the informal sector. It is the issue
and city council). And in this context, the institutions of of quality of goods and services provided in the informal
authority, power and ideology seemed reluctant to proffer a sector; poor quality is common and there is need for
lasting solution to the problems faced by the informal traders authorities to come up with policy mechanisms or to adjust the
resulting in the suffering of their enterprises and subsequently existing ones in order to monitor and ensure that the
their lives in general. community is provided with quality goods. Wage rate is also a
problem which the informal groups are grappling with since
VI. RECOMMENDATIONS there is no prescribed minimum wage and even if there is, in
an underground economy there is no compliance and the
This article after condensing the outcomes from the field government itself has no effective systems to ascertain the
recommends that the authorities should come up with policies extent of alignment to labor laws.
that are user-friendly when it comes to the operations of
Harare’s informal groups and poverty alleviation. There is On the issue of vending sites, the city council and the
need for having a coordination between policy makers and the government must find a common point of convergence for
public so that development is prioritized and becomes people’s social development through informalized economy
achievable through informal economics. For development to by equipping the proposed sites with ablution facilities so that
be realized, there is need for establishing and upholding they become attractive to traders and consumers as well. That
symbiotic interaction between superstructure (institutions of would decongest the CBD where the traders cited as profitable
ideology, policies and control and capital) and infrastructure zone in the city. This article is optimistic as it argues that,
(land, raw materials, physical labor, entrepreneurial passion since the year 2000 when the urban councils had fallen into
among others). Borrowing insights from the State Theory, this the control of the Opposition Parties, there has been what
article argues that, the government’s role in development is some prefer to call, diffusion of responsibility between the

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ruling party and its ardent critiques, the opposition. It is should be considered when policies and decisions are
imperative that the two must find their differences and locate a formulated for the purposes of feasibility and uninterrupted
point convergence in the principle of human beneficence and applicability.
environmental harmony.
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