LEORNARD Munyanyi misses the good old days when his carpentry business was sufficiently profitable, comfortably earning him enough for his workplace and residential rentals and his young family’s upkeep before the month was up.
Now it has become an uphill struggle given the stiff competition posed by the swelling ranks of the self-employed caused by continued company closures and retrenchments as Zimbabwe’s economic challenges show no signs of abating.
Munyanyi, who in a good month would make as much as US$1 000, is now struggling to raise his rentals let alone feed his family, and things look like they will get worse before improving. In fact, he now owes his landlord US$140 for two months’ arrears in rentals.
Specialising in making bed bases, room dividers, wardrobes and kitchen units, Munyanyi said at the moment he cannot save any money in the bank for future investment into his business since he is now surviving from hand to mouth.
“Towards the previous festive seasons, we would open as early as 6.30am so that we could cash in on the increased business, but during the same period last year we were quite idle,” Munyanyi said.
“We have had to cut our prices to attract business in the face of stiff competition because now there are so many of us due to retrenchments and the shrinking job market. The profits are now so small, but we don’t have an alternative but to soldier on.”
Due to falling business and tough competition, Munyanyi said he is contemplating relocating from Mbare’s Siyaso informal industrial site, where traders pay US$40-US$100 per month in rentals, to Waterfalls where business is slower, but would pay not more than US$40 each month.
Munyanyi’s tale is microcosmic of the experiences of those operating in the country’s burgeoning informal sector as Zimbabwe’s unemployment rate exceeds 80%.
Such small-scale business operators face a plethora of challenges ranging from stiff competition, low demand, lack of capital amid the country’s liquidity crunch, health hazards and revelations of impending taxation by the Zimbabwe Revenue Authority (Zimra) — all threatening the sector’s viability.
Zimra commissioner-general Gershem Pasi last year announced that he intended to increase the country’s revenue base by taxing the informal sector, but is yet to explain how this would be done since most of the businesses are unregistered and remain unbanked.
Christopher Dhlakama, who has never been formally employed and specialises in making door and window frames and gates from second-hand metal, has a similar story to Munyanyi.
“Competition is fierce and it’s increasing, hence business is low. I have a family of four people to look after and with rentals so high we end up just working for food and accommodation. We don’t have any extra cash to bank because business is low,” Dhlakama said.
He said at Siyaso there was no electricity and when they need power they are forced to go to some other premises with either electricity or gas and pay a service charge of about US$10 depending on the amount of work to be done.
Dhlakama lamented lack of capital to boost his business saying he failed to benefit from the Youth Development Fund despite him and other informal traders filling in loan access forms in groups of five as advised by the Indigenisation ministry.
The fund, aimed at youth between 18 and 35 years old, was last year suspended after a loan default rate of 78%.
According to a Small and Medium Enterprises (SME) survey conducted in 2012, 5,7 million jobs have been created from 2,8 million small businesses, while 800 000 small businesses employed 2,9 million people.
Economist Godfrey Kanyenze said it was not advisable for Zimra to descend on the informal sector before it is organised, protected, supported and promoted.
“Because of their nature, SMEs’ access to capital is critical so that they become sustainable. They should be given relevant credit by micro-lending institutions to assist them to grow,” he said.
Another economist Takunda Mugaga said SMEs face tough challenges as generally product demand was decelerating due to the liquidity crisis bedeviling the economy.
“Pockets are becoming shallower everyday due to poverty. People are resorting to low-value products. Even if you look at Delta beverages’ last (financial) results, they reflect that product demand is decreasing,” said Mugaga.
Another entrepreneur Sam Chiwara, who makes scotchcart boards and sells them to scotchcart manufacturers, said if he secured a formal job he would quit his informal work.
“Usually, business is better during the tobacco-selling season (February to around July) as farmers spend after getting cash for their crop. A product which at the peak of the tobacco selling season sells for US$70-US$75 would sell for US$50-US$55 during other times.
You will find that our prices are not fixed as in the formal sector; much depends on your bargaining skills and our perception of your ability to pay.”
Chiwara said he started steel fabrication in 2011, but business was low as a result of new sheets imported from South Africa as scotchcart crafters now prefer new sheets to old boards.
He also said he was risking his health since he could not afford to buy protective clothing as occasionally he gets injured from rust-infested iron sheets because he uses bare hands to work metal panels.
At Siyaso, informal traders also face the problem of harassment by self-styled middlemen who lure customers to their products, and add an extra charge on the products as a fee for their unsolicited services. If traders deny the middlemen access to their goods they decampaign them and discourage customers from buying their products.
While the informal sector is growing, it is clear that most small-scale operators have not joined out of choice, and would readily jump at jobs in the formal sector.