Shadow economy, poverty alleviation


THERE is general consensus worldwide that poverty is an enemy of all humanity and that it has to be eliminated or at least ameliorated wherever it exists.

This explains why there have been concerted efforts by governments and other key stakeholders the world over in a bid to eliminate poverty.

The United Nations (UN) secretary-general Ban Ki-moon has been quoted saying, “Eradicating extreme poverty continues to be one of the main challenges of our time and is a major concern of the international community. Ending this scourge will require the combined efforts of all, governments, civil society organisations and the private sector, in the context of a stronger and more effective global partnership for development.

The Millennium Development Goals set time bound targets, by which progress in reducing income poverty, hunger, disease, lack of adequate shelter and exclusion . . . can be measured.”

It is an empirical fact that large swathes of Africa are wallowing in poverty while most of the Western world habitually demolish “butter mountains” and empty “milk lakes”.

The question that immediately arises: Why is Africa, one of the poorest continents on earth when providence has bestowed her with a multiplicity of natural resources ranging from timber or wildlife to a broad range of minerals?

There are no simple answers to this age-old question. From antiquity many governments and institutions all over Africa have come and gone all promising people an Eldorado which is yet to be attained.

Zimbabwe, like all African countries, is grappling with the problem of poverty.

For most black Africans poverty or lack of basic comforts of life does not need a technical definition as experience which is a rough and tough teacher has taught us experimentally what poverty is.

In Zimbabwe formal employment levels are very low, but people have found shelter in alternative employment. Alternative employment comprises both legal and illegal employment avenues.

Legal alternative employment channels are what are known as the informal sector — the parallel economy or the flea market economy. Illegal employment is what is termed the underground economy.

The subject of this article is the informal economy which is also called the shadow economy in the conventional development discourse. In Bulawayo, if one walks along Fife Street to Fourth Avenue — a thriving informal market for vegetables suddenly springs to life which has employed hundreds of women and men for ages.

The products sold in this market range from honey to amacimbi. Fruits are also found at emakethe (the market). At this market one sees serious men and women who work from dawn to dusk earning an honest living for their families.

These people are not peculiar to Bulawayo, they are found in virtually all major urban centres and growth points of Zimbabwe. They form an unsung arm of lowly women and men who are helping the UN secretary-general Ban Ki-moon and his team achieve the millennium goal of eradicating poverty.

The informal sector contributes to development and economic prosperity in three main ways.

Firstly, informal sector channels in Zimbabwe complement government in ensuring a steady supply of food and other basic resources needed to nourish life and sustain it. Most informal traders have found it easy to set up their businesses to either compete with formal ones in the supply of food at affordable prices.

Some informal sector platforms provide high fidelity and durable household goods especially in the nation’s flea markets.

As the country braces itself to stimulate the economy it is imperative that the informal sector is not taken for granted or ignored in efforts to kick-start activity in moribund business sectors.

Economic revival cannot be complete if informal small-to-medium entrepreneurs are not adequately capitalised and afforded resources to expand their businesses and most probably graduate from informal sector employment or activity to the formal sector. Secondly, the informal sector of the economy ensures peace and stability in the country since it occupies members of the economically active segments of the population who would otherwise engage in mischief like drug trafficking, prostitution or stealing.

Finally the informal sector creates reliable revenue streams for formal businesses since the sector is linked to the formal economy through the packaging, transport, fuel and other industries. Produce sold daily at emakethe (the market) is transported over long distances and is sold by various wholesalers through the auction system which ensures fair prices in the long term for both producers and their clients.

Government and non-governmental organisational interventions to capacitate this important sector of the economy need to intensify to improve incomes, livelihoods and develop business potential of the informal sector.

 Ian Ndlovu is an economics lecturer at the National University of Science and Technology. His research interests cover business, development, economic and e-commerce issues. He writes in his personal capacity.