page, about 43% of the informal sector enterprises were found to be located in

Residential Areas, 31% in the Central Business District and almost 27% in the Industrial Sites.

Table 1OA: Distribution ofInformal Sector Enterprises by Area

Area Percentage Number ofEnterprises

CBD 31.1 101

Industrial Sites _{26.5 86}

Residential Sites _{42.5 138}

Total 100.0 325

Source: ISES, July-October 1995, Harare.

As reflected in Table 10B; Commerce enterprises, about 48%, were mainly

concentrated in the residential areas ofthe cities followed by those in the Central Business Districts (39%). Construction units (about 76%) ^are most prevalent in

Industrial Sites with considerably few in the Residential Areas(21%).

Manufacturing enterprise units (46%) ^are concentrated in theIndustrial Zone and ^a

few(29%) in the Residential Areas too. Though the services/repairs units ^are significantly spread across sites, there ^{are more} (about 50%) in the Residential Areas. Transport activities cut across the board but ^more (41%) ^are prevalent in the Industrial Sites.

Table 1 OB: Distribution of Branch of Activities byOperational Area Com

Total 119 100.0 29 100.0 31 100.0 107 100.0 39 100.0 325

Source: ISES, July-October 1995, Harare.

The respective ^areas have specific attractions for the relevant informal sector

operatives, but to a large degree their concentration in a given place has been ^more

or less dictated by the availability of infrastructure facilities and ^as for residential

zones for evading taxes and licenses. It was noted that apprentices often had to set

up new enterprises ^nearerto their old ^{masters so as} to obtain technical advice when need arises.

Nearly all of the informal ^sector enterprises interviewed operated from fixed

locations. Well over 60% ofthe enterprise ^owners owned their places of work and

75% of these happen to be their homes. About 15% of the enterprises operated

from places which they did not ^own and neither did they pay rents for them. The

rest rented the premises from formal sector operators.

The location ofthe activities has ^an important bearing on the type of facilities

which are available to the enterprises. It was observed that ^some of the enterprises

relied on public water points and toilets. Electricity in some enterprises ^never existed, some argued that the production level ^as well as demand was not high enough to warrant such utilities. One may interpret it ^{as an} indication of the relationship between demand for the product and level oftechnological adaptations

within the specific enterprise. Another reason for not using utilities such ^as electricity ^was that^some enterprises operated from temporary structures most often operating in the open air. Thus the temporary nature of their workshops also played ^a role in influencing the adoption techniques and production which used electricity.

Apart from the above, it ^was noted that there were other factors that influenced the location of the enterprises, these include; residence of proprietors, proximity to the market,

proximity

to raw

materials,

proximity to similar enterprises and ^easy access to transport.

Inspite of

the ^reasons given by the

fin

enterprise ^owners in

justifying

their firms' locations, quite a number pointed out that they ^were prepared to ^move fromtheir present location.

The above,

implied

thatthe participants ^were not satisfied with their _present locations as well as the _structure from which they operated. In the same vein many

were not prepared to move, their main fear ^was that the new location _may not be

suitable ^or that an allocation ofa place by the local authority i.e. municipalities of Harare, Bulawayo, Masvingo and Mutare ^or the _government would bring with it

the payment ofhigher taxes and licenses which they wanted to avoid or even may not afford.

3.8 Informal Sector Earnings and Income Distribution

This section focuses on the level ofearnings ofthe labour force in the sector.

Three categories of earnings were used. Firstly, those who earned less than Z$300.00 (US$32) ^per month; secondly the informal sector workers who earned between Z$301.00 and ZS600.00 (US$ 64)and thirdly those who earned above Z$601.00 _per month. The section also attempts to explain the differences in the level of earnings with ^a view to analysing the variables that could influence

earnings.

Information ^on earnings ofthe labour force ^was collected by asking the enterprise owner/head the number ofpeople who belonged to any of the _categories

one to three mentioned above. For the five branches ofactivities more than 27% of the labour force earned less than ZS300.00 _per month.

Table 11: Distribution of Informal Sector Workers' Earnings

EarningLimit Percentage No. of Workers

Less ZS300.00 26.5 700

Z$301.00-Z$600.00 46.0 1226

Z$601 + 27.5 728

Total 100.0 2654

Source: ISES, July-October 1995, Harare.

As Table 11 shows, many of the informal sector labour force earned betwec ZS301.00 and Z$600.00 _permonth. Many ofthose in the second category earned

lot well ^over Zimbabwe's official minimum _wage in the formal sector of ZS500.

(US$53) ^per month. This second category constitutes 46% of the total inform

sector labour force included in the survey.

The third category which for obvious ^reasons include the entrepreneurs (

enterprise heads, those who earn above Z$601.00, constitutes 28% of the sector7 labour force. Available information showed considerable differences between th

earnings of the labour force within different activities. Labour force in th transport sub-sector earned higher than any other labour force in the five branche

of activities. The labour force in the commerce sub-sector earned relatively

loi]

incomes. In all cases the differences in earnings, ^{was an} indicative of the extent

tj

which certain activities can generate high incomes compared to others and als

individual enterprises operating at efficient levels depending ^on the training an other factors.

It was discovered from the results of the survey that education and/or natur of training had important bearing ^on the labour force's level of earnings. It

waj

observed that the labour force's incomes correlates the nature oftraining. Informa

sector workers with institutional training had a better chance ofdoing well and it i

reflected bytheir higher earnings.

Primary, secondary and tertiary education with special focus ^on enterprise

heads is important for the better management of their businesses ^{on a} day to dafill basis. It ^was established by the ^survey that post-primary education has importai!

fn

>r >

positive implications for the earnings of the informal sector labour force particularly the enterprise heads. As pointed out earlier, over 65% of the informal

sector enterprise heads had their vocational training obtained through apprenticeship system. However, one may conclude that one's ability to successfully go through the apprenticeship training depended largely ^on the

educational level received _e.g. primary ^orsecondary.

Generally, the level ofeducation and size of initial capital injected into the

business and indeed experience ^are the important variables in determining the ;

earnings of the informal ^sector entrepreneurs. The informal sector activities which perform well were found to be offering higher remuneration to their work-force and

it was not surprising that highest salaries/wages were paid to the work-force in the transport and manufacturing sub-sector. It ^was found that the two activities appeared to be ^more efficient than others.

The above underlying observations confirm the assumption that the informal

sector is involved with interalia:

-the provision of goods and services at affordable prices to all.

-the participation of locals in the economic management of the economy,

-employment of people, curbing unrest and unemployment that ^may build up into

social and political instability ifnot attended to.

lil!

3.9. Impedimentsto the Developmentof the Informal Sector

3.9.1 Introduction

This section deals with the main factors impeding the development ofthe

informal sector in Zimbabwe ^as observed by the survey in the four cities. The section also forms the basis for identification of the types of measures which need

6i

I

mm to be evolved to assistthe sector. The survey asked the enterprise heads to indica

the major problems

affecting

the growth and development of their entities at entr and in the life line.

Inquiry ^on the problems affecting the sector were important in identifying th'

I

major bottlenecks likelyto be encountered by eitherthe newentrant into the ^sector 1 daily problems in running the business operations ^as well as other problems whic

are common to certain activities. An analysis of the above are essential

i|.

identifying

the ^areas which require assistance in the form ofpolicies and practica

areas where the _government ofZimbabwe and its _organs could develop tailor mad

programmes to assist the sector.

3.9.2 General Problems

¥

The major problems that ^were identified in relation to initial setting ^up

informal sector enterprises include among others: inadequate capital, lack ^o technical know how, lack of technology, lack of suitable premises ^an inappropriate government regulations(government bureaucracy). Reporte' impediments to existing enterprises included lack of managerial skills, sti:

competition and financial constraints.

The _survey established that about 48% of the enterprises reckoned

tha-inadequate capital was one of the informal sector's key problems. This ^wa;

11

Table 12: Informal Sector Enterprises' Constraints

Source: ISES, July-October 1995, Harare.

Most Common Problem Percentage Frequency

Financial 48.0 156

Government Bureaucracy ^{18.8 61}

Managerial Skills ^{18.4 60}

StiffCompetition ^{14.8 48}

Total 100.0 325

mL

H

I

followed by government regulations (bureaucracy) and lack of managerial skills

with almost 19%, 18% respectively. The problem of stiff competition was mentioned by 15% of the entrepreneurs. Table 12 on the previous page, shows

the

response of the informal ^sector enterprises to the difficulties which they face in : starting and running their enterprises.

Several issues _may be drawn from Table 12, the consistently high emphasis l

on lackofcapital ^as a major source òf the informal sector's problems are both prior

to the entry into the sector and after. Government regulations and/or bureaucracy

was found to be the second main problem. For instance, a look into Zimbabwe's

|

Five Year Development Plans reveals that ^on paper the government has been t

establishing policies regarding the growth of the informal sector. Yet, in practice

there are government instruments that block the development plans' set objectives. :

.

It can be observed that in the Transitional National Development Plan (TNDP)

-1982-1985, several of its sections spell out how the informal sector was to be used

as one of the _ways oftransforming the ^economy into a modern type.

Page 14 of the TNDP identified insufficient growth in the modern sector and

the desire to supplement incomes as factors contributing to the emergence and growth of^a "vibrant and dynamic informal sector". Page 15, section II of the plan

identified the sector as facing all forms of discrimination which impeded its ability

to create morejobs. It ^was noted that government objectives over the plan period

wereto ^remove such discrimination.

Reading through Zimbabwe's

First Five

Year National Development Plan (FFYNDP) 1986-1990, one

would find

out

that though it tended

to

focus

much on

1

the

large

scale

businesses,

_slight attention was given to the informal sector. Pa1 17 ofthe FFYNDP identified the sector as "key sector for changing the structure the economy and for

achieving

rapid and sustained economic growth ai

development."

It outlined _{the need to} give assistance to the sector in the form provision of

infrastructure,

credit facilities and technical assistance.

A further _{look into the} Second Five Year National

Development (SFYNDP) 1990-1995,

one would find out that it makes reference to employmeit*I creation opportunities in the informal sector.

Specifically,

it stated thatat least 50 000 jobs ^were to be _created in the _{sector over} the plan period. The SFYNDf

acknowledged

the significant contribution _{of the} informal _{sector to GDP which} estimated at Z$650 _{million at current 1990}

prices. Page 8 ofthe plan noted th

"growth of the informal sector was being constrained by several factors _which

If

.

included the

multiplicity

of regulations that retarded the growth ofthe sector, lack of suitable

financing

arrangements for the _sector and

inadequate

_marketing

arrangements for the informal sectorproducts."

It is observable that as with the previous plans, page 16 of the SFYNDP mentions that

"employment

_{generating projects will be given}

high priority and incentives will be provided, various informal sector employment schemes will be

encouraged and supported." While ^so much as been written _{and said} in these Long

Tenu National Development Plans ofthe countrythere is _very little which can been written as achievements in an effort to pave way for the informal _sector's sustainable growth and

development.

As earlier mentioned in Chapter Two under sections on Investments and Sources of Finance, the infrastructures that exit in the country favour businesses

6K

that are registered with the respective authorities only. The ^current investme policies in Zimbabwe requires that _any entity which need to do business in tl

country should

firstly

get registered with the Registrar of Companies ^or Registn

of

Co-operatives.

But to register,

fairly

complex legal procedures have ^to of

followed at a cost ofat least a few hundred dollars, perhaps ^as much ^as Z$1 50

(US$158).

Most of this

being

needed to draw _up articles of association and memorandum of association, which must be submitted by the foundin;₁₁₁ shareholders to the Registrar's Office.

To be acceptable to the Registrar's Office, the memorandum and article,

must correctly reflect the business activity, the rights and obligation of its shareholders and directors and the company must have ^{a name} that would hav been approved before _any of the _procedures mentioned above are undertaken. On may conclude that all these are inhibitives to the economic growth of the count:

via the informal sector.

The _survey established that the _government ofZimbabwe has several law enforcement _agents that restrain individuals in operating within the informal _sector.

This

finding

is common even in other African and Third World countries.

Regulations of such governments and/or local authorities are often regarded ^as restrictive to new entrants as well as the existing informal ^sector enterprises.

Several areas of assistance were cited that include _{the need} for fixed and permanent locations, provision of basic utilities such as water and

electricity,

provision of loan facilities, assistance to purchase new equipment, technical and

managerial training for the informal ^sector labour force. Quite ^a number of the

1«

0

entrepreneurs indicated that the sector faced other problems such ^as lack information on the organisations in the country where they could obtain techni

know-how,

modern

technology,

financial and managerial support. Lack ^o information on what services are offered by the above mentioned organisations

fear ofapproaching them ^on the _pretext thatthey may be turned down and ofno

knowing

how to approach the same organisations i.e. the protocols.

One _{may argue} that if policies which minimise ^{or remove} the variou constraints facing the informal sector are effected, it could enable and lead the sector to increase the quantity and quality of production as well ^as increasing employment. The survey established that with respect to the effects ofemploymen

in the sector, it was noted that some enterprises had ^some short life _spans because

of the constraints raised above. _{Such short} life _spans threatens the ^status of

employees and their stability in the sector.

Assistanceto the _sectorwould therefore enhance the life _span of the activities and improve stability of employment in the ^sector. Inevitably additional employment could be created ^{as a} result of efforts made to assist the informal

sector. It is therefore clear from the

foregoing

that there is considerable room for the local authorities in the four cities under consideration i.e. the _government and other related _organs to assist the sector in turning and/or boosting the quantity and quality of production in the sector. The aim being to increase the economic growth

ofZimbabwe.

3.9.3 Technological Constraints

The informal sector is handicapped by technological shortages. The _survey established that _many informal sector enterprises ^use

rudimentary

tools in most

(ÍR

I

cases home _made. Free-hand production techniques ^{are most} often used. The

product

quality

and quantity is therefore compromised, ^more attention is paid to

functionability

ratherthan appearance. However, it was observed that

exceptionally

gifted craftsmen exhibited considerable _skill especially on

baking

bread, smithing

Dans le document The informal sector in Zimbabwe:features, Impediments and Potentials (Page 71-82)