‘Hard lockdown killing informal business’

Business
ZIMBABWE’S informal sector, which accounts for the bulk of employment and 60% of economic activity, has been hardest hit by lockdowns announced to contain the spread of Covid-19. Until herd immunity is achieved and the economy possibly fully opened, restrictions remain. This week, our chief business reporter Taurai Mangudhla (TM) spoke to United Kingdom-based economist […]

ZIMBABWE’S informal sector, which accounts for the bulk of employment and 60% of economic activity, has been hardest hit by lockdowns announced to contain the spread of Covid-19.

Until herd immunity is achieved and the economy possibly fully opened, restrictions remain.

This week, our chief business reporter Taurai Mangudhla (TM) spoke to United Kingdom-based economist Chenayi Mutambasere (CM) about the impact of Covid-19 on the informal sector.

Mangudhla challenged her to come up with possible solutions to the crisis that confronts informal businesses in the age of the coronavirus.

Here is how she sees the situation…

TM: The government has responded to spiking Covid-19 cases by announcing another Level 4 lockdown, which keeps most informal sector businesses closed yet Zimbabwe’s informal sector is the nexus to survival. What is your opinion? CM: New Covid-19 virus strains have brought Zimbabwe into the eye of the storm after months of what looked like the worst was over. The government has rightly responded by openly acknowledging the seriousness of the situation leading to a tightening of lockdown rules. Like most governments in similar situations, our government is grappling with managing the pandemic to flatten the fatality and infection curves. However, the government’s stance on a hard lockdown with enforced curfews appears to be failing to flatten the curve as the infections rates and the death toll continue to rise.

TM: As you have said, tightening the lockdown rules seems to have achieved very little. In your view, was the lockdown worth the cost in terms of disrupting business and what must be done? CM: One may argue that the government requires a lateral Zimcentric pandemic response that seeks to flatten Covid-19 infection rates while encouraging some form of economic green light for the majority of Zimbabweans. A hard lockdown can’t work in a situation where the majority lives from hand-to-mouth. In this situation, on a day-to-day basis, two things must happen. The first thing is “hustling”. The second thing is a trip to purchase basic commodities to feed the family. It’s impossible to stay indoors when one has no food, they will starve.

TM: I believe the biggest headache for authorities has been around striking a balance between citizens’ safety and the desperate need for meaningful activity especially given the country was coming from a low base in 2019 and 2020. CM: Flattening the infection curve must be in tandem with financial security not just for the present moment, but beyond. Long after we are all immunised and normalcy resumes, the adverse economic impact of Covid-19 will be felt for years to come. From this premise, it’s possible to make the claim that the last person to be impacted by the effects of Covid-19 will probably be born in 2026. Therefore, it is paramount that any plans to safeguard the nation from the spread and attack of Covid-19 must consider the health impact together with the economic impact. Unfortunately, a hard lockdown alone will flatten the economy making it harder to flatten the Covid-19 curve as many leave their homes in search of money to source basic commodities.

TM: Can you speak directly on the impact and/or role of the informal sector in the fight against Covid-19 and its negative effects on economies? CM: A key constituency in tackling both the health and economic impact is the informal economy, which is the backbone for survival for the majority of Zimbabweans. The informal economy contributes roughly 60% to the commercial sector with about 90% of Zimbabweans relying on this sector for their income. A hard lockdown will not work for this constituency because on the most part their day-to-day living relies on day-to-day hustling without which families will literally starve. The informal sector also has the potential to serve as the post Covid-19 knight in shining armour that will rescue Zimbabwe from further economic doom. With the whole world being brought to an almost standstill, the domestic economy is going to have an even bigger role to play and must be safeguarded. The ability to borrow locally, grow locally and sell locally may become the nexus to survival. To this end, all Covid-19 regulations must remain agnostic of the survival of the informal sector.

TM: Given what you have just said, how best can the government cater for this constituency? CM: More appropriate measures may be to reconfigure interactions, perhaps limiting the number of vendors within a certain radius, allowing only non-cash payments and appropriate PPE worn at all times. If services are also provided more locally, then this may reduce commuters into the central business district. Providing informal vendors with Covid-19 testing will mean those that test positive may isolate and prevent the spread. Such testing must be followed up with tracking of others you have been in contact with. Tracking also increases the number of those who go into isolation from an informed position. Government can capitalise on digital technology to enforce this tracking.

TM: Post Covid-19, where do you see the informal sector? CM: The informal sector in Zimbabwe has proven time and again to be highly adaptable. As things stand, most folks infected with Covid-19 are mostly reliant on the informal economy to purchase Covid-19 survival kits from small equipment such as oximeters, to nebulisers and even oxygen equipment. While there is much to be said in terms of regulatory frameworks, it is the operational model in place, that is low overheads and adaptability, that is key. Large commercial companies will be least likely to survive the pandemic due to high overheads and inability to adapt. This is already evidenced in the west where, for instance, in England longstanding retailers such as TopShop or Debenhams have failed to withstand the heat. As Treasury comes up with finance recovery plans, it is quite essential that unlike their previous strategic plans, they pay adequate attention to the informal sector. They must create a space for this sector to thrive safely during and post-pandemic. Government must think about how all the economic players, including banks, can devise strategies that are focused on supporting the informal economy as their survival will be and is already key in determining how well Zimbabwe will ride the Covid-19 storm.