The issue of the unemployment rates in Zimbabwe has been very contentious in Zimbabwe because of the informalisation of the economy. Let me put this into perspective.
According to the IMF (2018), Zimbabwe has the third largest informal economy in the world, accounting for 60.6% of GDP, only behind Bolivia with 62.3% and Georgia with 64.9%.
The informal sector has grown in recent years in response to a harsh business environment, characterized by price and exchange rate distortions, burdensome regulations, and slow urbanization.
Roughly, informally employed persons constitute about 87.5 percent of all employed persons. That means that the formal market employs about 12 percent of all employed people. The government says all people who are employed in the informal sector are employed hence officially, the unemployment rate was 21.8% in the third quarter of 2024 according to Zimstat, 2024.
But to us as long as the workers in the informal sector do not have a Payslip, if they have no employment contracts, do not pay taxes, we regard them as unsecure jobs. We cannot celebrate that people are employed if they are selling tomatoes or selling airtime.
What should be done?
If we are to create employment there are a number of issues that needed to be done to reverse the declining capacity utilisation. Capacity utilisation has been declining due to ) low local demand, working capital constraints, competition from cheap imports, antiquated machinery and machine breakdowns, drawbacks from current economic environment, high cost of doing business; shortage of raw materials; and
power and water shortages.
There must also be clear strategies on Fiscal Discipline, Public Sector Administration, Conducive Business Environment, and FDI. Diversification of the economy is required mainly driven by 2 sectors i.e. agriculture & mining and value addition. We should be asking who is benefiting? Who is involved in the process – securing jobs for locals, where are the inputs in value addition coming from?)
The main areas in need of reforms to ease doing business & attracting FDI include: (i) licencing processes; (ii) multiplicity of levies; (iii) multiplicity of authorities; and (iv) delays in utility connections
Given the political economy context of reforms, ‘doing business reforms’ should be placed on the agenda of the Tripartite Negotiating Forum (TNF) to ensure they are broad-based and are driven through a consultative, inclusive process as opposed to the prevailing situation whereby they are Government-based, characterized by inconsistencies.