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By Sowell Chikwari
Government should formalize enterprises in the so-called informal sector to stimulate job-inclusive economic growth, labour and business experts contend.
The call comes as Zimbabwe’s economy is failing to create sustainable employment with the formal unemployment rate fluctuating around 90 percent.
The rapid economic growth experienced in most African economies has also failed to create meaningful jobs or improve the livelihoods of the majority as the market economic context does not drive employment.
The Ministry of Public Service, Labour, and Social Welfare National Formalization Strategy Implementation Plan Validation Program cited multiple drivers and incentives of informality ranging from the regulatory framework, labour market discrimination of poor women, youths, people with disabilities, and those living with HIV/Aids, lack of voice and representation of workers, lack of access to markets, public procurement, finance, appropriate technology and infrastructure as well as fragmentation of associations representing informal sector workers as hindering job-rich inclusive economic growth.
Labour & Economic Development Research Institute of Zimbabwe (LEDRIZ) director, Dr. Godfrey Kanyenze urged the government to adopt a pro-employment macroeconomic framework by reviewing the regulatory framework, strengthening public institutions and enforcement mechanisms to stimulate enterprises development and enhance the formalization of informal sector businesses.
“The cumbersome registration process, punitive taxation systems, outdated local authorities regulations, and by-laws, and the exclusion of the informal sector from policy dialogues and social security coverage have been the major hindrances to the formalization of startups. In this regard, the NDS1 (2021-2025) adopted formalization as a key priority.
“Hence there is a need to improve the ease of doing business through a market-driven approach to collective formalization in order to stimulate enterprise development which is crucial for job inclusive growth,” he said.
Against this backdrop, energy expert, Engineer Edzai Kachirekwa has also urged business enterprises to put employment creation at the centre of their existence in order to grow the national Gross Domestic Product (GDP).
Speaking on National FM’s Consumer Corner program, the Power Giants Southern and East Africa Managing Director underscored the strategic importance of formalizing business operations.
“Formalization of startup enterprises and informal sector businesses creates more employment opportunities and enables them to acquire financial support from lending institutions to grow their enterprises. Businesses must be tax-compliant to enhance their prospects of securing smart partnerships and lucrative contracts,” he said.
He also advised business startups to first conduct robust market research to ascertain the viability of their enterprises, engage in vigorous marketing strategies such as corporate branding, and strengthen their brand visibility.