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The destruction of the informal sector
Eddie Cross
June 01, 2005

In the past week the government of Zimbabwe has taken steps to destroy much of what has become known throughout Africa as the informal sector. This consists of about 3 million small-scale business enterprises - none of whom are registered or pay direct taxes but which play a major part in the nations economy.

There are 800 000 small scale peasant farmers and their families, but it is in the cities where this kind of economic activity has thrived as the formal sector has crashed. The activities take on many forms - cross border traders who take orders from urban business and then find the foreign exchange and go to South Africa or Botswana to source the products required. I estimated once that about 5000 traders crossed the borders every day doing anything up to 20 per cent of all imports.

Vegetable and fruit sellers are found almost everywhere - a vendor selling just a few tomatoes every day can make as much as a worker in industry. Small scale industry goes on where ever there is a vacant lot and takes on all sorts of tasks and produce products such as wire netting, door frames, windows, furniture. The motor industry and public transport is another area of informal sector business - hundreds of small vans operate in urban areas and provide a very efficient form of local transport, which is used by millions every day.

In the housing sector the role of the informal economy is just as ubiquitous - with a back log in housing running to over 1 million units on official lists and only 1,4 million housing units actually on the ground, over 40 per cent of the urban population is thought to be technically homeless - they live in crowded tenements and as lodgers - often living as a whole family in a single room. Desperate for any sort of privacy and family life many take to constructing shacks in other peoples yards or on vacant ground in peri urban and township areas.

This means that some where about 2,5 million people live in makeshift urban accommodation without adequate sanitation or clean water. They include hundreds of thousands of children. Many brought to the towns because the education and health services are so much better than they are in the rural areas, or their parents have died from Aids or a related illness and they are living with the extended family.

So we have a massive structure of informal sector activities - almost eclipsing the formal sector that was so dominant in 1980. I estimate that informal business may generate as much as half our GDP, handle as much as 40 per cent of all foreign exchange and 20 per cent of our exports and imports. They support 3,4 million urban people and 4 million rural people. They provide transport for the great majority and meet the basic housing requirements of at least 8 million people. They pay taxes through the indirect systems of taxation that exist (VAT and others) and provide a huge market for the formal sector as well as income support for the majority.

Despite the complete failure of the Zanu regime to maintain the formal sector - with GDP declining nearly 50 per cent in 7 years, exports down by half and employment by over 40 per cent - the State has now decided to decimate the one thing that is working - the informal sector.

If I had not seen it myself I could not have believed that so stupid and heartless a thing could be carried out. On Thursday last week I watched armed police destroy the markets in Beitbridge - the border town with South Africa. I saw them burn food, steal groceries and smash furniture. Afterwards one street kid said to me as I walked past - "this is cyclone Gono!" referring to the governor of the Reserve Bank who seemed to have triggered this exercise in an effort to gain control of informal money markets. Others just sat stunned - not quite appreciating that the State had just robbed them of virtually everything they owned.

We saw evidence of the cyclone all the way to Harare and then over the weekend we saw the Capital City go up in flames. The markets at Magaba, Mbare all destroyed and billions of dollars worth of goods taken or destroyed. My daughter witnessed a team on the street cutting a vendors hot dog stand loose and then loading it onto a truck - she remonstrated with them and they threatened to arrest her. Some Z$2 billion in cash stolen from vendors by the Police.

All over the City homes were destroyed, goods stolen or destroyed and people threatened with loaded weapons and live ammunition. They were also threatened with tear gas supplied by Israel that stuns its victims. Officers in charge of this mindless destruction said that they had orders to shoot anyone resisting. In one area I visited the majority of the squatters had voted Zanu PF in the recent election, believing that in doing so they were protecting themselves from eviction because the land they occupied was not theirs - they sat stunned by events surrounded by burnt out wrecks of their homes and crying children who had spent the night out in the cold.

The question is why are they doing this - punishment is one reason given by police to those they were hurting, punishment for voting MDC in the cities. But I think there is another reason and this is that Mugabe - now in the final stages of his rule, has decided - like Stalin in the 30's and Pol Pot in the 60's and the Afrikaner administration in South Africa, that it is time to move some people out of the cities and back to the rural areas. This is a mass eviction of unwanted urban poor being forced to go "back to their rural homes" and "grow food!"

In the cities they are a threat - restless, independent and proving a powerful support base for opposition politics. In the rural areas they can be controlled and perhaps forced to grow food where none is being grown at present. Will they get away with it - probably, just like Stalin and Pol Pot and the apartheid regime. But only for a while, eventually the tide will turn and when it does, those who were the oppressors will themselves become the victims of their own evil acts.

To back up this thesis that strange new Ministry called the Ministry of Rural Housing and Social Amenities with Munangagawa in charge has been given a massive budget from nowhere to operate with. This suggests that they really are trying to force a relocation of population. In the past 5 years, rural populations have been declining - the math's suggest by as much as 10 per cent per annum. This coupled with the impact of Aids has meant that these areas can no longer even feed themselves. Mugabe is trying to reverse this situation.

When you go to bed tonight - just think of those tens of thousands of poor, hungry, destitute people and their children who will sleep in the open in near zero temperatures, without hope or a future. Mugabe is goading the population to revolt - then he can declare a state of emergency and remove what is left of our civil liberties and rights.

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