A Look into Zimbabwe is Informal Sector and Unemployment among Youth

By Samuel Gwenzi

Political Economic climate

Zimbabwe has experienced decades of economic and political decay making life unbearable for the greater population. The Zimbabwean crisis has emanated from political choices made during the Mugabe era that include policy inconsistency, lack of respect for rule of law, land reform, corruption and sanctions as key enablers to the deteriorating economic circumstance of the people. The land reform and closure of most productive industry changed the economic pattern of Zimbabwe to be more informal and nearly 80% of the people are absorbed by the informal sector and the few percent absorbed by the formal sector. There has been also politics of patronage where the political elite has more than one farms and are involved in siphoning of the national cake through illicit deals. There has been reports of the missing 15 billion from the Chiadzwa diamonds and no clear accountable systems in the rank of government to account for it in 2013. Currently through government command agriculture program 3 billion was lost and parliament was unable to get necessary accountability from the Ministry of finance.Zimbabwe has undergone political changes with tensions relating to the 2018 elections. The economy is suffering from a severe liquidity squeeze in the currency system. Many Zimbabweans are frustrated that the November 2017 departure of longtime President Robert Mugabe, who died September 6 of this year in Singapore, did not lead to a quick economic recovery or end the heavy-handed tactics of authorities in the country.There is a serious deterioration of the political, economic and social environment since August 2018, resulting in fear, frustration and anxiety among a large number of Zimbabweans. Mnangagwa's disputed elections last year was met by a security crackdown that killed six people, while more than a dozen people died in January when security forces moved in to quell fuel protests that had turned violent. Today, citizens are suffering under staggering inflation, regular fuel and water shortages, rolling blackouts, a failing currency, and an increasingly repressive political environment. The government arrested scores of civil society and opposition officials after the January protests and charged them with subversion, which carries a 20-year jail term.

Unemployment of a large proportion of Zimbabwe’s urban youth, particularly those with secondary level education and above, is a major social and political challenge. Within the last three decades, Zimbabwean youth have been involved as the main force behind social unrest and violent insurgencies in the country on several occasions. Dissatisfaction and frustration of youth, especially educated urban youth, is therefore regarded as one of the major threats to social and political stability. Consequently, the state has launched a number of programmes and planning strategies to meet the needs of young people, mainly through the rapid promotion of productive employment opportunities for unemployed urban youth. Multiple factors play into young people’s perceptions and anxieties around accessing jobs, their abilities to do so, and implications for social and political conflict. In November after a military coup there was hope and international acceptance of the military assisted transition as the former President was regarded a dictator among people outside his political circles and considered old and fronting a young tuck faction called G40 in his party. The new leaders called this political change a new transition where there were promises of respecting the rule of law, curbing corruption and all the niceties of building a democratic state. The coup was cleansed by the holding of elections in July 2018 where President Mnangagwa won with a land slide victory in an election considered rigged by the opposition. The legitimacy of the new administration was questioned and his victory challenged in the constitutional court. The ruling was made in favour of the incumbent a case where legal analysist considered a traverse of justice by a captured judiciary system. Currently the ruling government has failed the test of leadership as they are responsible for a rising inflation, inequality, unemployment, corruption, deteriorating social service and an unsatisfied labour force among other challenges. The opposition has called for dialogue to end the political impasse whilst the government has established a political pact dialogue with small parties. The churches and CSO has called for a broad based dialogue with all citizens with the inclusion of the main opposition and the current ruling party. Hence dialogue has become the only alternative to address the current crisis in Zimbabwe. The question is how the informal sector and youth would contribute in these political developments? The fear is if there is an elite political pact among political actors they may fail to capture the interest of these groups.

Zimbabwe political challenges to informal sector and unemployment

The problems in Zimbabwe is both its economy and its political environment that have accumulated over more than two decades. Political and economic governance in Zimbabwe is derived from the legacy of colonialism and the liberation struggle. Military elites effective control state levers of power and have provided a culture of entitlement and dependence, which has in turn seen the centralization of power in the presidency (the executive), and conflation between State and ruling party (party–state). The political environment has been characterized by political factionalism and conflict, fiscal and economic mismanagement and deeply-ingrained corruption. This has resulted in a deep regression in the structural transformation of the economy that has led Zimbabwe away from political stability and long term economic prosperity. All key levers of power (including information) are in the hands of, and are controlled by, the civil military elite, including the Joint Operations Command (JOC) and the security sector. Political power has manifested itself in the control and running of the diamond fields, the fast-track land reform programme, and the militarisation of institutions, as well as the running of elections. Political instability including civil violence and human rights violations has characterized the current so called new dispensation. The social contract between ordinary people and their government has been undermined and civil society has degenerated. Poverty levels have risen sharply and health and educational provision has fallen. The economic decline has resulted in widespread political discontent and disaffection with the present regime. Zimbabwe is experiencing a structural regression characterized by increasing informalisation, deindustrialization and dependence on natural resources. Deindustrialization has reached ruinous levels, with dire consequences to the state of the economy. As a result of persistent deindustrialisation and decline, the economy has increasingly informalized. The share of informal employment in total employment increased. The worst affected are the youth, who have little labour market experience. The year started on a very sad note for the majority of Zimbabweans as the cost of living skyrocketed due to the failure of the neo-liberal national development framework which informs the Upper Middle Income Economy Agenda of 2018-2030. 2019 saw the implementation of the first two policy-steps, (The 2019 National Budget and The Transitional Stabilisation Programme), as the nation staggers towards 2030. In response to the deteriorating socio-economic environment, Zimbabweans took to the streets in January 2019 to demonstrate against the failure of austerity measures targeted at the poor that continue to bring untold suffering to the masses of Zimbabwe.

The events leading to and during the mass stay away were however politicised and in the process failed to address the critical demands of the protestors. It was viewed as a politically motivated stay away rather than a national cause, leading to arrests and intimidation of political and civic leaders some of whom have already been imprisoned whilst others are yet to appear before the courts of law to answer to the allegations. The stay away was also met with heavy military presence in the streets in high density suburbs of Harare, Bulawayo, Gweru and Mutare where the military as exposed in the Zimbabwe Human Rights Commission Report on the mass action carried out brazen human rights violations. Cases of rape, torture and deaths perpetrated by the military were recorded in the process. Without condoning acts of violence, the recent events should be a wakeup call for the government to act in the best interest of the general citizenry and address the macroeconomic distortions which include the huge national debt, fiscal indiscipline, current account deficit, inflation, and the currency issue among others. An inclusive and people centered approach therefore remains critical in resolving the social, economic and political crises in the country. This alternative economic policy is a democratic developmental state as opposed to the present neo-liberal economic inclination that the government is currently implementing. The President, E.D Mnangagwa extended an invitation to all losing presidential candidates to the 30 July 2018 harmonized elections to a national dialogue. Some political parties embraced the dialogue, whilst the main Opposition (MDC Alliance) disregarded the call as they viewed the process as a way of legitimizing the disputed election results. There is however a general consensus among political parties across the divide that the national dialogue is a political process that leads to a political settlement. The dialogue process thus remains a consensus of the political elite, limited in scope, structure, issues and vision. National dialogue remains relevant in determining the macroeconomic trajectory that the country should take premised on transparency, accountability and citizen participation. Anything outside this remains political grandstanding which negatively impacts on the general citizenry.

The 2019 Monetary Policy Statement which was announced in February, with the intention of addressing the exchange rate crisis and the broader cash crisis, has further worsened the economic situation. Two months after the monetary authorities predicted that commodity prices will remain the same or start to fall and the black market will disappear, the prices of basic commodities have in actual fact quadrupled. Month on month inflation, public transport and prices of basic commodities continue to skyrocket. The fuel crisis continues unabated, a clear indication that in the near future the situation will worsen partly due to the infrastructure disturbances at Beira Port due to Cyclone Idai. In Zimbabwe, the meltdown of the economic situation and the high levels of unpreparedness to disaster risk management has exposed the government as hundreds of lives were lost in an incident which could have been avoided. These unfolding events leave one to ponder on the paradox of plenty as Zimbabwe is endowed with vast bankable natural resources but this has failed to translate into real human development on the ground as social services continue to deteriorate in the midst of surpluses being reported by the Ministry of Finance and Economic Development. There is need therefore for the down trodden and poor citizens to stand and demand for transparency and accountability by duty bearers as domestic resources are being illicitly siphoned out of the country for the benefit of the few political elites and multi-national corporations at the expense of the majority poor. The Minister of Finance and Economic Development Hon. Mthuli Ncube revealed that the government registered a budget surplus of $733 million and $113 million in December 2018 and January 2019 respectively. However, the budget surplus is not congruent to the socioeconomic situation in the country where an ordinary citizen’s life has not improved. The reported surplus comes at a time when the country is grappling with socio-economic woes characterised by deplorable public social service delivery and where 70% of the country’s population is languishing in poverty. Instead real growth and surplus should reflect the general population’s decent social and economic being. It is also ironic that the surplus was recorded at a time when senior doctors were on strike demanding medical supplies and equipment in hospitals. The livelihoods of vendors also came under threat as the army and municipal workers demolished illegal structures in most cities, including driving out illegal vendors from city centres. The actions by the government continued to cause untold human suffering at a time when citizens are grappling with the continually deteriorating economic and social conditions amid high unemployment in Zimbabwe.

Unemployment

The country has an increasing unemployment rate since the beginning of 1995 to date. Failing to uphold the sustainable development goal in line with Goal #8 of the Sustainable Development Goals (SDGs) which seeks to “promote inclusive and sustainable economic growth, employment and decent work for all” Unemployment rate currently sours at 80% as from ZIMSTAT statistics. According to LEDRIZ thousands of jobs has been lost since the year 2000 as a result of worsening business environment as the government fails to create opportunities to stimulate industrial expansion. Mudonzvo (2015) noted that unemployment among the youths is an escalating social, economic and political crisis in Zimbabwe. If the problem of unemployment is not attended to, it has the potential to disrupt national cohesion, economic development, peace and stability. The effects of unemployment include youths finding solace in gangs where it is a daily routine to spend the day at street corners chatting, smoking dagga/ marijuana or any illicit drugs including alcohol usually with a feeling that such drugs help them to momentarily forget the problems that confront them. At night youths patronize beer halls, night clubs or any social gatherings where some of the gangs can be violent. At night, the activities of the gangs may change to theft, robbery and outright womanizing thereby exposing the youths to disease. Prolonged unemployment would make the youths to be so entrenched in the wrong things to a level that even when job opportunities arise in future, they will not be employable and the nation would have lost the contribution from this age group. This is seconded by scholars such as Smith (2011), Mlatsheni (2007) and Guma (2011) studied the situation of youth unemployment in Southern Africa and found out that the number of unemployed youths was rapidly rising with most of them becoming mentally affected by the hopelessness of their situation while others were turning to violence or becoming drug addicts who would be unemployable. In Zimbabwe, youth unemployment has been rapidly rising. Former President Mugabe legacy is of educating the nation, his policy has contributed an influx of educated unemployed youth with high qualifications such as degrees and diplomas. This phenomenon shows that the country has literate and unemployed graduates. It’s sad that in 2016 a group of university graduates formed unemployed graduates association where they embarked on various advocacy campaigns on their state of unemployment. By 1986, 34% of the unemployed youths had Ordinary Level qualifications. The percentage rose to 73.4% in 1994, 74.6% in 2004 and to 85% by 2012 and it continues to rise to a level where almost all unemployed youths will be educated youths (ZimStats, 2012).

 Most of the factors affecting Zimbabwe is economy are political that include policy inconsistencies and over reliance on the international community. The 2018 new administration popularly known as the new dispensation has been pushing the mantra ‘ open for business’ the concept seem to suggest its open for business for international players and less for locals. As the conditions by the new administration is doing less to open up the economy for Zimbabwe citizens. Zimbabwe faces a formidable challenge in terms of resolving issues of endemic poverty, unemployment, under-employment, informality and decent work deficits. This has been the case even before the onset of the current economic challenges in 1990s. The limited capacity by the country to absorb the new entrants into the labour market, has been largely attributed to the failure to resolve the dual and enclave nature of the economy inherited at independence. In addition, the easy of doing business environment, which is critical for sustainable enterprises and employment creation has deteriorated over the years. The weak implementation of employment friendly policies, including the National Employment Policy Framework (NEPF) has seen the scourge of unemployment and underemployment, and indeed poverty unresolved. Persistent de-industrialization and informalisation of the economy. Despite the economic rebound, de-industrialization persisted, with 4,610 firms closing between 2011 and 2014, resulting in 55,443 job losses. Informalisation deepened such that the level of informal employment, which had increased from 80 percent in 2004 to 84.2 percent by 2011, rose sharply to 94.5 percent by 2014. Inadequate supply of infrastructure thus infrastructure deficits are a major barrier to growth and employment creation in the economy, especially against a budget where 92 percent of the expenditures are recurrent. Apart from directly creating jobs, infrastructure is a key enabler of both growth and employment creation. Access to, and the cost of finance is one of the main obstacles to doing business in Zimbabwe owing to the debt overhang and high country risk factor. Unfavorable doing business environment include the doing business environment in Zimbabwe has been unfavorable. The country continued to rank lowly in the World Bank’s Doing Business Index and the World Economic Forum’s Global Competitiveness Index. However it is important to note that of the sixteen factors affecting Zimbabwe’s competitiveness identified by the World Economic Forum (2013), labour regulations were ranked sixth. Workers’ employability is another critical issue whereas Zimbabwe can be credited with having one of the highest literacy rates in Africa, much still needs to be done in terms of skills development. Due to its supply-bias, the education system is failing to meet the needs of the economy, creating a mismatch between demand and supply.

Zimbabwe is predominantly agro based economy and the destruction of agriculture during the land reform led to the loss of the agriculture chain economic value. This is in consideration of the contribution of agriculture previously to Zimbabwe GDP. Most of the manufacturing industry linked to agriculture also closed shop and relocated to Zimbabwe is neighbors. The new black farmers had a plethora of challenges after taking over farms that include perennial droughts, corrupt distribution of agriculture inputs and lack of financial loans from banks.

Informal sector

The country faces structural and infrastructural bottlenecks such as: high debt overhang, liquidity crunch, erratic power and water supply, outdated industrial machinery, high cost of capital or lack thereof, and widespread company closures. This has seen the country experiencing persistent de-industrialization and the informalisation of the economy. This has also made the country uncompetitive both on the regional and global markets. According to tech zim a news online publication, Zimbabwe is the largest in Africa and second in the world. The government and its citizens have serious concerns regarding the country's joblessness and negative economic growth. The government also is concerned about the mushrooming growth of underground businesses and the resulting loss in tax revenues. It is possible that the work towards inclusive economic growth is in tandem with employment growth is much more important including the need to formalize informal sector than suppressing the underground businesses that is, the informal economy. Growth of the informal economy is an important part of the future of all developing nations for one primary reason the present high unemployment rate will crush both local markets and foreign trade.

The informal economy is defined, as economic activity not included in a nation's data on gross domestic product, and not subject to formal contracts, licensing, and taxation. These businesses generally rely on indigenous resources, small-scale operations, and unregulated and competitive markets. In addition, skills may be obtained outside the formal educational system. To simplify the concept, most often the informal economy refers to owner/operator businesses of the urban poor, unskilled or semiskilled workers, and the chronic unemployed. By definition, these workers and entrepreneurs are on the fringe of, if no side, social and fiscal legality. Reduced tax revenues are becoming commonplace within many African countries. Only 18 percent of Zimbabwe's 85,237 kilometers of highway are paved. And the communications system, once considered the best in Africa, now suffers from poor maintenance and only supplies 247,000 telephones to a population of 10.9 million though mobile telecommunication has done much to fill this void. International and fiscal entities are encouraging cash poor African countries to develop a new tax base in the only economic sector with any dynamism in the informal economy. Zimbabwe is not the only African nation to confront high rates of unemployment. For example, unemployment rates in Benin are equal to those of Zimbabwe, where a recession in the formal economy has caused the informal economy to flourish in recent years. Informal employment is estimated to account for 65 percent of Benin's overall employment. In addition, South Africa has a 40-percent unemployment rate. Although the wages of skilled and semi-skilled black workers are only 70 percent of those of white workers, it is still double the wages of such workers in Taiwan, South Korea, and the Philip- pines, taking into account cost-of-living differences. The argument is made that in South Africa, like in Zimbabwe, rates of unemployment are extremely high, and the emphasis must be on first increasing employment and then increasing wages and productivity. The informal economy is efficient at generating job opportunities at a very low cost for at least some segments of the population.

Involvement of youth in the informal sector in Zimbabwe

The Informal Sector Literature has shown that youth constitute the majority of the workers in the informal sector in almost all the developing countries. According to research findings by UNRISID (2010) because of the large proportion of the youth in the informal sector there is often a tendency for them to be involved in erratic and often corrupt segments of the sector. Both the money changers and drug dealers in urban areas and mineral panners in rural mining communities are known as makorokoza. A lot of Zimbabwe economic activity rest in these formal processes. In Zimbabwe, the percentages of the youth representation in the informal sector have been attributed to a variety of factors. One of the major factors is its easy accessibility and ready availability for youth participation in the sector. Research by Carr and Chen (2001) demonstrated that the connection between employment in the informal sector and being poor is often stronger amongst the youth than it is for the older generation. According to the same findings the older generation’s participating in the informal sector tend to be over represented at the top segments of the sector while youth are at the bottom tiers where they specialize in trading perishable items. This paper posits that, youth dynamics in the informal sector points to intricacies involved in the context of urban and informal sector development. Challenges facing youth working in the Informal Economy. Exclusion from policy processes and a lack of appropriate legal and policy frameworks despite the fact that the youths are the majority in the informal economy, they are often excluded from policy processes and this exclusion manifests in different forms. Participation mechanisms and processes for youth in the sector are often inappropriate, employing economic jargon or disempowering language with youth being viewed in a negative light. This exclusion results in the formulation of top-down policies that do not address the specific concerns of the youth. For example, most policies governing the financial sector are not friendly to the informal sector players. To open bank accounts, banks require too much documentation which informal sector players may fail to produce, even if they might have the money to bank. The requirements are mostly a result of policy pronouncements, which makes policy a hindrance to access to bank services by the informal sector players To make matters worse, many countries, especially in the SADC region, do not have appropriate legal and policy frameworks to protect and nurture the informal economy and to protect youth as is the case in the formal sector. Where there is some form of legal framework, such frameworks fail to address the needs of the youth and the power dynamics at play in the informal economy (Mwaba, 2010; Steyn, 2011).

The lack of appropriate legal frameworks exposes youth to all manner of abuses, particularly from law enforcement agencies and officials who show little or no concern for the very laws they are supposed to uphold. This is expressed in various ways including police brutality, corruption and double taxation (ESSET, 2010; Chetty, 2012). The Government of Zimbabwe still continue to use old colonial laws to manage the informal economy. These laws promote perceptions that informal economy workers are illegal and a nuisance. Further, these laws allow city authorities to ‘forcibly remove any nuisance, obstruction or encroachment on streets or any public place’ The Ministry of Local Government in 2017 threatened to deploy security forces to remove street vendors operating in the central business districts of major towns and cities in Zimbabwe. Unfair competition Youth working in the informal sector face multiple forms of competition including from the older players and large-scale companies. Youth street vendors often experience stiff competition from big economic players. The general low level of education and business literacy among youth contributes to this significantly. It also means they cannot have the same level of access to finance as the older players. Most youth use their own sources of income, which are frequently meagre, to raise capital for their business. This may be supplemented through borrowing from their neighbors and families as well as their own savings. The requirements for bank credit tend to be cumbersome and the youth are consequently side-lined. The youth are also sometimes categorized as a high-risk group for credit. The lack of assets and capital required for collateral limit their potential to grow their business (Mwaba, 2010). Sadly, credit solutions in the form of microfinance are no better. Like commercial banks, they are geared towards unfettered profits and in a position to exploit others. In the process, they trap the youth into on-going cycles of debt. Promoted by the architects of the neoliberal agenda, such models only serve the interests of capitalism at the expense of youth in the informal economy.  Sexual Harassment Young women in the informal economy often complain of sexual harassment from both government a

Alternative policy framework for curbing unemployment

The key areas to achieve economic growth in Zimbabwe include job creation and supporting the informal sector. Zimbabwe has to establish a growth policy that emphasizes employment, utilizing the available abundant resource the labor pool of its educated constituency. Second, invest in human capital by providing the poor with education and vocational training. In addition, devolution in policymaking and implementation can dramatically promote employment objectives. The challenge confronting all self- employed workers in Zimbabwe's informal economy is to make the transition from mere survival to an economically stronger position. Zimbabwe's labor force totals 3.1 million; approximately 74 percent of them are in the agriculture industry, with low pay. If an effective program is established under which full employment is a goal for Zimbabwe and other developing nations, the informal economy is an obvious opportunity. The role of the Micro, Small and Medium Enterprises (MSMEs) Sector has increased as the economy de-industrialized. The Government fully appreciates the role of the MSMEs as an engine for growth and employment creation, especially given its high labour to capital ratio, providing a strategy for quick turnaround of the economy at a relatively cheaper cost compared to the conventional larger industries

There is need of strengthening accountability system by citizens to be economic literate and make the government accountable or exposed especially in areas of policy inconsistences such as areas of command agriculture and minerals which have destroyed the growth of the economy and enriched political elites. So citizen engagement is essential in bringing government and policy makers to account. There is need also of citizen involvement in policy formulation such that there is buy in from citizens and people centered development. In order to unlock potential of youth and informal traders effort has to be made in building consortiums for projects and in able to unlock lines of credit.  A lot of innovation and potential is found in colleges and universities hence effort has to be made to establish student’s private sector and government partnership to support potential innovation and projects. Also support of students clubs and organization to build entrepreneurship and self-sustained opportunities that can have potential of supporting financially struggling students.