An informal, used tyre shop at a residence in Harare's Hatfield suburb. Zimbabwe has 2.8 million micro, small and medium businesses — 85 percent of which are unregistered. Credit: Tatenda Dewa/IPS

By Tatenda Dewa
HARARE, Apr 24 2014 (IPS)

Zimbabwe’s extensive informal sector could help boost government revenue if regularised, but this won’t happen unless the government creates incentives for the informal sector to register, economists say.

“Formalisation of the informal sector would significantly improve revenue inflows through taxation on employees’ salaries, import duty, property fees and other forms of taxes on the sector. However, there is need to create incentives for the informal sector to register,” Eric Bloch, a Bulawayo-based economist, told IPS. Many businesses would be reluctant to pay taxes because of concerns that “taxes collected will not be used in the national interest”.

A 2013 FinScope survey, which is now being used by government officials as reference, indicates that 2.8 million micro, small and medium businesses — 85 percent of which are unregistered — have created 5.7 million informal jobs. These businesses generate an estimated turnover of 7.4 billion dollars, according to the survey.

Finance and Economic Development Minister Patrick Chinamasa has already cast a light on the growth of the informal sector and its significance to the economy in this southern African nation.

Responding to questions in parliament in February, Chinamasa said: “Our economy is now informal…That is the reality of our economy and it is a reality we must recognise and take measures on how to tap into this sector.”

Godfrey Kanyenze, an economist and director of the Labour and Economic Development Research Institute of Zimbabwe, a think tank of the Zimbabwe Congress of Trade Unions, explained that the government was failing to fund public programmes because the treasury struggled to mobilise money from existing industry and labour.

“There is no way the government can maximise on revenue collection in the informal sector if it is not regularised. Government must come up with a working strategy to ensure that the informal sector is formalised and taxed to improve revenue collection, which is currently in a sorry state,” he told IPS.

He said the government was also losing out because the Zimbabwe Revenue Authority (ZIMRA) was struggling to tax registered small to medium enterprises.

The formal sector has been negatively affected for more than a decade by the withdrawal of investment, low investor confidence, rampant power outages and a struggling economy that was marked by hyperinflation and acute shortages.

Kanyenze said that to ensure effective monitoring, the government must organise the informal sector into clusters based on the services or products they supplied or produced. He said the government should also offer business development and training services to the sector and devise mechanisms to protect and promote them.

Economist John Robertson told IPS that formalisation of unregistered enterprises would bring a host of other advantages.

“Besides improving revenue collection and encouraging better public sector performance, formalisation of the informal sector would hopefully ensure better working conditions for the millions said to be employed there. They would enjoy benefits associated with the formal sector such as medical aid schemes, pension, better work safety and the ability to negotiate salaries,” he said.

Tapson Mandiziva, who works as an assistant carpenter at an unregistered furniture-making firm in Glenview, a low income suburb in Harare, does not enjoy such benefits.

“I don’t have an employment contract and my boss pays me as and when he likes. Sometimes he makes huge profits from the sale of wardrobes and the kitchen furniture that we manufacture but uses the money to buy cars and personal items and does not pay us. When he does, the money is too little and he has dismissed workers on flimsy grounds,” Mandiziva, 31, told IPS.

In the three years he has worked for the furniture firm, the highest salary he has received is 200 dollars a month. But Mandiziva says he can go for as long as four months without receiving a wage and does not receive backdated payments.

The police and municipal authorities periodically raid backyard industries like the one Mandiziva works for. They have been accused of confiscating products or extorting bribes from companies operating without licences. There are also allegations that they sell the seized goods at office auctions where the officers or local authority officials are the only buyers.

Innocent Makwiramiti, an economist and former chief executive officer of the Zimbabwe National Chamber of Commerce, told IPS that the illegal raids could be avoided if the informal sector was regularised.

“The police officers, municipal and ZIMRA officials are collecting thousands of dollars in bribes from the informal traders and, in some cases,  are forcing traders to surrender part of their earnings as a protection fee against the raids.

“Part of this money could be going to the treasury had the informal sector been registered and compelled to observe company and taxation regulations,” he said.

However, formalisation and taxation of the informal sector will not be easy, according to experts.

“The biggest constraint is reluctance by small businesses to register. They tend to suspect that formalisation would open them to too much scrutiny that would affect their income generation. Since most of them are run by individuals and families that view adhering to labour laws as a burden, they would rather remain as they are,” said Bloch.

The February edition of the Public Administration and Development Journal shows that there are numerous hurdles the government faces in its attempts to harness taxes from the informal sector and registered SMEs. This includes the manpower and administrative constraints of ZIMRA.

According to the report, many businesses would be reluctant to pay taxes because of concerns that “taxes collected will not be used in the national interest”.

Many are also disgruntled over poor service delivery and the fact that some politically-connected businesspeople were being let off the hook for failing to pay tax.

Augustine Tawanda, the secretary general of the Zimbabwe Crossborder Traders Association, which comprises informal entrepreneurs whose businesses involve sourcing for resale or selling goods in neighbouring countries, told IPS: “There is plenty of money circulating in the informal sector and it is possible to innovate a win-win situation with the government.”

However, his organisation is opposed to registration of informal businesses, preferring that the government just includes them in its data base only for purposes of taxation rather than formalisation.

“The main problem is that the government is only concerned about taxing us, rather than making us grow as businesses. It does not have clear policies for formalisation and has not shown how it is going to incentivise informal traders,” he said.

The Westlea dumpsite near the low-income settlement Warren Park, west of Zimbabwe’s capital, Harare. Here electronic waste such as old tvs and microwaves, which contain hazardous substances such as mercury and lead, are dumped with regular waste. Credit: Tatenda Dewa/IPS

By Tatenda Dewa
HARARE, Mar 25 2014 (IPS)

Electronic waste in Zimbabwe is becoming “an emerging environmental crisis that is by and large unheralded,” according to Steady Kangata, the education and publicity manager of the government-run Environmental Management Agency (EMA).

“It can grow out of control if solid action is not taken,” Kangata told IPS.

He said that individuals, backyard or informal businesses, and large companies were “indiscriminately” disposing of electronic items such as old tvs, radios, computers and microwaves, which contain hazardous substances.

“These waste products are harmful because they contain toxic material such as mercury, lead and carcinogens that, if inhaled or ingested, can have far-reaching effects on people’s health.Increased consumerism in this southern African nation has not been matched by appropriate disposal systems and hence e-waste was becoming a real danger.

“Some of the e-waste is flammable and radioactive and contains elements that can affect the reproductive and nervous systems. It accumulates underground and is thus an environmental danger,” explained Kangata.

He said that increased consumerism in this southern African nation has not been matched by appropriate disposal systems and hence e-waste was becoming a real danger.

It’s also the country’s poor who are at risk.

For the last 10 years, Jairos Zimombe from the low-income settlement Warren Park, which lies just west of the capital, Harare, has been unemployed but he has made a modest living retrieving and selling plastic and other forms of garbage from the nearby sprawling Westlea dumpsite.

Here, the Harare municipality regularly burns pharmaceutical and medical waste such as thermometers, used dental products and syringes from local clinics.

But the perennially smoking site also contains a broad assortment of garbage. And every day scores of garbage pickers rummage through the dumpsite in search of scrap metal, used plastic, rubber containers as well as electrical components that they sell at downtown markets.

Kangata pointed out that garbage pickers, like Zimombe, were “constantly exposed to electronic waste, but the tragedy is that most of them are not even aware of the danger of the discarded items.”

Indeed, the 45-year-old Zimombe is adamant that there is no health risk associated with his informal job.

“My only worry with this smoke is that sometimes it makes me cough. Otherwise I don’t see any problem with the items [e-waste] that you are talking about. How come the municipality keeps dumping these things here and does not warn us?” he told IPS.

According to Kangata, local municipalities should properly dispose of e-waste by separating it from ordinary trash.

However, the country’s Environmental Management Act and city by-laws do not specifically state that municipal authorities should do this.

In addition, most local city councils have failed to regularly remove heaps of garbage in residential areas. Phillip Mutoti, mayor of Harare’s dormitory town, Chitungwiza, told IPS that financial constraints were hampering garbage collection. He added, however, that his municipality cleared refuse once a week.

“Most residents and local companies are defaulting on rates payments and we are struggling financially. We have a limited number of refuse trucks though we hope to get more with time,” he said, admitting that the garbage collectors did not separate the waste.

Shamiso Mtisi, head of research at the Zimbabwe Environmental Law Association, told IPS that the country has “no clear and comprehensive position on e-waste.”

“The Environmental Management Act has regulations that provide for the disposal of hazardous waste, but that law does not address the issue of e-waste per se,” Mtisi explained.

In 2012, Zimbabwe ratified the United Nations-initiated Basel, Rotterdam and Stockholm conventions that restrict the transboundary transfer and disposal of organic pollutants and other forms of waste. It also regulates the management of harmful chemicals.

And in 1993 Zimbabwe also ratified the Bamako Convention that prohibits the importation into Africa of hazardous waste. These conventions, however, do not address the issue of e-waste.

“As a result, culprits who inappropriately handle e-waste tend to get away with murder as they are lumped together with lesser offenders…and pay low fines if they are brought to book. This legal omission also means that there are no specific systems to handle e-waste,” Mtisi explained.

According to Kangata, the fine for illegally dumping any form of waste ranges from five to 5,000 dollars. Municipal authorities and the EMA set the fines according to the amount of waste dumped and the danger it poses to public health.

However, the Combined Harare Residents’ Association (CHRA) is concerned about the lack of proper systems to manage e-waste and fears that the public is at risk.

“There is need for an urgent collaborative approach between municipalities, residents associations, the EMA as well as other environmental experts to devise a working mechanism to cope with e-waste. Primarily, residents need to be educated on the dangers of and best ways to manage e-waste disposal and this calls for massive public awareness campaigns,” Simba Moyo, CHRA chairperson, told IPS.

Such campaigns could possibly save Zimombe’s health and that of his children. During the school holidays, he brings his two teenage sons to the dumpsite to help him rummage for trash to sell, exposing them to the hazards of the toxic waste.

According to the World Health Organisation’s website: “Children are especially vulnerable to health risks that may result from e-waste exposure and, therefore, need more specific protection.”

But Zimombe is still unconvinced of the dangers, though he admitted that he suffers from lingering headaches, frequent breathing problems, and he sometimes has difficulty sleeping.

Like most garbage pickers and traders who visit dumping sites in the capital, he does not have the money to go for a medical check up, let alone to pay for any treatment he may require.

“I can’t afford the luxury to go for medical check-ups. Poverty is what has forced me to do this kind of job in order to look after my family. For as long as I am walking and can come here, all is well. I will stop when I get seriously ill.”

A mine shaft in Zimbabwe. Activists and economists accuse some indigenous and emerging mining companies of not improving the welfare of local communities. Credit: 2E0MCA/CC By 2.0

By Tatenda Dewa
MUTOKO, Zimbabwe, Nov 1 2013 (IPS)

Ranganai Zimbeva, from the rural village of Mutoko, which lies about 200 km northeast of Zimbabwe’s capital Harare, plugs his ears with his fingers and shakes his head as he watches miners close to his village blast the hard rock to extract the black granite within.

Deep and wide gullies have replaced the rolling pastures in this village in Mashonaland East Province where thriving livestock once roamed freely. It is difficult to see the blue skies as grey dust formed from the explosions billows upwards to fill the skyline.

“Some who go to the clinic with breathing problems have been told that their illness is caused by inhaling too much dust or smoking. The mining companies should set up a health fund to ensure villagers get sufficient treatment,” 70-year-old Zimbeva told IPS.

“The cattle sometimes die after drinking water from the gullies and it could be contaminated by chemicals and no one seems to care. All they want is money.”

But the cattle deaths, which happen every year, are not frequent. And Zimbeva and the people of Mutoko have no proof about what causes this – many do not have the money to seek veterinary assistance. People here are poor and have been experiencing worsening hunger due to the recurrent drought.

“We have less cattle now because this black granite [mining] has taken away the grazing land. Worse still, [the mining companies] have turned a deaf ear to our requests for them to employ our sons and daughters, choosing to take people from other areas instead,” said Zimbeva.

About 10 companies, which are both local and foreign owned, are extracting granite from this rural district. The contact details of some of these mining companies are obscure and difficult to obtain. While IPS was able to make contact with a representative from one of the mining companies involved, they refused to comment.

Geologists say that Zimbabwe holds some of the richest mineral deposits in Africa, including platinum, diamonds, asbestos, graphite and gold. But activists and economists accuse some indigenous and emerging mining companies of not improving the welfare of local communities and leaving them worse off than before.

Independent economist John Robertson explained that emerging mining companies, which the government is heavily involved in, were different from multi-nationals that tend to cater for the welfare of local communities.

“Some of these multi-nationals have management teams running the equivalent of municipalities, complete with hospitals, schools, housing schemes. This is where they differ from the indigenous and emerging extracting companies where rules don’t seem to apply and greed rules,” Robertson told IPS.

For families who once lived on the Marange diamond field in Manicaland Province, which is estimated to be about 71,000 hectares and thought to hold about a quarter of the world’s diamond deposits, the compensation offered to them by mining companies for relocating has not been sufficient.

About 693 families, who had lived for decades on the diamond fields, were moved to a derelict farm called Arda Transau, which is near Manicaland Province’s main town, Mutare. A total of 4,300 households have been identified for relocation.

While Arda Transau has now been developed and families have been given four bedroom houses as compensation for the loss of their homes, this is seen by many as inadequate.

“The expansion of mining activities in Marange has claimed much of the land used by locals for subsistence, [and also] community infrastructure, such as dams, that provided water for market gardening. Small business such as shops and stalls were closed down,” Melanie Chiponda, the director of Chiadzwa Community Development Trust, a lobby group promoting the rights of local villagers whose communities border the mining field, told IPS.

“The mines have created a dependency syndrome among the households. They are hardly involved in corporate social responsibility activities and the people are secondary. It is all about profits and never the people, who are incapacitated to negotiate for better arrangements,” she said.

Chiponda said people were worse off since they had been relocated as they mostly lived on food handouts from humanitarian agencies and on donations from the mines. She added that a large number of children dropped out of school and are helping to support their families by selling firewood.

Freeman Bhoso, the executive director at the Zimbabwe Natural Resources Dialogue Forum, a non-profit advocacy organisation seeking to promote the sustainable extraction of the country’s resources, told IPS that because mining concessions were granted behind closed doors, it left loopholes that made communities vulnerable.

“The way in which the concessions are granted by the government is wrong because it excludes communities. There is no transparency and it seems they are given along politically partisan lines. In most cases, environmental impact assessments are done well after mining starts,” he said.

A report released in June this year by the mining parliamentary committee, accused the ministry of mines and mining development of granting licences to companies to mine at Marange without fully disclosing how this was done.

The report states that the government parastal Zimbabwe Mining Development Corporation (ZMDC) has joint ownership of three of the companies operating at the Marange diamond field. The ZMDC also owns 100 percent shares in another mining company operating at Marange.

Former deputy minister of mines and mining development Gift Chimanikire, from the Movement for Democratic Change, refused to comment on the mining companies that the government had a stake in. He told IPS he was no longer part of the government following his exclusion from a cabinet formed after President Robert Mugabe won the Jul. 31 election.

Ministry of mines and mining development officials referred questions to the current minister, Walter Chidhakwa. But he did not respond to calls.

The parliamentary committee report also said the government had not “realised any meaningful contributions from the [diamond] mining sector” despite the fact that “production levels and the revenue generated from exports have been on the increase.”

In 2011 and 2012, mining companies in Zimbabwe exported diamonds worth a total 797 million dollars, yet only 82 million dollars was remitted to the treasury.

Bhoso accused the companies of failing to distribute money from the community share ownership trusts announced by the government. According to Zimbabwe’s Indigenisation and Economic Empowerment Act, foreign-owned mining companies are required to transfer 51 percent of their shares to locals. This money was meant to placed in the community ownership trusts and distributed among affected communities.

“The main problem is that the government is heavily involved in these joint ventures and operations tend to take a political dimension,” said Bhoso.