THE Employers Confederation of Zimbabwe (Emcoz) is predicting more company closures and job losses due to the rapid informalisation of the economy, it has been revealed.
The prediction comes as the economy remains highly informalised, made worse by the growing availability of products and services within that sector compared to its formal counterpart.
This comes as the informal sector is dollarised and uses a market determined exchange rate, leaving it unencumbered by the Reserve Bank of Zimbabwe’s monetary controls.
Both authorities and independent analysts suggest that the informal sector now makes up between 60% and 70% of the economy.
Informalisation is already causing job losses, company closures and firms entering corporate rescue owing to exchange rate difficulties, power cuts, taxes, and policy inconsistencies.
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Speaking at the two-day 2025 Business Indaba in Harare that began yesterday, Emcoz president Denmos Mbauya said there was urgent structural transformation needed to revive the formal sector.
“The fact that the manufacturing sector, which is supposed to be driving growth in both value-addition and employment, is placed fourth (in terms of employment) underscores the need for urgent structural transformation of the country,” he said.
“Given that the wholesale and retail trade sub-sector seems to be the most affected by informalisation, there is a high likelihood of the loss of jobs in this sector as companies bow to pressure from the informal sector.”
He said joblessness, especially among the youth was worrying as evidenced by the unemployment rates of 41,2% and 30,1% for the 15-to-24 and 15-to-35 age groups, respectively.
“The situation is more concerning when we consider the expanded or relaxed unemployment rates of 59,7% and 47,8%, respectively. These figures are in tandem with the percentage of youth not in employment, education, or training [NEET] which stand at 48,1% and 49,5%, for the two respective age groups,” Mbauya said.
“The status quo shows that as Zimbabwe, we still have a long way to go in terms of benefiting from the demographic dividend.
“Currently, we are actually grappling with the associated consequences of youth unemployment, chief among them, drug and substance abuse.”
He said the private sector needed a conducive economic environment that enabled it to perform, create employment and economic growth.
“It is against this background that we are holding this Business Indaba, running under the theme Innovative Employment Creation,” Mbauya said.
“If Zimbabwe is to attain its vision of an upper middle-income status by 2030, we must prioritise innovative employment creation which delivers, not only jobs, but decent jobs.”
He noted that private sector-led development required an enabling environment.
“While the fiscal and monetary authorities continue to work on setting macroeconomic fundamentals right, the risk posed by the informalisation of the economy remains,” Mbauya added.
“In this light, momentum is required on the formalisation agenda, particularly, finalisation and implementation of the formalisation strategy.”
He also implored business leaders to ride on emerging trends and technologies to create new industries, processes, and products that generate new job opportunities, underpinned by innovation and research.
“So the economy is unfortunately relying on the export of minerals, which are vulnerable to fluctuation in the global commodity prices and this affects our employment,” economist Albert Makochekanwa said.
“It is that component of value addition which we have to do.”
According to the 2024 3rd Quarter Labour Force Survey report, informal sector employment (non-agriculture), which stood at 43,6%, remains higher than formal sector employment (non-agriculture) which was at 30%.
Wholesale and retail trade subsector accounts for the greater percentage of formal employment standing at 22,8%, followed by agriculture (20,3%), mining and quarrying (9,4%), and manufacturing (8,5%).
