Informal sector Zim’s biggest employer yet lacks adequate policy support: BPC

Zimbabwe’s informal sector has emerged as the country’s largest employer; however, government policy and financing mechanisms have failed to keep pace with its growing role in sustaining livelihoods, the Bulawayo Projects Centre (BPC) has said.

BPC, which provides young people with vocational skills alongside technical resources, business guidance and support intended to help them turn skills into viable enterprises, says informal trading and other self-employment activities continue to face major barriers to finance, markets, skills development and formalisation, despite carrying an increasing share of the country’s employment burden.

The organisation is now calling for a comprehensive review of the country’s small and medium-sized enterprise (SME) policy, arguing government support for small businesses does not match the scale of their contribution to the economy.

BPC Programmes, Partnerships and Communications Officer, Tichafa Chiramba, said the government had developed incentives to attract large investors, including tax breaks, but similar measures were insufficiently available to locally owned SMEs.

“Currently the largest employer in Zimbabwe right now is the informal sector,” he said.

“As someone who has worked with the SME sector for quite a while, I feel there’s so much more the relevant ministries and government could do for that sector.”

Chiramba was responding to questions during a recent media tour of BPC hosted by the National AIDS Council (NAC) as part of efforts to strengthen public awareness and media engagement on HIV and AIDS prevention, treatment, care and support in Bulawayo Metropolitan Province.

Chiramba said the policy gap was concerning because many of those operating in the informal economy were young people who lacked collateral and formal business structures traditionally demanded by financial institutions.

“You want collateral from a young person but where are they supposed to get it?” he asked, stating that businesses with potential to grow were often locked out of formal financing and markets, while entrepreneurs were left to operate in an economy increasingly dependent on self-employment.

He added the SME policy needed to be revisited to provide financing mechanisms tailored to the realities of small businesses, improve market access and create stronger protections for enterprises that were attempting to formalise and expand.

“The SME policy exists, but it’s not comprehensive enough. It needs to be revisited and some of these issues addressed,” Chiramba said.

The concerns come as BPC itself seeks to bridge some of the gaps through technical and vocational education and training (TVET), entrepreneurship development, business incubation and market-linkage programmes.

Chiramba said the organisation’s experience working with entrepreneurs showed the informal sector was far more economically significant than its conventional portrayal suggested.

He cited activities at Kelvin in Bulawayo, where vehicle owners purchase parts and pay mechanics for repairs, as well as Renkini in Bulawayo and Gazaland in Harare.

“These are multi-million-dollar industries that have not been adequately captured by the metrics that are used to determine economic performance,” he said.

He argued that people operating within these spaces were generating significant incomes and supporting families, even though informal employment was often portrayed as an indicator of economic weakness rather than an important component of the economy.

“A lot of families are surviving and a lot of them are making filthy money,” Chiramba said.

BPC says its own experience demonstrates the potential of targeted support.

Over the past decade, the organisation has assisted more than 600 small businesses to improve and expand through its training programmes, while also supporting start-ups and connecting businesses to networks that can help them grow.

The organisation’s programmes include entrepreneurship and business management training, feasibility-study support, development of investable business plans, financial planning, regulatory compliance, mentoring and coaching.

It also facilitates market access through product launches, demonstration days, trade shows and other market-linkage initiatives.

Technology has become another component of the programme, with BPC using computer laboratories at its hubs to train young entrepreneurs in digital marketing and the use of platforms such as TikTok, Facebook and LinkedIn to promote their businesses.

However Chiramba said these interventions could only go so far without broader government support, noting access to finance remained a challenge because financial institutions often viewed SMEs as risky due to their informal structures, limited records and lack of collateral.

He called for financing products specifically designed around the realities of SMEs rather than expecting young businesses to meet requirements designed for established companies.

Chiramba also highlighted quality-control challenges that prevent some SMEs from accessing export markets, saying the government and other stakeholders should help small producers meet standards required to sell beyond Zimbabwe.

BPC is also pushing for stronger policy support for TVET, arguing vocational training needs to be more deliberately linked to youth employment and entrepreneurship.

“There isn’t a comprehensive TVET policy that guides how TVET is conducted and the manner in which it can be used to promote youth employment,” Chiramba said.

With donor funding becoming increasingly difficult to secure, BPC is also developing income-generating activities to sustain its programmes.

The organisation owns infrastructure that it uses to generate revenue and is developing business units, including a catering venture built around young people trained in hotel and culinary studies.

The model allows trainees to gain practical experience while generating income for themselves and helping BPC meet some of its administrative costs.

Chiramba said this approach was becoming increasingly necessary as Zimbabwe’s traditional employment model changed.

“The traditional economy that we’ve known in the past no longer exists, and therefore it is only through self-employment that our young people can be able to actually earn income, sustainable income for their families,” he said.

Source: Informal sector Zim’s biggest employer yet lacks adequate policy support: BPC — CITEZW

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