Informal sector hails new empowerment banks
By Courage Pahla
PLAYERS in Zimbabwe’s informal sector have expressed optimism with the Women and Youth empowerment banks that came on board last year saying that the financial institutions have aided and capacitated their businesses resulting in the valuable contribution that they make to the country’s economy.
The informal sector in the country remains an important cog in the country’s fight to turn around its fortunes.
The informal sector workers, under the banner of the Zimbabwe Chamber of Informal Economy Associations (ZCIEA), highlighted that the Women and Youth banks have availed the much needed capital and loans to some of its members helping to change perceptions about informality.
“We are delighted that these financial institutions recognised, the undeniable fact that most of them lack collateral and relaxed stringent bank requirements. This has helped them to access loans in tandem with costs associated with their business. It is of interest that the government is supporting policies that stimulate growth and recognize that informal sector workers are legitimate economic players,” said ZCIEA.
The workers, the majority of them vendors who ply their trade in the streets, noted that working capital remains the biggest obstacle to the growth of the sector, and the presents of the banks has been a short in the arm to their efforts towards meaningful contribution to the economy.
“Over the years, instead of being seen as a vital cog in the country’s economic development due to lack of collateral, informal workers especially vendors, have been used as political pawns, with those in positions of authority using political muscle to make inhumane decisions that advanced their personal interests.
“The new banks are becoming critical, to champion our concerns of financial inclusion through availing affordable funding options to start our own enterprise,” said a Harare vendor who only indentified himself as Samuli.
Labour and Economic Research Institute of Zimbabwe (LEDRIZ) senior economist Prosper Chitambara said the informal sector was a bastion of entrepreneurship, adding the informal economy in Zimbabwe accounted for more than 80 percent of jobs while almost half a million school leavers are churned out into the informal economy each year.
Chitambara said the fact that Africa’s richest man, Nigeria’s Aliko Dangote, who is worth over US14 billion, started as an informal worker, was good enough reason to believe that the informal sector had potential to create more jobs and unpack and create wealth, adding there was a need to maximise its potential.
Zimbabwe’s economy has over the past two decades rapidly informalised as formal businesses have continued to fold because of a difficult operating environment.
Under the new dispensation, President Emerson Mnangwagwa launched Women and Youth banks last year to ensure that women, youths and also small medium businesses take up loans and co-guarantee each other, consequently creating equal chances of accessing credit which will help them to improve their economic status.
The two banks are of paramount importance in country’s quest of vision 2030 that Zimbabwe should attain middle income status.