Zimbabwe Says Informal Sector Dominates 76pc Of The Economy

Zimbabwe estimates that more than three-quarters of economic activity takes place in the informal sector, depriving the government of much-needed tax revenue, according to the findings of its first economic census.

While the high level of informalization has “increasingly become a significant source of livelihoods, its contribution to government revenue remains minimal due to non-compliance with the formal tax system,” the Zimbabwe National Statistics Agency said in a report released in the capital, Harare, on Wednesday.

Growing informalization is a “critical risk” to the economy as less than one quarter of formal businesses carry the tax burden, according to the Confederation of Zimbabwe Industries, the nation’s largest industry body.

“Formal businesses are being squeezed,” MacDonald Mutengo, CZI’s lead research officer, said at the event. “Companies are not making profits, they are highly regulated.”

The informal sector has flourished as formal jobs evaporated due to decades of economic mismanagement that led to repeated currency collapses and bouts of hyperinflation.

The census surveyed 204,798 businesses across a range of sectors, including financial services and construction. The wholesale and retail trade sector accounted for most economic activity, contributing 73%, followed by manufacturing at 8%.

Bulawayo province had the highest concentration of formal businesses at 40%, compared with less than 30% in other regions. *Bloomberg*