Abstract
Introduction
Informality has become a major characteristic of most cities (and towns) in the developing world. As the world continues to rapidly urbanise, United Nations Conference on Trade and Development (UNCTAD, 2022) notes that at least 57% of the world’s population already resides in cities. Although rapid urbanisation is a worldwide phenomenon, about 90% of the projected urban growth will occur in developing countries (Sclar et al., 2005). Sub-Saharan Africa, for example, has an average annual urban growth of 5% due to high rural-urban migration, natural growth and transformation of rural areas into towns. Although cities are regarded as engines for socioeconomic development (Potts, 2016), this is not always the case in southern cities where urbanisation is not backed by adequate industrialisation to support economic and employment growth (Potts, 2016). Cities attract more people than they can support, resulting in the creation of a pool of unemployed citizens who struggle to secure economic opportunities and support urban life (Hlungwani et al, 2021; Magidi, 2022). Consequently, most urban households end up inventing their own jobs in what is termed the ‘informal sector’ (De Soto, 1989).
The topic of ‘informal economy’ has received wide discussion and generated debate on its definition and significance. Although some appreciate its role in local economic development, empowerment, employment creation, building livelihoods and facilitating the growth of small to medium-sized enterprises (SMEs) (Abor and Quartey, 2010; Chirau, 2014; De Soto, 1989; Mahiya and Magidi, 2022), others do not acknowledge it as a significant economy and therefore concentrate on its shortcomings. In this sense, it is seen as a marginal, shadow, parallel and petty economy that is separate from the main or formal economy (Chirau, 2014; Fox and Goodfellow, 2016; International Labour Organization, 2002). Ndiweni and Verhoeven (2013: 3) noted that it has been classified as a ‘low productivity sector’ while others characterised it as a vulnerable sector with little or no capacity to make a socioeconomic contribution.
However, although some of these characteristics are true in some contexts, this article argues that some of them do not paint a true picture of Zimbabwe’s informal economy. It used data collected in Norton town to demonstrate how the sector managed to build resilience and grow to improve the sophistication of the goods and services it offers, marking a shift from its traditional role of only offering petty businesses to becoming the vibrant economic sector that it is today. Evidence suggests that the sector has grown beyond being the livelihood of poor people and is now home to notable economic activities that contribute to the creation of jobs and economic growth. It further argues that the sector managed to build resilience, reinvent, and assert itself as a significant and very organised economic sector.
The study aims to achieve the following research objectives:
Analyse the evolution and improvement of the informal sector in Norton, Zimbabwe, from disorganised small businesses to an organised sector that substantially contributes to job creation and economic growth.
Demonstrate how, despite challenges, the informal economy in Zimbabwe has developed resilience and achieved growth over time, using Norton as a case study.
Literature review
An overview of the informal economy
The subject ‘informal economy’ (herein also called the ‘informal sector’) has many definitions that differ from context to context (Ndiweni and Verhoeven, 2013). Invented by Hart (1971), the term refers to economic or livelihood activities outside the formal economy that the ordinary populace normally resorts to when faced with a constricted economic situation with limited opportunities. Hussmanns (2004: 3) defined it as,
private unincorporated enterprises owned by individuals or households . . . constituted as separate legal entities independently of their owners and for which no complete accounts are available that would permit a financial separation of the production activities of the enterprise from the other activities of its owner(s).
According to the ILO (2002), the sector has been regarded by some as a marginal economy that provides safety nets for poor people. It further noted that the sector has been argued to have no direct links to the main economy and has also been called the black market, second economy, shadow economy, or parallel economy (Chirau, 2014; Fox and Goodfellow, 2016). The informal economy is more common in developing countries than in developed economies. In Africa, most of the population is excluded from participating in the formal economy and, consequently, ends up ‘piecing together livelihoods through a complex mix of other activities’ (Ferguson, 2015: 91). Hart (2007) argued that the informal sector is the major economic sector in many developing countries. In many countries, including South Africa, Zimbabwe and Ghana, it gained names such as small, medium, and micro enterprises (SMMEs) and SMEs (Abor and Quartey, 2010; Magidi, 2019). The economy has also been acknowledged to play a role in the acquisition and development of skills for disadvantaged groups who cannot access formal training (Magidi and Mahiya, 2021).
The informal economy has many characteristics. According to the ILO (2002), it is easy to enter and requires relatively low capital to start a business in the sector. Second, it is largely dependent on local raw materials. Third, it largely uses free labour from family members who normally work long and flexible hours to maximise profits. In addition, the sector is unregulated, suggesting that it has fewer restrictions. It also uses adapted technology that is cheaper to access and use (Fox and Goodfellow, 2016; Potter and Lloyd-Evans, 2014). De Soto (1989) noted that the informal economy is a way of assuming local control of the economy, resources and means of production. However, despite these advantages, other scholars have argued that the informal economy is vulnerable and unsustainable and that its challenges outweigh the benefits. These challenges include the lack of security, organisation, recognition, social protection and legal representation. The sector also lacks institutional support and infrastructure and is highly competitive due to too many participants (Ngundu, 2010; Tibaijuka, 2005).
Potter and Lloyd-Evans (2014) identified four types of activities that make up the informal economy as follows:
Subsistence goods that are primarily meant for family consumption and sell surpluses;
Activities by small producers and retailers who produce and sell to earn an income;
Businesses in the informal sector by petty capitalists to enjoy the benefits of the sector and avoid the strict regulatory requirements that govern formal businesses;
Criminal and socially undesirable activities by people who earn an income through illegal means.
This study focused on informal activities under the first two types of activities and, therefore, explored informal businesses in small-scale informal retailing and light manufacturing.
The informal economy in Zimbabwe
Zimbabwe is one of the world’s highly informalised economies. Many scholars contend that the high prevalence of the informal economy in the country was a result of the massive deindustrialisation, and economic and political crises that it has been experiencing for more than two decades now (Coltart, 2008; Magidi, 2014; Ndiweni and Verhoeven, 2013; Ngundu, 2010). It has been noted that after the collapse of the formal economy, informal businesses took advantage of the created gap and became the major source of income and livelihood for most urban families (Chirau, 2014; Magidi and Gwekwerere, 2024). In the absence of a commanding formal economy, Tamukamoyo (2009) argued that the informal sector has become the unofficial main national economy. Ndiweni and Verhoeven (2013) noted that the sector contributed up to 60% of the country’s gross domestic product (GDP) in 2000. Coltart (2008) observed that by 2005, at least 3 million Zimbabweans relied on the informal sector for employment and livelihoods. This makes the sector a significant player and contributor to the national economy and a source of income for many households.
However, this commendable growth of the informal economy in Zimbabwe has not been without challenges. It should be noted that the sector has been subject to numerous constraints that have threatened its growth and existence (Chirau, 2014). These challenges include the lack of support from the central government, local authorities and other stakeholders since banks and money-lending institutions normally have borrowing requirements that most informal entrepreneurs cannot afford to meet (Ngundu, 2010; Tamukamoyo, 2009). Central and local governments also favour the formal sector and are preoccupied with crafting policies that promote formal or large-scale businesses, leaving the informal sector with inadequate support (Magidi, 2024b; Ngundu, 2010). There were also repeated attempts to eradicate the informal sector by government and local authorities through several initiatives which include Operation Murambatsvina (also known as Operation Restore Order) of 2005 (Potts, 2006; Tibaijuka, 2005). Under Operation Murambatsvina, the government worked with all local authorities and embarked on a nationwide campaign to destroy the informal sector in general. The government justified the initiative arguing that it was a way of ‘controlling economic saboteurs operating the black market’. Several other similar operations aimed at destabilising the sector continue to be rolled out across major urban centres.
However, despite these crackdowns and sustained attacks, the sector has remained defiant and expanded. Bratton and Masunungure (2006) argued that although Operation Murambatsvina destabilised the informal economy, the sector became more adaptive than it was before. Referring to informal businesses in Harare, Chirau (2014: 80) wrote:
Although the operation [Murambatsvina] ‘cleansed’ Magaba of informal economic activities, these activities have subsequently re-emerged and even become more resilient. It seems that reducing informal activities is a mission impossible, and Magaba remains a heterogeneous hub of small traders.
This article sought to understand how the informal economy in Zimbabwe managed to overcome and recover from these restrictions to emerge as a vibrant sector of the national economy that it is today. It explored how informal businesses managed to build resilience and continued to grow despite facing serious challenges. It characterises informal entrepreneurs in the context of Norman Long’s actor-orientated approach (Bosman, 2004; Long, 2001) as active subjects or social actors with the ability and capacity to build resilience and innovate as they seek solutions to the challenges that face them. The argument here is that, even as these entrepreneurs operate under conditions of continuous extreme coercion and suppression, they always devise ways to cope, develop resilience and continue to grow (Long, 2001).
Methods
The research approach for this study involved using qualitative methods and aligning with an interpretivist research paradigm. This paradigm was chosen for this research due to its ability to facilitate a thorough and nuanced exploration of the phenomenon under study. It accommodates contextual considerations, flexibility in methodological approaches, subjective experiences and dynamism of informality allowing for a deeper understanding of the complexities that surround the informal economy. Data were collected in Norton between 2016 and October 2018 using ethnographic methods of key informant interviews, in-depth interviews and observations. Norton is a secondary town located close to Harare, which has been badly affected by deindustrialisation which resulted in a high prevalence of informal economic activities (Magidi, 2024a). Data collection involved interviewing at least 25 informal entrepreneurs using semi-structured interview questions. The researcher also participated in several other informal conversations with actors in the sector. Key informant interviews involved officials from the Norton Town Council (NTC), the Norton SME Association, the Ministry of SMEs, the Zimbabwe Chamber of Informal Economy Associations (ZCIEA) and the Norton Vendor Association. Data were also collected through observations in the formal and informal trading and industrial areas of the town (mainly Katanga and Ngoni Shops) to better understand how the sector functions.
The research participants were selected using convenience and snowball sampling techniques. Initial participants were approached based on their proximity to the researcher and then later referred (snowballed) to other potentially willing respondents. The researcher employed several methods to ensure the accuracy, authenticity and reliability of the collected data. These methods included using the triangulation method, which involved gathering information from multiple sources such as interviews, key informants, observations, and documented sources. The data from different sources was then cross-referenced to identify any inconsistencies. In addition, the researcher maintained comprehensive records of all collected data in the form of transcripts, field notes and pictures. The transcripts were carefully reviewed and revised to accurately capture all relevant data and member-checked with some of the participants to verify if the interpretation of the findings was consistent with what they meant. The data underwent thematic analysis, and to comply with research ethics, the study received clearance from the researcher’s institution’s ethics board. The researcher also guaranteed that participants joined the study voluntarily and could withdraw at any time. No rewards or incentives were provided, and participant confidentiality was strictly protected by anonymising all responses and respecting the decisions of those who opted not to be audio-recorded.
Findings and discussion
This section presents and discusses how informal businesses in Zimbabwe managed to build resilience to survive the harsh environment in which they operate.
From petty businesses to manufacturing
The study found that as a way of asserting their businesses, some informal entrepreneurs in Norton have moved away from running petty businesses and ventured into light manufacturing. Although petty businesses persist, the study found that some entrepreneurs had shifted to work on slightly larger projects, which in turn fuelled the growth of the informal sector. It was found that the formative stages of the informal sector in the town were largely characterised by petty trading activities. These include selling ready-to-eat products such as fruits, vegetables, snacks and cigarettes and handcrafts such as flower vases, brooms and mops in small quantities along the streets, bus termini, marketplaces and other public places. Other petty activities included garment and shoe repairing and making, selling floor polish and domestic duties, among other things. However, the sector has over time expanded and increased the sophistication of the types of products it offers. This is seen in the light manufacturing of a range of high-order products on a slightly larger scale. Common products include bed linen, clothing, school uniforms, shoes, beds and furniture (school, office and domestic), among other things. The study also found that some informal businesses were manufacturing metal and steel products such as sliding gates, vehicle trailers, ox-drawn and push carts, braai stands, door and window frames, and fences.
Manufacturing high-order goods has improved the growth of the informal economy, as entrepreneurs in the sector now enjoy more returns than before. An informal entrepreneur who used to repair broken furniture but has since moved into making furniture indicated that his business has seen significant growth over time. He said,
I started my business as a furniture repairer. I used to repair broken beds, tables, chairs and school furniture, but seeing that the profits were marginal, I moved to actual furniture manufacturing. Today, I can attest that the move has seen growth in my business in terms of size, stability, and profits.
This was supported by a ZCIEA official who said,
Informal businesses are no longer about petty trading as was the case back then. We work with many entrepreneurs who work on big projects in sectors like furniture, clothing, and metal fabrication.
The entrepreneurs noted that manufacturing has allowed them to acquire significant assets such as equipment and machinery, which they can also tender as collateral security when seeking to borrow funds. Some money lenders also accept finished goods as collateral, therefore, enhancing their borrowing opportunities. A Katanga-based welder said,
When I started making metal products, my businesses started to expand. I managed to buy better welding equipment and a generator to use during load shedding. When I want to borrow money for something, I can surrender my generator or a finished product as collateral.
Other studies have also noted that informal sector manufacturing in Zimbabwe is on the increase. Chirau (2014) noted the rise of informal manufacturing in the Magaba area of Mbare, Harare, while Dube and Chirisa (2012) also found that there was an influx of manufacturing activities across the country’s main cities in trades that include carpentry, construction, metal fabrication, garment and linen-making, among others.
Taking advantage of a collapsed service delivery system
The study also found that, in addition to improving the sophistication of the products that the sector offers by venturing into manufacturing, informal businesses in Norton have moved into providing some services which are normally provided by the formal sector. Some entrepreneurs stressed how they capitalised on the failure of the state and local government to provide basic public services due to the poor economic environment. They were creating informal businesses to cater for the unserviced market. Some respondents noted that the shortage of public schools saw the rise of informal private learning facilities in Norton. Teachers were taking advantage of low educational standards and the failure of public schools to meet the increasing demand for better education by offering private tutoring services. A teacher who was offering extra classes at home said,
I spend most of my time teaching extra lessons at home. The public education system has been poor and under-delivering for a long time, and most parents are sending their children to private tutors to enhance their chances of passing.
Some parents also confirmed that they now preferred private tuition for their children to public schools. One parent who also runs an informal grocery store said,
Teachers in government schools are poorly paid. They lack motivation, and this is affecting our children, so many parents are now sending their children to private teachers where they get better tuition. All my three children attend private lessons, I only keep their places at their [public] schools for public examination purposes but most of their learning is through private teachers.
The study, through observations, also noted that the increase in the number of informal tutoring facilities in the city and the increase in the number of enrolled learners was also driven by the lack of schools. Norton had 4 high schools serving at least 13 primary schools, which was not enough, as some learners were travelling to Harare for schooling purposes. This deficit became an advantage for informal tutors, and they were making maximum use of it.
Furthermore, the study discovered that the absence of an effective public transport system had led to a vibrant informal transport sector. Informal transport providers who operated private taxis and commuter minibuses moved in to cover the gap. Field observations indicated that they are the main form of transport that serves not only local commuters but also links the town to other distant destinations such as Harare, Mhondoro, Chegutu, Murombedzi, Darwendale and Chinhoyi. A minibus operator highlighted how the poor public bus system has offered him a chance to venture into the transport business:
The public bus system is very poor here and that’s how some of us got into the transport business. I started pirating using my car, then upgraded and bought a minibus. I now have three and employ two other drivers. Many parents have contracted me to carry their children to and from school.
Some commuters confirmed how informal transport operators served the town. One of them said,
Norton is basically served by informal transporters. They carry people to work, church, hospital, or for long-distance trips to Mhondoro or Murombedzi because we don’t have conventional buses. They also take our children to and from school.
The study also noted that persistent power cuts had seen actors in the informal sector quickly move in to provide alternative energy sources in the form of wood, charcoal, solar lamps, solar panels and gas. It was also found that there is a range of other informal providers and services that residents generally rely on. These services include construction, electrical installation, tiling, carpet cleaning, fumigating, vehicle repair, and servicing, among other things. The article argues that by moving in to provide missing services, the informal sector strengthened itself and managed to survive and grow to become the vibrant and resilient economy it is today. These findings are also consistent with De Soto (1989) who observed that when denied opportunities to participate in the main economy, urban populations create their economy and invent their jobs outside the formal economy to sustain their lives. Muchadenyika (2018) also noted that informal transport is the dominant form of mobility in Harare, while Bukaliya (2021) highlights the high prevalence of extra tuition by both primary and secondary teachers in Chegutu.
From unskilled to skilled labour
The research also found that the informal economy now employs highly skilled and experienced workers. This is in contradiction with the view that the sector is home to unskilled or low-skilled personnel as suggested elsewhere (Adams et al., 2013; Peter-Cookey and Janyam, 2017). At least 17 of the 25 informal businesses that were interviewed had some recognised qualifications or skills acquired through formal education or industrial apprenticeship training. Many entrepreneurs in woodwork, metalwork, clothing, vehicle repair, electrical installation, and cell phone or laptop repairs largely attained some level of formal training and were largely skilled. A carpenter who participated in the research said,
I trained as a carpenter at a vocational college and then passed my trade tests. I decided to join the informal sector after struggling to find a job, but I have the skills that allow me to work anywhere as a carpenter.
Similarly, a beauty therapist at Katanga shops attested to being ‘a trained beauty therapist’ who was ‘trained in a variety of skills at school’, while a welder confirmed going through 4 years of apprenticeship training and then gained 10 years of industrial experience before starting his own business.
The study further explored to understand how the sector was hosting a significant number of skilled workers and discovered three main driving factors. First, as the formal economy in Zimbabwe crumbled, many highly skilled or experienced personnel lost their jobs and sought refuge in the informal sector, either as employees or as entrepreneurs. The case of the welder explained above exemplifies this scenario. Second, most young graduates graduating from tertiary institutions were finding it difficult to penetrate the formal job market and were therefore taking informal sector jobs. A builder who worked in the informal construction sector confirmed that he had worked with numerous new graduates who had failed to get jobs. He said,
I work with young graduates who struggle to get formal jobs. I work with qualified bricklayers, tilers, electricians, architects, carpenters, plumbers, painters, among others.
Third, the study also discovered that the informal sector alone had become a hub for skills training. It found that those already skilled or experienced offered informal on-the-job training to their young and unskilled employees, who in the long run mastered the trade and became equally skilled, albeit without attending formal classes or getting formal certificates of qualification at the end. A Katanga Shops clothing designer highlighted that she normally recruits unskilled assistants and trains them:
I recruit three to five unskilled assistants at a time and train them as they work with me. Over time they learn the different skills of this trade, and some even become as good as me.
The Ministry of SMEs also confirmed that it was working with the Ministry of Youth in the informal sector to facilitate and finance some training and skills programmes in which young people were taught vocational skills to prepare them for entrepreneurship. An official said,
We have several vocational training programmes aimed at youth in informal entrepreneurship; those who did not continue their education beyond high school; so, they can improve their businesses.
The NTC also noted that several nongovernmental organisations (NGOs) provided entrepreneurial skills in business proposal writing, project planning and management, and financial literacy and management to informal entrepreneurs to improve their professionalism. In the study, the researcher also met numerous other qualified and skilled entrepreneurs and employees who work in the informal sector in various trades.
By hosting skilled or experienced labour, the sector managed to improve its growth. Skills play an important role in the survival and growth of businesses. Skilled personnel (human capital) improve the productivity of businesses (Almendarez, 2013; Magidi and Mahiya, 2021). Adams et al. (2013) argued that a skilled workforce improves the quality of goods and services, which in turn enhances the marketability and competitiveness of products, resulting in the likelihood of higher sales and profits (Magidi and Mahiya, 2021; Walther, 2012). The article therefore argues that absorbing a skilled workforce is one of the ways the informal sector in Norton built resilience and survived the harsh operating environment.
From local to cross-border markets
As Zimbabwe’s economic crises continued to unfold, business became more difficult. The respondents highlighted that the business began to experience an acute shortage of products and raw materials and high production costs. For businesses in manufacturing, the shortage of raw materials prompted them to consider other markets beyond national borders. Entrepreneurs in trades such as metalwork, woodwork and baking started to import most of their raw materials. A baker from the Knowe suburb said she was importing almost all her ingredients:
I buy 90% of my inputs from South Africa where they are cheaper and readily available. I used to buy locally, but they are now expensive and not always available when you need them. This affected my business and I resolved to source them from South Africa.
Similarly, some entrepreneurs confirmed that they were sourcing their equipment from neighbouring countries. A carpenter noted that carpentry machinery was expensive and sometimes unavailable locally – the reason why he chose to try international markets. He said,
My son helped me to buy my toolbox and other machinery from China and South Africa where they were almost 50% cheaper. Many of my colleagues and others in different trades are also buying their equipment from other countries.
He said that he also sent his equipment to South Africa for servicing or repairs when needed. A beauty shop owner mentioned earlier confirmed that she relied on the South African and Zambian markets for all her equipment and beauty equipment since they were expensive or difficult to obtain in Zimbabwe. Traders of electronic gadgets (cell phones, laptops and accessories) also sourced these products from South Africa, Dubai and China while some imported auto spares from Japan. Observations also confirmed that most of the grocery items sold by informal entrepreneurs sourced their products from neighbouring countries (South Africa, Zambia, Botswana, Malawi and Mozambique) where they were cheaper and again always available.
The study also found that some informal companies had established markets in other countries where they would go and sell their products. The growing population of Zimbabweans residing in other countries also saw an increase in demand for certain popular Zimbabwean-made products, which prompted some entrepreneurs to export them to neighbouring countries to meet the needs of this niche. A grocery store owner said,
There are many Zimbabweans based in the neighbouring country who still enjoy Zimbabwean-made products and some of us are making money through the supply of such products.
Such products include Cerevita cereal, Mazoe juice,
An official from the ZCIEA confirmed that the organisation was helping many informal businesses in cross-border trade. He said,
We assist many informal businesses in importing items ranging from higher-order goods such as motor vehicles, manufacturing equipment, clothing, and groceries.
Importing cheaper raw materials, equipment and finished products for sale in Zimbabwe improved the quality and sophistication of the products offered by the sector. Import-export trade also strengthened the sector and made it more competitive while exporting some of its products improved its growth, visibility, profits and generation capacity of foreign currency. This article therefore argues that participating in import-export trade is another strategy that informal businesses in Norton have used to build resilience and continue to survive against all odds. Other studies also highlight how informal businesses have become major players in import trade in Zimbabwe and across Southern Africa which accounts for 30% to 40% of intra-regional trade (Makombe, 2011). Tawodzera and Chikanda (2017) noted that informal businesses are linking Harare and Johannesburg through informal cross-border trade. Kurebwa (2015) observed that informal cross-border trade does not only import goods into the country but also expands the market for Zimbabwean goods which demonstrates how innovative the sector has become over the years.
From street shouting to the use of ICT and creative marketing methods
The study found that, when faced with serious market competition, informal entrepreneurs were becoming innovative in marketing their businesses. Originally, informal businesses would generally advertise their products by displaying them along streets and at junctions and then shouting at passers-by to lure them to come and buy. Although this method persists, the research discovered that some informal businesses were becoming innovative and creative in marketing their businesses. Some were adopting ICT products to market their products and services to reach more clients and penetrate other markets beyond their immediate localities. The study found that the use of social media platforms such as WhatsApp, Twitter and Facebook was becoming prevalent in the informal sector. A Katanga hairdresser indicated that she used to get clients outside of Norton by advertising her services on social media. She said,
I use WhatsApp and Facebook to advertise my business and I am getting clients from all over Harare – something that was not possible before I joined these platforms.
Another entrepreneur who offered construction services echoed similar sentiments, highlighting that he was receiving contracts from other towns such as Epworth, Ruwa, Chegutu and other distant rural areas through the marketing of his work using WhatsApp. He said,
I joined many WhatsApp groups where I market my work. I am receiving contracts from surrounding towns and peri-urban and rural areas such as Domboshava, Mhondoro, and Manyame. Without WhatsApp, my work would not have gone that far.
The study found that informal entrepreneurs also used social networks to discuss and share business ideas. It came across many WhatsApp groups where entrepreneurs shared ideas. The topics discussed included how to start and expand a business, how to deal with the challenges that affected their businesses, where to source raw materials, new products or to find new markets. Through WhatsApp and Facebook, entrepreneurs also received real-time updates of any developments of interest to them as opposed to relying on radio, TV or newspaper news, which normally came late. For example, it was easy to spread the news of planned municipal police raids or for taxi operators to share where an unusual traffic police roadblock was established. A trader of airtime and street forex revealed that her work required her to have up-to-date forex rates since exchange rates were changing regularly. She said,
I sell airtime, but I must convert my earnings into forex as soon as possible. Besides, my prices are set according to the current rate, so I must be as up-to-date as possible or else I run a loss. Therefore, I have joined some forex trading WhatsApp groups where I get real-time updates whenever the rates change.
The research discovered that ownership of smartphones, tablets, laptops or desktop computers and access to the Internet was very prevalent among informal entrepreneurs. All 25 informal entrepreneurs who were formally interviewed and many others with whom the study engaged in informal chats owned at least one of these digital devices. Each of them also confirmed to have one or more social media accounts (WhatsApp, Facebook or Twitter) and to belong to at least one entrepreneurial WhatsApp group. Related to the use of digital devices and the marketing of social networks by informal businesses was the adoption of the plastic money payment system. With the critical cash shortages that the country was experiencing, some informal businesses were making use of plastic and mobile money payment methods. Some partnered with large businesses that had swipe machines. Some also acquired mobile payment merchant accounts, which they used to make or receive mobile money payments. A fresh produce trader operating near OK Katanga clarified how this worked:
Most of my clients do not come with hard cash, so I arranged with my friend who works in that pharmacy. I use their swipe machine and they will send me the money as mobile money or give me cash. Many of us here also accept instant bank transfers and mobile money as a payment mode.
It was noted during observations that other informal businesses were using creative and innovative advertising methods such as the use of pre-recorded audio clips, which were played on loudspeakers repeatedly. This replaced the traditional shouting method that some traders said was tiresome. This method allowed the seller to attend to clients while the advert continued to run. Some informal entrepreneurs had also resorted to promotions and the use of music, comedy and dance to advertise their products. The seller would assume the role of a DJ, play music and advertise his products at regular intervals in a typical roadshow style. They would invite potential clients onto the stage to dance and win some prizes. This technique lures customers, while the music keeps them entertained.
Another strategy used by informal businesses was good customer service and the provision of free after-sale services. The researcher observed that while supermarkets such as OK and TM Pick n Pay sell plastic bags to customers, most informal stores offer them for free. In addition, informal entrepreneurs also provided cheap and free transportation services to clients who bought in bulk, a service that most formal businesses in the city no longer offer. This greatly contributed to the growth of informal businesses as customers enjoyed such free or highly discounted services. Observations also noticed how some informal traders went all the way to demonstrate how the various products they sold could best be used. This contrasted with formal outlets, which leave clients to rely on product manuals written in English and Chinese, which some customers do not understand. Manual demonstrations lured more customers to buy the products. These creative marketing innovations have played an important role in improving the competitiveness of informal businesses, making them more resilient and helping them survive against all odds. Magidi and Gwekwerere (2024) confirm the use of digital and ICT products among Zimbabwean urban male youths in their informal economic activities. Deen-Swarray et al (2013) highlighted the increasing usage of ICT among informal businesses across Africa as an innovation to grow their businesses. Mhandu (2020) also highlights the social innovativeness of informal hairdressers of Zimbabwean origin working in Durban who use social networks to navigate the challenges of informal work and spread information among themselves as well as in the creation of their businesses.
Home-based entrepreneurship
The study found that when faced with a lack of entrepreneurial space and infrastructure, informal businesses in Norton resorted to using their homes as business premises. Under this strategy, some also used their residential properties for business purposes. Owning a house in a strategic location near shopping centres and along major roads is a huge advantage. Observations noted how some of these houses hosted informal businesses. Common informal economic activities included grocery stores, beauty stores, private tuition facilities, woodworking, car washes and catering, among other things. A house located very close to the Katanga shopping centre hosted a barber shop, a grocery tuckshop and a car wash. Asked if she owned the three businesses, the owner revealed that she owned only the tuckshop and that she was letting out the barbershop and car wash. She said,
I only run the tuckshop. The other two belong to my tenants, so they pay me both for their accommodation and the shops.
Others rented out their properties as cloakrooms and storage rooms. One of such property owners said,
I use two of my rooms and the garage as warehouses and storage rooms for traders who work in Katanga but stay far away from here. They cannot take their products to and from the market every day, so they leave them there overnight for a fee.
Another homeowner in a similar arrangement said,
Using my house as a storage space has the advantage that it doesn’t attract the public to my place, as is the case with a tuckshop. I only attend to traders in the morning when they collect their wares and, in the evening when they return them.
Some homeowners confirmed that they sought permission from the local authority to convert their homes into mixed-use properties on the condition that they paid the required monthly fee. Depending on the nature of economic activities, home-based entrepreneurship sometimes allowed entrepreneurs to evade raids by the council police, since it can be difficult to know about their activities. For example, the business of a teacher who offers private tuition, a hairdresser or a tailor who works at home can be difficult to discover. The respondents noted that home-based entrepreneurship played a role in averting the challenge of a lack of entrepreneurial space and infrastructure, which is a common constraint that affects informal businesses (Magidi and Jimu, 2023). Chirisa (2013) also noted how informal entrepreneurs were using residential spaces to manufacture and market their goods. Therefore, home businesses emerged as another big strategy that informal businesses were using to build resilience and continue to survive in an environment that is less conducive to business.
From haphazard to organised enterprises
The study found that the informal sector in Norton had become more organised than before. It found that contrary to the view that informal business activities are generally associated with disorder, dirtiness and noise, informal businesses in Norton demonstrated a high degree of organisation. First, some improvements in hygiene were observed. The researcher discovered that informal businesses were constantly inspected by health officials from the local council. To pass these inspections, the traders were making efforts to ensure that they looked tidy and presentable and that their operating spaces and surroundings were clean. It was fascinating to see informal traders neatly dressed; an outstanding case involved a hawker who wore suits as if he had an office job. During observations at several informal business sites throughout the town, the researcher also observed entrepreneurs cleaning their workplaces every day before opening businesses. They also participated in clean-up activities organised by the local authority and government. An official from the ZCIEA emphasised this observation:
Gone are the days when you would find dirty and shabby vendors. We encourage our members to be presentable and professional, and it is no longer surprising to find a street vendor dressed in designer suits. We also encourage them to keep their operating spaces as hygienic as possible.
This finding resonates with Magidi’s (2021) observation that the informal sector plays a role in promoting urban environmental sustainability.
The second aspect of proper organisation is related to money-saving schemes to improve the financial stability, survival and growth of their businesses. The study found that when faced with a shortage of capital and limited funding opportunities, informal entrepreneurs in Norton organised themselves into savings clubs and started some collective cash-saving schemes. Under this arrangement, a group of informal entrepreneurs come together and contribute an agreed amount of money, which is given to one member after an agreed period on a rotational basis. A secretary of one such club explained how his club worked:
We are 15 in our club. We contribute US$10 each per day which is given to one member and the following day we move to the next one, and the cycle goes until each member gets their share, and we start again. In total, each member receives US$150 every fortnight or US$300 per month. Money goes a long way toward boosting our small businesses.
Such an arrangement allows them to boost their businesses and allows them to purchase items or pay bills that require a relatively high amount of cash. An official of the Ministry of SMEs confirmed that savings clubs were one strategy that the ministry was encouraging informal businesses to adopt to raise funds. She said,
We have been teaching them [informal businesses] financial literacy and encouraging them to form saving clubs to raise their funds rather than waiting for bank loans that may never come.
The official from the ZCIEA added that some of their members were contributing big amounts of money towards their group savings:
some of our members, those with slightly bigger businesses contribute up to US$100 each per day and in a group of 10, one can easily go home with US$1,000.
Third, the study discovered that informal entrepreneurs have also formed different associations. These include unions such as vendor unions, SME associations and residents’ associations. These associations were meant to serve two main purposes. First, they provided opportunities for entrepreneurial education and training for their members. Second, they were used to lobby for and advocate for the rights of their members, who were often harassed by the local authority and government. Under the banner of such organisations, informal businesses could hold lawful demonstrations against the local authority whenever they had some grievances and even take them to court. The researcher attended a protest organised by the Norton Vendors Association and the Norton Residents Development Association against the town council over poor service delivery. The researcher also attended an entrepreneurial training workshop convened by the Norton SMEs Association. Such a high level of organisation has strengthened the sector, and together informal businesses can speak with one voice, a strategy that resonates with Magidi (2021) who argues that the informal sector promotes social cohesion among the social actors involved. Gumbo and Geyer (2011) underscore that following the collapse of the main industry, cities like Harare and Bulawayo have well-structured and organised informal sectors. Gumbo (2005) also noted the creation of the Ministry of Micro-, Small and Medium Enterprises (MSMEs) by the Zimbabwean government is a testament to how organised the sector has become. This high degree of organisation is yet another way through which informal businesses manage to build resilience, survive and continue to grow despite facing numerous challenges.
From a separate economy to a part of the main economy
The findings of this study also demonstrate that the informal economy in Norton has strengthened itself and managed to grow by penetrating the main economy. Informal businesses had established multiple connections with formal businesses, making it impossible to draw a clear line that could separate the two economies. The study observed how some informal businesses obtained their supplies directly from producers and suppliers in the formal sector. Some informal businesses were also suppliers to some formal retail stores. Other informal businesses were acting as intermediaries between formal suppliers and other informal businesses. Examples of how intertwined the supply chain system has become between actors in the formal and informal sectors include how producers of various products such as bread, beverages, toiletries, meat products and millers were providing direct supplies to informal businesses. It was therefore very common to see trucks belonging to Bakers Inn, Lobels or Proton bakeries delivering bread to home-based or street-based grocery shops. Similarly, Delta Beverages, Colcom Meats and Dairibord Holdings were also among the suppliers and distributors that made direct deliveries to informal businesses, or informal businesses could place direct orders from home without any difficulties. A home-based grocery trader in Johannesburg township clarified these connections:
Most big producers realised that real business is now in the informal sector, so instead of denying us supplies in favour of formal retail shops, they are now working directly with us and providing us with some of our supplies. Every day I welcome trucks from Baker’s Inn, Lobels, Colcom [meats], Delta [beverages], Irvines [chicken and eggs], and many others to my doorstep.
Some informal traders, especially those in cross-border trade, were also supplying formal retailers with some products. A grocery importer, a I am a ‘malaicha’, I buy a range of goods from wholesalers in South Africa, import them and supply both formal and informal businesses once I arrive here. The demand is so high that I am always working to bring in new orders. Many of us import various goods.
In this regard, the study discovered that it was common for products to move from a formal producer to an informal distributor, back to a formal sector retailer, and then back to an informal grocery store owner before they reach the final consumer. This created a long and complex chain supply system which defied the normal flow of goods from producers to wholesalers to retailers and finally consumers. An official of the Ministry of SMEs commented on these intertwined connections between the two sectors, ‘the informal sector has grown to become a strong force that formal businesses can no longer afford to ignore. The two sectors are therefore working together, and it is now impossible to draw a line separating them’. An official from the ZCIEA also stated,
Informal businesses are penetrating the so-called formal economy. If you visit informal business sites, you will see people from large formal businesses doing business there. Can you believe that most of the furniture sold in formal stores in town [Harare] is manufactured by informal businesses?
The study therefore argues that the informal economy managed to build more resilience to survive by entrenching itself into the main economy. Consequently, it was becoming increasingly difficult to destroy the sector without causing huge disruptions in the formal economy. Some formal businesses such as Econet, Telecel and Netone (mobile service providers) had licensed informal agents who worked as airtime distributors or mobile money agents, making it difficult to identify them as standalone informal businesses since they work together with the actual service providers. The same applies to businesses that supply construction materials and agricultural inputs that work directly with informal agents that act as intermediaries. They were even entrusted with the products to market, sell and collect money on behalf of the actual businesses. These findings debunk the view of some scholars (Chirau, 2014; Fox and Goodfellow, 2016) that the informal economy is a parallel or second or secondary economy operating separately from the main or formal economy. They demonstrate the fact that the two sectors not only worked together but had become one. Formal businesses had matured to appreciate the informal sector as a partner and stakeholder and not as a rival. They realised that they complement each other’s work and formed strong partnerships (Magidi, 2019). Tamukamoyo (2009) labels the informal economy as the ‘unofficial’ main economy following the failure of the formal economy. In this way, the informal economy has managed to build resilience, survive and grow to be the vibrant economy it is today.
Conclusion
With this host of innovations, mechanisms and initiatives such as proper coordination and organisation, creative and innovative marketing strategies, cross-border trade, adoption of ICT, taking advantage of collapsed service delivery, light manufacturing and home-based enterprises, the informal economy managed to establish itself as a force to be reckoned with in Zimbabwe. These strategies improved the sector’s operations by increasing its competitiveness, building resilience and increasing earnings. The sector managed to get a place in the formal economy and pushed for its recognition by government, local authorities and the formal sector; today, it stands firm and competitive and is regarded as a key economic sector in Zimbabwe. The article concludes that the informal sector managed to reinvent itself from being a petty product economy only and transformed itself into the strong economy that it is today.
Footnotes
Funding
ORCID iD
