What will it take to formalize the informal sector?

Harare 21 July 2015 - “We train people for the formal sector but we do not create the formal sector for these people”, quoting the President of Zimbabwe, Mr Reza Hossaini, the Acting UN Resident Coordinator opened a high level panel discussion on “Strengthening Partnerships and Opportunities for Youth Employment: Case of the informal economy”. DSC_04755_0.jpg

The High Level Panel Discussion convened on the sidelines of the Eastern and Southern Africa Youth Employment Knowledge Sharing Forum.

Contributing to the discussion, Dr Godfrey Kanyenze , Director of the Labour and Economic Development Institute of Zimbabwe said that there is enough evidence in Zimbabwe on the decline of the formal economy with 94% of total employment being in informal economy activities.

The motive to formalize should be driven by the desire to create jobs and improve livelihoods. If the emphasis is on regulation or to control or extract resources, then the move to formality will be difficult. The issue of transitioning should be gradual and global guidance has been developed in the ILO Recommendation 204 adopted at the 104th Session of the ILC in Geneva.

Mr. Kanyenze further said that the process and eventual result should be characterized by diversity and innovation, with detailed information to direct those participating in it.  

Dr Desire Sibanda, the Permanent Secretary in the Ministry of Economic Planning’s contribution pointed to the importance of reigning in on illicit funds flow, especially with regards to informal activities in key sectors such as mining. Whilst acknowledging the challenges, the Government will face during the transitioning; the greatest challenge will be on changing the ‘fiscal psychology’ of players in the sector.

The representative of industry, Mr Callisto Jokonya agreed that government and the private sector could no longer ignore the informal economy, because it complements the formal sector. He singled out the informal farming and artisanal sectors, as those requiring special attention in terms of revenue collection to support fiscal activities of the economy as a whole. There was an agreement that using taxation and the law to enforce formality needs to be preceded by incentives, including provision of work spaces and infrastructure to the informal economy.

The many contributions coming from the floor on the importance of transitioning to the formal economy provided a rich base of information to tap.