You are on page 1of 333











JULIUS GWATIWA The impact of the United States of America (USA) Economic Sanctions (ZIDERA) of 2001 on Informal Businesses in Zimbabwe: A case study of the informal traders in Harare. Executive Diploma in Business Leadership 2009


Permission is hereby granted to the Zimbabwe Open University to produce single copies of this project and to lend or sell such copies for private, scholary or scientific research purposes only. The author reserves other publication rights and neither the project nor its extensive extracts from it may be printed or otherwise reproduced without the author’s written permission. SIGNED:………………….. PERMANENT ADDRESS: Kambuzuma Harare Zimbabwe DATE 3073/6

August 2009




The undersigned certify that they have read and recommended to the Zimbabwe Open University for acceptance a project entitled “The impact of the United States of America (USA) Economic Sanctions (ZIDERA) of 2001 on Informal Businesses in Zimbabwe: A case study of the informal traders in Harare”, submitted by Julius Gwatiwa in partial Fulfillment of the requirement for the Executive Diploma in Business Leadership (EDBL).

……………………………………………………………………………..... SUPERVISOR(S)

……………………………………………………………………………… PROGRAMME/SUBJECT COORDINATOR

……………………………………………………………………………… EXTERNAL EXAMINER

…………………… DATE


DEDICATION I dedicate this research project to my lovely wife Beauty and my six children.


ABSTRACT This research project aim to determine the impact of Zimbabwe Democracy and Economic Recovery Act of 2001(ZIDERA) a broad economic sanctions Act imposed by the United States of America in 2001. The researcher noticed difficulties experienced by informal traders in their operations. The researcher studied five sectors of informal businesses to get a cross sectional views of ZIDERA’S effects. The research subjects for the study comprised sixty (60) owner managers, one hundred and fifty (150) customers and the Acting General Manager in the Harare Municipality Department of Housing and Community Development. The Ministry of Small to Medium Enterprises provided the researcher with their policy document. Central Statistic Office and the Ministry of health provided data to the research to accomplish the study. The major limitations included time, cost of transport, stationery, bureaucracy and protection of confidential information. The research findings showed that informal traders were heavily affected by the economic sanctions. Major sectors included informal Engineering, Clothes Retailing, Carpentry, Vehicle Repair Services and Vegetable Markets. The major sanctions linked challenges included: -Decline of formal market, cash crisis in the economy, raw material shortages, transport system decline, food crisis/ shortages, health system decline, and education stagnation were reflecting the effects of economic sanctions. This study recommends that informal business be the driving force of Zimbabwe economic prosperity. Government should involve this sector in policy formulation and implementation to economic emancipation. The is need for recognition of the part played by the informal sector which create an estimated 94% of the age groups 14 to 55 years who are economically active. Topic for further study is “The role of Zimbabwe congress of trade unions (ZCTU), ZANU PF and MDC on the unilateral imposition of economic sanctions by Britain, EU and united states of America 2000 -


ACKNOWLEDGEMENTS I wish to acknowledge the assistance received from the following people who made it possible for this document to be put together.

Firstly, I would like to convey my sincere gratitude to, my supervisor Mr. C Vutete. My Programme coordinator Mr. Uzhenyu, for their invaluable contribution and guidance throughout the whole project. I would also like to thank my Principal Director at work Mr. I D Tizora. It would be remiss not to mention Ms P. Mashumba for typing, Mr. S.K. Nyemba and Mr. T. Goro for their support.


TABLE OF CONTENTS CONTENTS Cover Page Release Form Approval Form Dedication Abstract Acknowledgements Table of Contents List of tables’ List of charts List of Appendices CHAPTER 1: INTRODUCTION 1.0 Introduction Background of the Study 1.2 Statement of the problem Research objectives Research Questions Significance of the study Research assumptions Definition of Terms Delimitations of the study Limitations of the study Chapter summary CHAPTER II: LITERATURE REVIEW 2.0 Introduction 2.1 Impact of ZIDERA 2.2 The informal trading in Harare: Recent Studies 2.3 Escaping harsh Breton Woods Institutions 2.4 Zimbabwe Economy turned informal almost 90% 2.5 Plight of the Informal traders under a barrage of all types of sanctions 2.6 Theoretical orientation of informal trading 2.7Theory of Economic Sanctions 2.8 Registration of Harare People’s Markets 2.9 Informal Traders and the contextual meaning in the research 2.0 Summary PAGE i ii iii iv v vi vii viii ix x 1 1 3 3 4 4 5 5 8 8 9 10 10 15 17 20 23 25 26 28 29 29

1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9



RESEARCH METHODOLOGY 3.0 Introduction 3.1 Research Design 3.2 Research Subjects 3.3 Research Instruments 3.4 Data Collection Procedures 3.5 Data Presentation and Analysis 3.6 Summary 30 31 32 35 37 38 38

CHAPTER IV: DATA ANALYSIS, PRESENTATION AND DISCUSSION 4.0Introduction 4.1 Demographics of Respondents 4.2 Informal Engineering business Affected by Economic Sanctions 4.3.2Nutritional Deficiencies 4.5.1Supply of Products 4.6.1Product Diversification as a strategy 4.6 Ways of improving informal Business in Harare 4.7 Chapter Summary

39 40 49 54 63 67 71 72

CHAPTER V: SUMMARY, CONCLUSION AND RECOMMENDATIONS 5.0 Introduction 5.1 Summary 5.2 Conclusions 5.3 Recommendations 5.4 Summary References

73 73 74 76 78 82


LIST OF TABLES TABLE 4.1 4.2 4.1.3 4.1.4 4.1.5 4.1.7 4.1.8 4.3.2 4.3.2. 4.4 DISCRIPTION Age Distribution Sex and Gender Academic and Professional Qualification of respondents Types of Informal Business Number of Employees Indicative Parameter Table Major Sectors of Informal Traders Number of Cholera Cases by Province in Zimbabwe Ranking of Major Informal Traders Major Sanctions Linked Challenges of Informal Traders PAGE 39 40 42 43 44 46 47 50 54 55


LIST OF FIGURES CHART 4.1 4.2 4.3 4.4 4.5 4.6 4.7 DESCRIPTION PIE Chart of Informal Pie Chart of Customers Bar Chart Representing Number of Employees Bar Chart of Cholera Bar Chart Indicating Sanctions Chart Showing Importance of Informal Business Response Strategies on ZIDERA Bar Chart PAGE 41 44 45 51 56 61 64


LIST OF APPENDICES APPEDIX 1. Questionnaire 2. Newspaper Cuttings 3. Magazine Cuttings DISCRIPTION PAGE

An assessment of the impact of 77 Economic sanctions Water woes, Inflation, Sanctions, Cholera reports, Land Reform letter from Clare Short, sanctions reports President Mugabe’s statements on sanctions




1.0 Introduction The area of this study is concerned about the impact of USA economic sanctions on informal businesses in Harare. It aims to provide an insight on how informal business units help millions of people in Harare. The study seeks to explain why so many people in the Capital City across social divide have entered into informal trading. The research is going to touch the question of unemployment and economic sanctions. Informal trading in Harare started in 1991 mainly due to massive retrenchment soon after the adoption of ESAP. Many workers were forced to leave employment especially in multinational organizations. This however, left many people at the mercy of poverty with the liberalized economy; cost of living became the order of the day.

1.1 Background to The Study Informal trading became the best alternative as many families tried to avert negative effects of ESAP. During those early 1990s many of the informal traders were from the disadvantaged in society. The perceptions held by many then were that, only those people uneducated engage in informal business activities. However, these perceptions did not live longer as many well educated are now falling on each other to get a stall


at flea markets in Harare for survival. This new trend came as a result of the sanctions law enacted by the United States of America in 2001 called (ZIDERA) Zimbabwe Democracy and Economic Recovery Act. This followed a successful revolutionary land redistribution meant to correct colonial land imbalances by British settlers. Agrarian reform from mid- 1950s up to as late as 1968 forced Africans in Rhodesia now Zimbabwe to be removed from their land. The British settlers enacted destructive land laws, the Land Husbandry Act 1951 moving many people from their land into new mines and urban settlements for cheap and forced labour. Zimbabwe government embarked on land redistribution to bring all races on equal footing completely removing racial discrimination on socio-economic issues. The land redistribution policy is anchored on equitable redistribution amongst all Zimbabweans.

The former USA President George W. Bush signed a brutal sanctions law in 2001 to re-enforce the colonial draconian laws to humiliating black people in Zimbabwe. The real intentions of the sanctions law being to beat all black Zimbabweans into submission and allow the minority British settlers to dominate the socio-economic sphere. Section 4I of the sanctions law stipulate that, Multilateral Financing Restriction.- -Until the President makes the certification described in subsection(d), and except as may be required to meet basic human needs or for good governance, the secretary of the treasury shall instruct the United States executive director to each international financial institution to oppose and vote against- -(1) any extension by the respective institution of any loan, credit, or


guarantee to the Government of Zimbabwe; or (2) any cancellation or reduction of indebtedness owed by the Government of Zimbabwe to the United States or any international financial institution.” As a result of these sanctions from USA and Britain, many formal business closed shop creating a record unemployment level of not less than 90%. This coupled with hyperinflationary environment many people started to engage in informal trading in order to circumvent their impoverished status as a result of ruinous sanctions. Today, informal trading has created opportunities for all social classes in Harare.

1.2 Statement of The Problem Informal trading in Harare and ever increasing vendors’ legal and illegal explain the socio-economic environment caused by economic sanctions. The main challenge here is to determine to what extend has informal trading improved the socio-economic conditions of people living in Harare. The socio-economic effects in a sanctioned economic environment, where formal employment is estimated to be less than 7%, so what are the socio-economic effects of informal businesses across the various sectors in Harare? 1.3 Objectives of The Study The study therefore seeks to establish both the impact of ZIDERA and socioeconomic effects caused by informal trading in Harare. The study’s broad objectives are: a) To find out the major sectors of informal traders highly affected by sanctions. b) To find out what challenges informal traders faced in their businesses.


c) To establish the major sanctions linked challenges affecting informal traders d) To find out the importance of informal business on economic development in Zimbabwe. e) To establish response strategies by informal traders on ZIDERA environment.

1.4 Research Questions/ sub-Questions a) What are the major sectors of informal traders highly affected by sanctions? b) What are the challenges faced by the informal traders in their businesses? c) What are the major sanctions linked challenges affecting informal traders? d) What is the importance of informal businesses on economic development in Zimbabwe? e) What are the response strategies employed by informal traders on ZIDERA environment?

1.5 Significance of The Study The research is expected to highlight the socio-economic effects of informal trading in Harare with emphases on Mupedzanhamo flea-market in an economy under harsh economic sanctions. It seeks to explain why informal trading became one of the vibrant alternatives in Harare when unemployment and hyperinflationary

environment took center stage. The research will discuss the positive and negative aspects of informal trading in People’s Markets in Harare. The research will provide the latest information to policy makers on the impact of economic sanctions in the informal sector.


The research will also seek to provide some insight on the socio-cultural circumstances reflected by informal traders and their families. It touches on the issues of company closures, sustenance and breakdown of family units and the extended family. It is also to discuss health and education as some of the serious challenges informal traders and their families encounter.

The research will reveal the economic contributions offered by the informal trading businesses to society. Recommendations of this research will create a reasonable basis of offering advisory services to the informal traders and raise awareness of their mixed fortunes. The researcher will learn throughout the length of the study and gaining an in depth understanding on how the informal traders are surviving under grueling economic conditions as a result of sanctions. 1.6 Assumptions of The Research 1. Informal traders have basic knowledge on operations of sanctions in an economy. 2. Economic sanctions have multiple impacts in the target country. 1.7 Definition of Terms This section defines terms to be used in this study in the context of the research. Terms of interest are as defined thus: 1. Economic sanctions – (a) Economic penalties, such as stoppage of trade and financial transactions, imposed upon a country to force compliance with another country’s or UN’s or WTO’s demands.


(b) Internationally, restrictions upon trade and financial dealings that a country imposes upon another for political reasons, usually as punishment for following policies of which the sanctioning country disapproves. 2. ZIDERA – Zimbabwe Democracy and Economic Recovery Act of 2001, signed by USA former President George W. Bush against Zimbabwe. Section. 3. Definitions. In this Act: (1) International financial institutions. - - The term international financial institutions’ means the multilateral development banks and the International Monetary Fund. (2) Multilateral development banks.- - The term multilateral Development banks’’ means the International Bank for Reconstruction and Development, the International Development Association, the International Finance Corporation, the Inter- American Development Bank, the Asian Development Bank, the Inter- American Investment Corporation, the African Development Bank, the African Development Fund, the European Bank for Reconstruction and Development, and the Multilateral Investment Guaranty Agency. 3. Informal trading – Informal trading is defined as the economic activity undertaken by entrepreneurs who sell legal goods and services within a space deemed to be public property, within the informal sector. This excludes any activity that is defined as illegal by any national or provincial law. Example of


informal trading businesses include:- (a) Mupedzanhamo flea-Market, siyaso market, Glenview Home industries in Harare. 4. People’s Markets – land for markets, the council set aside land or premises for the purpose of informal traders, and may divide such land or premises into separate stands or stalls, as the case may be. 5. Hyperinflation – an extremely high rate of inflation, often exceeding several hundreds or several thousand percent, that causes a country’s money to become practically worthless. Example, German hyperinflation 1920s and Zimbabwe hyperinflation reached millions 2008. 6. Socio-economic effects – socio-economic effects are those outcomes whether positive or negative as a result of socio- economic activities carried out at micro and macro environment within a community (ies). These outcomes affect the community in different ways. For example if the informal traders improve the quality of life through their daily earnings and be able to send children to school as well as affording medical care, it is a positive outcome. However, if their informal trading activities fail to meet the standard of living, then the outcome is negative. 7. Mupedzanhamo – refers to a market in Mbare suburb informal traders own stalls to sell their products to customers coming from a diverse social background. The name Mupedzanhamo implies that this is a market where poverty diminishes. Traditionally the market used to sell second hand clothing but now even designer clothing have in recent times become common. Prices of goods are very low considering that one can buy quality clothes similar to


those found in an up-market clothing shop in Harare. Today some are calling the market ‘Mupedgars’ as a result of popularity with people in Harare and beyond.

1.8 Delimitation of The Study The research is focused on impact of economic sanctions on informal traders in Harare, taking customers and owner managers as the respondents.

1.9 Limitations of The Study The following limitations were met by the research: • • Financial constraints to gather enough information on this topic. The researcher failed to meet printing cost to facilitate adequate supervision owing to the economic limitations. • Time constraints limited the speed solicitation of additional information particularly from the People’s Markets on the far out skirts of Harare. • Participating informal traders may withhold important information for fear of the unknown. • Some informal traders were unwilling to be interviewed especially those whose vending activities are not registered by Harare Municipality. • Poor records keeping might hinder the researcher from coming up with accurate analyses of informal trading enterprises. • Transport cost and scarcity of fuel in the market.


1.10 Chapter Summary Chapter one was divided into subsections which provided a direction the research problem and sub-problems are to be used to probe the main question. The next chapter concentrates on literature review; this takes into account the relevant literature as a result becoming the cornerstone of the research.



LITERATURE REVIEW 2.0 Introduction The purpose of a literature review is to convey to the reader what knowledge and ideas have been established on a topic and what are the strength and weaknesses. The literature review allows the reader to be brought up to date regarding the state of research in the field and familiarizes the reader with any contrasting perspective and view points on the topic. According to Gil and Johnson (1991), any research project will necessitate reading what has been written on the subject and gathering it together in a critical review which demonstrates some awareness of the current state of knowledge on the subject or problem. Thus, the review of literature is meant to enlighten the researcher on the subject.

2.1 Impact of ZIDERA economic sanctions on informal traders The perspective of this study looks at all the actions that the United States of America government has taken against people of Zimbabwe pre and post independence era. According to (Dr. Tafataona Mahoso) citing Richard Leonard’s book ‘South Africa at War: White Power and the Crisis in Southern Africa,” The Herald 6 May 2009, he said, “we find this report on page 243:” “Thus while holding the terms of the 1977 arms embargo (against the white racist regime of South Africa), the United States is allowing South Africa and its (apartheid) police and military access to an array of strategic equipment. In 1982 the International Monetary Fund approves a US $1, 1 billion loan to


South Africa with the support of the Reagan administration (of the US), despite protests by African countries, at the United Nations, and by anti-apartheid groups.” In relation to Zimbabwe, Dr. T. Mahoso state that, “Zimbabwe should not just pity the South Africans. At independence in 1980, we too found a big debt, relatively speaking, left behind by the racist regime of Rhodesia, the IMF and its donors. Independent Zimbabwe inherited from the Rhodesian Front regime a total debt burden of US$762100 000 which at 1980 can be broken down as follows: Multilateral – US$5 300 000; bilateral debt –US$97 900 000; and cost of debt servicing – US$65 000 000.” He further says, “What this means for the liberation movement and all patriots in Zimbabwe is that the IMF and its donors have been hostile to African interests for a long time; that the human rights and good governance rhetoric being used to justify the continuation of illegal sanctions against Zimbabwe and to justify the continuing denial of balance of payment support is hypocritical, reflecting the racist double standards of the same Anglo-Saxon axis who still dominate IMF-World Bank thinking.” The research want to understand why the United States of America’s interventions always impacted negatively to black Zimbabweans whether the economic sanctions are against UDI of Rhodesia 1965 or Equitable Land Redistribution Programme in Zimbabwe 2000.

As argued above the Rhodesian government received financial support from the USA government at a time Ian Douglas Smith regime was ruthlessly massacred poor and oppressed black Zimbabweans. At that time United Nations had imposed economic sanctions against Rhodesia for violating international law. Britain had imposed sanctions


against Rhodesia’s Unilateral Declaration of Independence but, USA helped Ian D. Smith to maintain a strong oppressive grip on the weak and poor black majority. For the purpose of clearing doughty here is the response from the then USA government; in an attempt to bypass the UN sanctions, the USA passed the Byrd Amendment in 1971 and continued to buy chrome from Rhodesia in violation of the UN sanctions. USA’s argument was that chrome was “a strategic raw material”, the chrome was for USA auto industry. In the year 2001 USA passed economic sanctions law (ZIDERA) to punish all Zimbabweans for having successfully restored their dignity by returning land to the people after more than 100 years. This became the basis for imposition of illegal economic sanctions which eventually decimated the socio-economic fabric of Zimbabwe. Companies closed down many workers lost their employment, cost of living become unbearable as the economic environment was turned upside down by USA and her allies through their unilateral sanctions not authorized by the United Nations Security Council. According to Stephen Gowans (2009) the Herald July 22, 2009, an excerpt article titled “Obama’s Africa Speech: Lies, Hypocrisy, and a Prescription for Continued African Dependence,” he says, “Analyses that attributed Zimbabwe’s economic disaster to mismanagement overlooked the reaction of Washington to the Mugabe government’s lese majesty against private property. For not only did the turn of the century mark the beginning of fast-track land reform, it also marked the passage of the US Zimbabwe Democracy and Economic Recovery Act. ZDERA is not a regime of targeted sanctions against individuals, as many believe. Sanctions against individuals do exist, but ZDERA is something altogether different.


ZDERA has two aspects. First, it authorizes the US president to “support an independent and free Press and electronic media in Zimbabwe”. This code for doing openly what the CIA used to do covertly: destabilize foreign government. Second, it instructs the United States executive director to each international financial institution (the World Bank and IMF, for example) to oppose and vote against: (1) any extension by the respective institution of any loan, credit, or guarantee to the government of Zimbabwe; or (3) any cancellation or reduction of indebtedness owed by the government of Zimbabwe to the United States or any international financial institution”. He further state that, “since ZDERA was passed in 2001, Washington has blocked all lines of credit, development assistance and balance of payment support from international lending institutions to Zimbabwe.” In agreement to Stephen Gowans, the honorable Finance Minister Mr. Tendai Biti on his return from US on an official visit, he said, “The World Bank has right now billions of dollars that we have access to but we can’t access those dollars unless we have dealt with and normalized our relations with the IMF. “We cannot normalize our relations with the IMF because of the voting power, it’s a blocking voting power of America and people who represent America on that board cannot vote differently because of ZDERA.” Stephen Gowans describes US sanctions more accurately when he says “As bad as ZDERA is, it’s not the only sanctions regime the United States has used to sabotage Zimbabwe economy. Addressing the Senate Foreign Relations African Affairs subcommittee, Jendayi Frazer, who was George W. Bush’s top diplomat in Africa, noted that the United States has imposed financial


and travel restrictions on 135 individuals and 30 businesses. US citizens and corporations who violate the sanctions face penalties ranging from $250 000 to $500 000.” Quoting from Ms Jendayi Frazer’s words “We are looking to expand the category of Zimbabweans who are covered. We are also looking at sanctions on government entities as well, not just individuals.”

According to Gowans (2009) The Herald July 22 2009, “On July 25 2008 Bush announced that sanctions on Zimbabwe would be stepped up. He outlawed US financial transactions with a number of key Zimbabwe companies and froze their US assets. The enterprises included: the Zimbabwe Mining Development Corporation (which controls all mineral exports); the Zimbabwe Iron and Steel Company; Minerals Marketing Corporation of Zimbabwe; Osleg, or Operation Sovereign Legitimacy, the commercial arm of Zimbabwe’s army; Industrial Development Corporation; the Infrastructure Development Bank of Zimbabwe. In early March 2009, Obama extended sanctions for another year, announcing that, “The crisis constituted by the actions and policies of certain members of the government of Zimbabwe and other persons to undermine Zimbabwe’s democratic processes or institutions has not been resolved. These actions and policies pose a continuing unusual and extraordinary threat to the foreign policy of the United States.” Gowans thinks Obama should have noted that in fact the US sanctions pose a continuing unusual and extraordinary threat to the economy of Zimbabwe. He says, “Under the leadership of Zanu-PF, Zimbabweans have tried to build their own country according to their own needs, expropriating land confiscated by European settlers when the former colonial


master, Britain, reneged on its promise to fund land reform. Zanu-PF has also led efforts to bring Zimbabwe’s resources and economy under the control of indigenous Zimbabweans, following methods reminiscent of the ones South Korea used to industrialize. But while South Korea’s subsidies, tariff protections and foreign ownership restrictions were tolerated by Washington as a necessary evil of the Cold War- South Korea needed to be given space to develop into a capitalist showpiece on the Cold War’s frontlines- Washington has been unwilling to tolerate Zimbabwe’s efforts to follow the same path.” The research wants to go beyond blanket claims on the implications of economic sanctions looking at the specific areas where socio-economic effects are easily identifiable.

2.2 The informal trading in Harare: Recent Studies Rodreck Mupedziswa and Perpetua Gumbo (2001) carried out a research on the activities of the women informal traders in Harare. At that time, Zimbabwe had adopted ESAP (Economic Structural Adjustment Program) the economy had been liberalized. This was followed by the removal of subsidies on all basic services and commodities. Employees in public and private sectors were retrenched in a bid to reduce expenditure. This development resulted in influx of people engaging in informal trading activities for survival. According to Mupedziswa and Gumbo (2001), “The informal sector is increasingly becoming one of Africa’s key mechanisms for coping with growing poverty, particularly in urban areas, as a result of the introduction of the economic reform programmes.” The Herald (1996:9)


The hue and cry and a feeling of hopelessness that accompanied the launch of the harsh economic reform programme five years ago is dissipating among Zimbabweans. A new work ethic, marked by a proliferation of backyard industries is now taking shape. The informal sector, once derided as an exclusive presence for an uneducated and unskilled individual with no prospects of gaining a job in formal sector, has become the life line for a growing number of Zimbabweans, from retrenched professional and hilly skilled workers to retirees and others entering the job market for the first time. The Zimbabwe Human Development Report (1998:31) summarized that, in terms of the economy: Although the policy environment improved considerably during ESAP, the growth response (though not the investment response) was disappointing. By 1997, per capita incomes were lower than in 1990, while manufacturing production fell to a 10 year low in 1995 and unemployment continued its relentless rise.

The IMF external evaluations summarized the socio-economic impact through its Enhanced Structural Adjustment facility. Here are some of their findings: • During the period (1991-1996) average private consumption levels declined by about a quarter. • There was a powerful redistribution of income from urban wage earner to the rural population. • By contrast, urban households suffered severely from fewer jobs to a decline in real wages.


Households’ welfare suffered further from a decline in public spending on social services.

The brunt of the fall in public expenditure was borne by those working in social services.

The introduction of ESAP did not happen without a struggle as the government was weary of the liberal economic policies brought by IMF and the World Bank. However, the Multinational organizations used coercive methods by threatening to closedown businesses if the government continued to insist on socialist policies. So the capital sided with the IMF until the government accepted the liberal policies which it later abandoned as it became clear that ESAP was not solving critical challenges of poverty. It was benefiting the Anglo-American Companies and many of their subsidiaries. This research is not going to dwell on the implications of ESAP. However, the researcher incorporated it on the current study of the informal traders so that it becomes one of the baselines as there are common areas on which the two studies converge.

2.3 Escaping harsh Breton woods Institutions’ Liberal Economic Policies (ESAP) to (ZIDERA) Economic Sanctions: Zimbabwe Democracy and Economic Recovery Act of 2001. Assessment of the socio-economic impact on informal traders looking at the human security clusters of humanitarian and socio-economic conditions given below: (a) The Core human security cluster: • Health


• • •

Food and Nutrition Water and Sanitation Education.

(b) The Systemic human security cluster: • • • • Governance Economic status The physical environment Demography.

According to Manuel Bessler(2004), he state that, “Eight human security subject areas are used to capture the status of conditions of life; these eight areas organized within two clusters: a core cluster, relating to the basic existential needs of the individual; and a systemic cluster, which relates to the socio-economic environment within which those core needs are located.” Bessler further explained that, “Human security recognizes a “vital core” of human activities and capabilities of highest importance to be protected. Since it is focused on threats to actual living conditions, human security can be assessed by measuring key aspects of people’s conditions of life. This focus on multiple measurable dimensions of people’s lives and their safety, and consideration of threats to these facets of a person’s security distinguishes human security from other concepts, principles and frameworks used for defining the status of living conditions.”

Zimbabwe’s humanitarian conditions have worsened as a result of illegal economic sanctions than what happened during ESAP. As from the year 2001 to 2008 the USA


sanctions created poverty, and death to the vulnerable people. The so called targeted sanctions are targeted against all people of the black race that exclude the white race that is perceived as being victimized. Now to put to rest the argument that EU and USA sanctions are targeted or not, the answer is yes, they are surely targeted against all black Zimbabweans. However, the list of government officials on what US and her allies purport to be targeted sanctions against individuals is an attempt to divert local and world opinion. From the onset of ZIDERA it became clear that the sanctions document targeted all people across social divide but protecting whites living in Zimbabwe. The behaviour of United States of America, Britain and their allies violated international law by imposing harsh economic sanctions against Zimbabwe for having corrected a derogatory colonial private property rights laws. The Private Property Rights (PPR) Laws were enacted unliterary by the settler regime which alienated the indigenous people when making critical decisions. These colonial states do not consider black people in all matters to do with human rights, rule of law, democracy and freedom of expression. What they mean when they say human rights = first and foremost, they mean white people’s rights and not black people’s rights, to them black people have no rights. Rule of law = no black people’s government is allowed to amend or propose to change draconian and imperialist regulations controlling black peoples’ resources in Zimbabwe. In other words black people should take a spectator role so that the racists’ whites provide in return senseless heaps of praises to all such ridiculous moderate blacks, the nature of praises range from being called the champion of democracy to progressive people.


Democracy = A moderate system that champions the interests of the minority and a systematic and perpetual suppression of the interests of the black majority in Zimbabwe. Further, the deprivations of the indigenous black people during the colonial era atrocities are everybody’s experience.

In the case of Zimbabwe; USA, Britain and their allies used their economic influence to breach the United Nations Charter and continuously violet human rights of the black people of Zimbabwe. These countries acted outside UN Security Council when they imposed these harmful economic sanctions. This can be seen from the efforts made by USA and Britain of taking Zimbabwe to the Security Council so that all member countries adopt the sanctions and further worsen humanitarian conditions. For now their quest to get the UN endorse the economic sanctions has not materialized.

2.4 Zimbabwe’s Economy Turned Informal almost 90%. On the list of informal trading in Harare are:1. Vulnerable groups e.g., poor man, women and children, 2. School dropouts, 3. School leavers, 4. Retrenched workers, 5. Workers, 6. College and University graduates, 7. Formal companies e.g. black market dealing, 8. Well to do families,


9. Foreign Governmental organizations/ NGOs, 10. Company chief executives, 11. Zimbabwe Stock Exchange. The above list explains clearly that the economic activity was operating under the dictates of a turf economic environment due to economic sanctions. Unlike during the ESAP era where informal business activities were dominated by women, under ZIDERA economic sanctions, the only economic activity remained in the informal sector. Basic commodities could not be found in supermarkets. However, it was common to buy sugar on the pavement outside a supermarket. Financial institutions were now channeling depositors’ money to the black-market as a result it was much easier to get cash at Road port than from the bank. The people had lost confidence in the formal markets as many now reverted to keeping their cash under the pillow after their savings were severely depleted by a hyperinflationary environment. Cash crisis took unprecedented levels as people in Harare could no longer afford to meet their medical, food, education, water and sanitation costs. The Financial Gazette (April 16 2009:6) Staff Reporter revealed the following; Runaway inflation had discouraged people from keeping their money in the banks, as prices skyrocketed daily. The informal nature of the economy had made the situation worse: trade outside the formal system, the only place where goods remained available under a grueling crisis, did not require plastic money of cheque books. So, it was foolish to keep the Zimbabwe dollars locked in the banks, where it had also become difficult to access because of notes shortages. According to the Finance Minister Tendai Biti as quoted in the Financial Gazette (April 16 2009:6), he said, “there was need for the country to rediscover the culture of saving.


“Currently, negative savings rates prevailing in country cannot promote the necessary economic turnaround and growth.”

The government of Zimbabwe through the Reserve Bank of Zimbabwe tried to bring normalcy to the economy through various interventions that ranged from proving foreign currency to distressed manufacturing companies, BACCOSI, agricultural mechanization, revolving financial loan to Small to Medium Enterprises and price controls. Quoting from RBZ Governor Dr.G.Gono on the paper entitled; dealing with ECONOMIC INCEST… INACTION IS NOT AN OPTION (September 28 2008:2), he said, “ Banks are by their nature mere conduits for monetary transactions taking place in the real economy and events of the last few days have shown and demonstrated that our markets have degenerated into a den of illegalities. This economically incestuous relationship between banks and between banks and their customers and between customers and their suppliers cannot be allowed to go on unchecked. It is easy and fashionable these days to blame politicians ZANU (PF), MDC-T, and MDC-M for our current state of affairs; easy to blame the Reserve Bank or its Governor and yet the very market players and business community that speaks the loudest are the biggest culprits who at the end of the day cry victim!” at this time banks were not honouring their cheques and illegal system called burning money had taken the economy into a bottomless pit. Businesses were developed into price addicts just as bad as drug addicts as they changed prices of goods several times a day. This explains the negative impact of the USA economic sanctions to every black Zimbabwean as the targeted people not just 135 or more individuals as Washington want the world to believe.


2.5 Plight of the informal traders under a barrage of all types of sanctions. Zimbabwe is under the following sanctions:1. Financial sanctions 2. Travel-related sanctions 3. Trade sanctions 4. Arms embargo. The researcher want to reveal how these sanctions destroys a previously well managed economy to levels where people will begin to blame the government for the ultimate consequences of an economy under racial sanctions. (a) Financial sanctions Financial sanctions may have a destructive effect on capital markets, make credit scarce, increase inflation and decrease trade. This have a negative impact on employment and increase the cost of goods, especially but not limited to the economic sectors or businesses of those individuals/groups targeted by sanctions.

(b) Travel related sanctions Travel related sanctions that are targeted against a selected number of individuals are likely to have few impacts on the general population. (c) Trade sanctions Trade sanctions are most likely to have an impact on humanitarian conditions. They eliminate economic activities in all sectors; trade sanctions reduce employment in all


sectors thus reducing the buying power of employees and their dependents. These create a multiplier effect on other economic sectors that provide goods and services. Many firms in Zimbabwe are multinationals and their subsidiaries; they are the second largest employers after the government. Sanctions constrain trade in these organizations reducing local funds for municipal governmental functions, including the provision of security, health and social services.

Furthermore, some industries provide direct support for health and education of employees or dependents, investments in roads, communication, sanitation in communities, or pension payments for former employees. When ZIDERA became law most of these activities disappeared. The indirect effects have thus affected the population far larger than those who lost employment in all sectors. In addition, indirect effect has impacted on the general business environment of Zimbabwe. Commercial funds became inaccessible, insurance and transport cost of all industries went up, and inflation skyrocketed. This type of general economic collapse and stagnation has been observed in many countries under trade sanctions, including the Democratic People’s Republic of Korea, Myanmar, Haiti and Libyan Arab Jamahiriya. The above sanctions have resulted in many people in Zimbabwe engage in informal business activities to a large extend illegally. Hunger, disease, teachers’ striking, thirst education institution closures characterized hardships to the majority. HIV/AIDS and cholera provided the clear picture of sanctions on Zimbabwe.

2.6 Theoretical orientation of informal trading.


The informal sector has over the years, assumed centre stage in the writings of many authors interested in understanding the survival strategies of marginalized and vulnerable groups, particularly in developing countries. (Brand et al, 1995), various attempts have been made to theorize this sector, and many of these writings have emphasized the common situation of the informal sector operators, i.e. uniform conditions and outcomes. This is the theme that has been evident right from the original ‘discovery’ of the sector as a locus of marginals and outcasts (Hart, 1973), through to its partial rehabilitation by the International Labour Organization (ILO) following its “Employment Missions” to Colombia, Sri Lanka and Kenya which resulted in the characterization of the sector as an employment option of “second resort”, and Moser’s (1979) view of it as a homogeneous form of “petty commodity production”. The theory of uniformity of conditions and outcomes is further strengthened by recent works of Del Boca and Forte (1982) that have referred to the informal sector as the “parallel economy”, Tanzi (1982) calls it the “underground economy”, Feige (1987) describes it as the “hidden economy”, Castells and Portes (1989) have also conceptualized it as a single “underground economy” pushed out of regulation by the adoption of sub-contracting processes on a mass scale. The work of Maliyamkono and Bagachwa (1990) referred informal sector as the “second economy”, and earlier studies done in the context of Zimbabwe (e.g., Davies, 1978). The underlying assumption which motivated the initiation of this research was that the thesis of uniformity in the informal sector does it hold water under circumstances of economic sanctions such as ZIDERA which Zimbabwe find herself in?

2.7 Theory of economic sanctions


(Levy 2000) Prospect theory suggests that people tend to overweight small probabilities and underweight moderate and high probabilities. This means that political leaders may employ sanctions because they believe they work more often than they really do or that they might give more hope to the small probabilities of success, than they really should. Also, while sanctions do have a small probability of success, they present a less risk approach than military conflict.

One of the most important situations that can promote conflict is when both advisories see themselves in the domain of losses. More conflict is endangered into the situation due to loss aversion and the endowment effect, which therefore makes both parties more likely to engage in risk acceptant behaviour. Levy; in his theory provide a case which resembles our own situation, first as people who lost their land through the Land Apportionment Act of the 1930s and the more recent Land Husbandry Act of 1951. Consider a situation in which State A has made a gain at State B’s expense, such as expropriating land from B. The instant endowment effect suggests that A will renormalize around the new status quo and assimilate its gains more quickly than B will adjust to its losses. While A may not renormalize its reference point instantaneously, it should do so in fairly short period of time. This places B in a domain of losses and because of loss aversion, it will attempt to recover those losses and restore the status quo. Since A has already renormalized its reference point, A will view this as an attack on its assets Consequently, both will be in the domain of losses and accept larger than normal


risks in order to maintaining its own version of the status quo (Levy 2000). Levy, provide an interesting hypothesis to his theory, and it goes like this:When both the sender and the target are in the domain of losses, the level of sanctions success will vary from case to case. Because both States are in the domain of losses, both States have high resolve over the dispute. The sender is more willing to employ harsh sanctions on the target to make it capitulate even at its own expense while the is willing to take more punishment to maintain the new status quo. Ultimately the likelihood of success is determined by both the effectiveness of the sanction and the difference in resolve between the two States. Whereas this situation is prone to intense conflict and considerable duration, the final situation is considerably less severe. The two theories that of informal trading and economic sanctions project a positive correlation in that, it appears as if the increase in informal economic activities were as a result of the declining socio-economic environment. During ESAP, many of the actors in the informal sector where women in sharp contrast to ZIDERA era where the formal sector engaged in informal business dealings. Men as well, were competing with their women counter parts in the informal business dealings. This was entirely to deal with the harsh economic conditions. Unlike the ESAP era where employees were retrenched and later joined informal employment for survival, during the current economic sanctions era employees unilaterally abandoned their respective employment to join the once derided informal trading sector of the marginal and the outcast.

2.8 Registration of Harare People’s Markets


The registration of informal business is done by the Harare Municipality Department of Housing and Community Development. The legal status of these informal businesses is enshrined in section 180 of the Urban Councils Act [Chapter 214], Statutory Instrument 57 of 1983. Harare (People’s Markets) By-laws, 1983. Despite the fact that there are existing regulations dealing with informal sector many informal traders started to do their businesses without permits due to limited facilities and influx of more desperate people who just wanted to survive the heat weave of harsh economic sanctions.

2.9 Informal traders and the contextual meaning in this research All actors; thus pavement vendors, backyard vendors, flea-markets, home industries black-market foreign currency and commodity dealers and finally, cross border traders.

2.10 Chapter summary The literature review provided the researcher with information which opens up all the gaps left by previous researchers on this topic. The major issues which this current study is looking into is to assess the impact of ZIDERA on the informal traders in Harare focusing on two crucial human security clusters i.e. the Core cluster which comprise; Health, Food and nutrition, Water and sanitation and Education. Then Systemic cluster which comprise; Economic status, The physical environment, Governance and Demography. Since the research is seeking to assess the impact of (USA) economic sanctions on informal traders, it requires an in depth study on the above human security clusters. This


is done in order to assess the implication of ZIDERA on each aspect so that the findings will represent the total socio-economic impact of economic sanctions. The literature review has given the researcher a unique opportunity to interact with various authors’ works as well as targeted population and the sample.




3.0 Introduction
This chapter explains how the research was carried out. The research identifies the methods that the researcher used to gather the relevant data that answers the research problem. This was necessary because each method has its strength and weakness hence the need to clearly specify methods employed. Some of the methods used in this research are as follows; historical analysis (Anthony Ashworth 1980), “study of trench warfare during World War One”; combining comparative and historical research (Theda Skocpol’s States and Social Revolution (1979)) “Skocpol’s set herself an ambitious task: to produce a theory of the origins and nature of revolutions grounded in detailed empirical study. She looked at processes of revolution in three different historical contexts: the 1789 revolution in France, the 1917 revolution in Russia and the revolution of 1949 in China.” Surveys also were used to access data of a quantitative nature. The researcher used ethnography given that on daily basis he intermingled with the population under study as a citizen of Harare. Secondary data assumed the leading role in this research as primary data centered much on the sample of the study providing crucial information on the impact of economic sanctions on informal traders in Harare.

3.1 Research Design The researcher used historical analysis, comparative and historical research, ethnography, surveys and case study to take of limitations each method carries. The research used different methods to enhance the validity and reliability of the data collected. The number


of the target groups involved in the study required cross examination of methods. Observations were made and interviews carried out. Tull (1993) defined research as the specification of procedure, for collecting and analyzing data to assist in identifying a problem or opportunity Gilbert (1998) define research design as a framework for a study that directs the collection and analysis of data Martin (1991) suggest that the researcher should have the following questions • • • Should we choose explanatory, descriptive or casual research approach? What sampling techniques to use? What research instruments to use?

 Explanatory approach can be used when one is seeking insight into the general nature of the problem, the possible decisions, alternatives, research variables that need to be considered Kummar et al (1999)  Descriptive approach Martin (1991) this approach is used when one is researching on large proportion of the problem. The purpose is to provide an accurate snapshot of some aspects of the research environment.  Casual approach Cooper (2001) argued that this approach is used when one variable or problem is preceded by the other and that research will examine factor by factor to see which one is the root of the problem The research adopted explanatory research approach because there was an insight to the general nature of the problem.

3.2 Subjects


The sample elements for the study were various stakeholders who included informal traders (Owner Managers) and their Customers. All respondents are in Harare selected based on accessibility and convenience of finding individuals from the population as the research required information, the subjects of the research were chosen for various reasons 1. Informal traders / Owner Managers depend on the performance of the economy, their informal businesses to a large extent are affected buy changes in the economic, political, social, technological and legal environment prevailing. Therefore they are affected by the economic sanctions. 2. Customers of the informal traders sustain their livelihood through availability of products and services that they can get from the informal businesses. Customers are the recipients of products and service, when the informal businesses are underperforming the customer are struck by a very serious dilemma. Therefore, the impact of sanctions affects their survival. 3.2.1 Population Boyd et al (2004) defined population as a universe, which is universal group of individuals that have one or more characteristics in common, that are of interest to the researcher Martin (1996) described population as the aggregate of all elements where information is to be collected . The population of the research was:i. ii. All existing informal traders / owner managers in Harare All existing informal business customers

3.2.2 Sample


Dibbs (2003) defined a sample as a limited number of units chosen to represent characteristics of the total population. It is a fair representation of all members of the union: Existing Owner Managers / Informal traders Existing Customers who buy from informal businesses 3.2.3 Sampling techniques It is an act, a process or a technique of selecting a suitable sample or representative part of the population for the purpose of determining parameters or characteristics of the whole population (Webster 1995), Kurper (1997) identify two methods of sampling available to the researcher. Probability and non probability sampling methods the research used both methods for new various reasons as discussed below I. Probability sampling Wenger (1991) states that, probability sampling includes all selection methods where the observations to be included in a sample have been selected on a purely random (chance) basis from the population selection was independent from the researchers influence the researcher used the following probability sampling techniques  Stratified sampling Dibbs (2003) the method in which the population is divided according to a common characteristic or attribute and a probability or random sampling is then conducted in each group. Informal traders were divided into different sectors based on the nature of informal business activity they undergo; thus, informal engineering, clothing retailing, carpentry, vegetable markets, and vehicle repairs and services. From those sectors probability sampling was conducted within each sector. Fifteen informal traders from each sector were 60 150


selected to make a total sixty. This is to ensure that each and every influential part of the informal businesses is represented.  Proportional stratifies sampling It is a sample method used when the cases of the population falls into distinctly categories or stratus of a known proportion. The researcher employed this technique for selecting informal business customers. Information from informal traders indicates that their customers come from divergent social classes, construction and other commercial firms in Harare. 70% of informal business customers come from individuals in societies within Harare, 20% come from construction business in the formal sector, 8% come from commercial enterprises e.g. furniture shops, and 2% come from a cross sectional social background in Harare. Probability sampling was conducted in each category of customers, fair proportional representatives were chosen from each group, giving priority to individual customers as they constitute a large proportion of the informal traders’ customers.

II. Non probability sampling Martin (2003) defines it as the type of sampling that does provide every item in the universe with a known chance of being included in the sample selection process is subjective. The researcher used the technique Theoretical sampling


Is a useful technique of getting information from a sample population that you think know most about the subject (Williams) 2001 the researcher used this technique to select informal traders representatives for in-depth interviews. The researcher identified owner managers as essential and assuming that they understand the implications of economic sanctions and that they are aware of ZIDERA.

3.3: Research Instruments Robinson (1993) described research instruments as techniques or tools used to obtain data from the respondents’. The researcher used questionnaires and in-depth interviews as tools for collecting primary and secondary data. a) Primary data It is the original data generated for solving the problem at hand Wengner (1999) questionnaires were sent to the informal traders /owner managers. In-depth interviews were designed and conducted for informal traders so as to collect relevant data for the first time. b) Secondary data It is data collected and processed by others for the purpose other than the problem at hand these include economic reports, informal business coverage news in the print media, health surveys, fiscal policy reports, legal documents, monetary statements and various reference from authors that were not compiled for the problem at hand. Secondary data might not be specific, it may be obsolete and it is difficult to asses’ data accuracy.


Asking questions is a method of collecting data both quantitative and qualitative information. The researcher used the following instruments to ask questions and collect data. 3.3.1 Questionnaires Using questionnaires enables one to organize questions and receive replies without actually talking to every respondent Zimkund (2000) defined questionnaires as self administered questions that are filling in by respondents more than the interviewer Questionnaires for informal traders were drafted and sent through hand delivery for the following advantages. Questionnaires are less expensive; they reduce bias by asking structured questions and have great anonymity. Data can be collected from a much larger sample; more accurate responses save a lot of time and allow easy processing and analysis of data that does not require highly trained staff to administer. However, questionnaires are not suitable for questions requiring probing to obtain adequate information some questionnaires may not be answered or returned and can provide false data resulting in wrong findings. The researcher designed the questionnaire in a way to encouraged respondents complete them.

3.3.2 Depth interviews Dibbs (2003) defined depth interviews as a lengthily one to one structured interview examining in detail the interviews view about the subject. The researcher designed


and conducted depth interviews for informal traders. Data was obtained and the researcher also noted non verbal expressions that could increase the quality of data. It was less expensive and the rate of response was significantly high up to 100%, the process is time consuming.

3.4 Data collection procedures The researcher conducted a pilot study before the actual implementation of the research plan. This means the researcher sent questionnaires to a small fraction of people; this was done in order to improve the quality of the questionnaire. Finally, the researcher had to prepare some questionnaires for informal traders and their customers before being posted to intended respondents. All questionnaires were hand delivered to reduce cost and unnecessary delay as postal system is still struggling as result of sanctions. Hand posting has the benefit of encouraging to respondents to complete and return the questionnaire. Questionnaires were answered and the researcher followed up to collect and got 71% of the questionnaires. Owner manager selected for interviews and all were willing to participate as the exercise took a short to complete.

3.5 Data Analysis, Presentation and Discussion Every questionnaire passed through data validation and editing stages were curried out where the researcher checked if all questions were consistently completed with


instructions properly adhere to. Leedy (1993) observed that data assumed an added dimension when arranged in some configuration, order, alphabetical, categorical, ascending and descending the researcher used percentages method, that is converting the qualified data into percentages for easy analysis, extracted data was also presented using tables and graphs.

3.6 Chapter Summary This chapter focused on research methodology of the study. It covered issues such as research design, research subjects, research instruments, data collection and procedures as well as data analysis. The next chapter IV: Data Analysis, Presentation and Discussion, giving results from the entire research process and their interpretations.

This chapter gives presentations, the analysis and discussions of research findings to provide the policy makers with first hand information on the impact of ZIDERA on


Zimbabwe’s informal businesses. For the purpose of this research the study focuses on informal traders in Harare the capital city of Zimbabwe. Although the population census in Zimbabwe was last carried out in 2002, it is the researcher’s conviction that the

information is still valid today. A total population stood at 11 631 657 the whole country, Harare province contributed the largest number of people amounting to 1 896 134. These represent 16.3% of the total Zimbabwe population.

The major objectives in the study were; to find out the major sectors of the informal traders highly affected by sanctions, to establish the major sanctions linked challenges of informal traders, to find out the importance of informal businesses on economic development in Zimbabwe, to establish the response strategies by informal traders on ZIDERA effects and to establish opportunities and ways of improving informal businesses in Harare.

The findings are presented from the responses solicited through questionnaires and depth interviews carried out on informal traders and their customers in Harare at the following areas:- Mupedzanhamo flea-market, Mukuvisi phase 1 (Siyaso) in Mbare high density suburb; Glen View Factory shells; Kambuzuma Vegetable markets, street vendors; Gazaland, Hardware in Highfields high density suburb. 4.1 Demographics of Respondents This section presents respondents’ age, sex, and their informal business activities, qualifications as well as their relationship to the informal trading as owner managers or as customers. Their experiences in the informal sector set up.


4.1.1 Age of Respondents The results below were obtained from informal traders ‘owner managers’ and their customers. 4.1 Age Distribution Age Owner Manager No 5 20 22 7 6 60 % age 8.33% 33.33% 36.67% 11.67% 10% 100% Customer No 20 40 55 20 15 150 % age 13.33% 26.67% 36.67% 13.33% 10% 100%

18 – 24 years 25 – 34 years 35 – 44 years 45 – 54 years 55 and above Total

Source: Survey Report 2009 In our societies from time immemorial, it is held that cumulative knowledge of political, socio-economic environment of Zimbabwe and other economies e.g. pre-independence disturbances both in Zimbabwe and South Africa are understood better by the age groups as given in the table above. Most of the informal traders 36.67% are found in the age group of 35 and 44 years, while the majority of their customers are in the age group 35 and 44 years. This shows that many young people have joined the informal sector in recent years than any time before. Although those in the Middle Ages dominate informal business activities whether as traders or as customers it is increasing evident that young people are no longer despising the informal sector and its products and services the constitute a stargaring 26.67%. Before the imposition of sanctions by Europe and United States of America young men and women used to deride the informal sector as primitive. 4.1.2 Sex and Gender


The table below shows gender results obtained from the research 4.2Sex table Sex / Gender Owner Manager No 35 25 60 % 58.33% 41.67% 100% Customer No 64 86 150 % 42.67% 57.33% 100%

Male Female Total

Source: Survey Report 2009 The table indicates an increase in male informal traders at 58.33% a trend contradictory to previous research reports that suggested female dominance in the sector now standing at 41.67%. However, approval rate of informal business products and services appear to favour female at 57.33%, perhaps this is primarily because women are price sensitive than men who constitute 42.67% of informal business customers. More so, it is indisputable that women play an important role of providing for the family than their male counterparts at 57.33%, hence they out number male customers trailing with a difference of 14.66%. The perception that only women participate in the informal is no longer relevant in Zimbabwe as many men are now occupying a sizeable industrial and commercial space competing with women and the vulnerable groups in our society. See the two pie charts below. Fig 4.1 A Pie Chart of Informal traders both sexes


Owner Manager No

Female, 25, 42% Male, 35, 58%

Male Female

Fig 4.2 A Pie Chart of Customers of informal business products
Customer No

Male, 64, 43% Female, 86, 57%

Male Female

Source: Survey Report 2009


A pie chart has been used to provide clear data presentation for ease of understanding to all stakeholders. One of the respondents said men, know where to go when making applications and can bulldoze when their demands are not met. They can use all methods and tricks to get stalls. The Herald of (3 August 2009), where it was report that Harare Mayor Mr. Muchadeyi Masunda said the city was moving to evict “the well-heeled former commissioners, politicians and business executives from the markets”. The Mayor further stated that, “Certain well-connected individuals have up to 10 markets stalls. They are making money at the expense of the genuinely need cases. They are sub-letting these stalls.” In the same report it was noted that at Machipisa Hardware Market that has 62 stalls a city audit established that there are 800 vendors renting stalls from individuals at US $30 per sub-division.

4.1.3Academic and Professional Qualifications of Respondents Qualifications Owner % 48.33% 35% 11.67% 5% 100% Customers No 49 38 30 33 150 % 32.67% 25.33% 20% 22% 100%

Managers No ‘O’ level and 29 below ‘A’ level certificate Diploma Degree / 21 7 and 3

above Total 60 Source: Survey Report 2009

The qualifications place one in a particular social classification where those holding degree and professional qualifications are perceived to occupy the upper class on social


stratification. However, such status have so far been defied due to incriminating economic sanctions bedeviling Zimbabwe as can be seen on the table to the extend that 22% of degree and above are buying their products from the informal sector. Although 48.33% of the informal traders represent those who have attained ordinary level qualifications and below, it is interesting to not that those who have advanced level and Certificate level are making inroads in the informal sector. This analysis is important since perception is that decision making and opinion could be largely influenced by education levels.

4.1.4 Type of informal Business Business Owner Manager No 10 5 14 25 6 60 % 16.67% 8.33% 23.33% 41.67% 10% 100%

Engineering Vegetable vendor Clothes retailing Carpentry Vehicle repairs Total

Source: Survey Report 2009 Importance of studying a cross sector is that there is a diversity of respondents enables various views to be collected from respondents.


4.1.5Number of Employees Employees Owner % 81.67% 8.33% 3.33% 5% 1.67 0% 100%

Manager No 0 -5 employees 49 6 – 10 5 employees 11 – employees 16 – employees 21 – 15 2 20 3 25 1

employees 26 and above 0 Total 60 Source: Survey Report 2009

Fig 4.3 Representing Number of Employees


60 50 40 30 20 10 0
ye pl e s 16 15 oy – em ee s p 21 20 e lo y m ee – 25 plo s em ye e 26 plo s ye an d es ab ov e

4.1.5: Number of Employees Owner Manager No 4.1.5: Number of Employees Owner Manager %

em -5 0 6 –

Source: Survey Report 2009 The majority of informal traders do not employ many employees as can be seen on the diagram above 49 Owner managers employ less than 6 people suggesting that their operation is informal. Definition of small micro, and medium enterprise as defined in the Ministry of Small to Medium Enterprise Development policy document is defined by reference to the: 1. Number of employees 2. Total net assets 3. legal structure “Enterprises that are not formalized through a legal structure such as the registration in terms of the companies Act or a partnership agreement, will be referred to as small micro-enterprises”




pl o

Indicative Parameters 57

4.1.7 Indicative parameter tables Sector No. of people Asset base Legal structure

Micro-Enterprises All sub-sectors Less than 5 Not relevant informal

Source: Adapted from the Ministry of Small to Medium Enterprise: policy document. All findings were solicited using the above criteria to determine the informality of business. This is very important because time is not wasted on the businesses that fall outside this standard. The information represents the area of study. 4.1.8 Major sectors of Informal Traders Affected by Economic Sanctions Sector Owner Manager No 27 22 19 % 45% 36.67% 31.67% 83.33% 21.67% customers No 59 47 80 79 39 % 39.33% 31.33% 53.33% 52.67% 26% -

Engineering Vegetable vendors Clothing

retailing Carpentry 50 Vehicle repairs 13 Total Survey Report 2009

4.2.1 Sector ‘A’ Informal Engineering businesses affected by Economic Sanctions The operations of wilders and brick molders are affected by USA financial sanctions which targets the financial institutions and trade. Since 2002 Zimbabwe started to


experience foreign currency shortages resultantly crippling the normal production in the formal sector the main source of raw materials for the informal engineering businesses. On 25 July 2009, USA slapped Zimbabwe Iron and Steel Company with sanctions further damaging the already ailing businesses. As specified in ZIDERA the international financial institutions and any development or reconstruction bank is prohibited to extend any financial assistance to Zimbabwe. Informal traders usually access soft loans through Small Enterprise Development Corporation (SEDCO) and RBZ.

4.2.2 Sector ‘B’Clothing retailing Clothing retailer are not spared on the negative effects of sanctions as the local clothes manufacturers no longer produce as before. Informal traders reported that they are now depending on imports from South Africa. They complained that it remain difficult for them to access foreign currency in Zimbabwe so that they travel to other countries to buy clothes for sale. They said their livelihood depended on their informal business, “now we can not send our children to school, we can not afford costs of health and food as before.”

4.2.3 Sector ‘C’Carpentry Affected by Economic Sanctions At Glen View factory shelves which were built by the government in 2005 for the informal carpentry businesses, owner managers raised complaints about the serious problems caused by sanctions here are some of their concerns:-


• •

Lack of foreign currency in the economy. Low stock turnover as a result of poor incomes earned by those in the formal sector who are their potential customers.

None availability of raw materials as the timber industry and Zimbabwe Iron and Steel Company are operating below capacity as a result of sanctions.

High prices of raw material as they are sourced in the paralmarket hence increasing the cost of production.

• •

Suspended operations due to increased labour turnover as they fail to pay them. Failure to access soft loans for capital injection.

4.2.4Sector ‘D’ Vehicle Repairs adversely affected by sanctions In this sector they reported that their businesses were heavily affected as their suppliers’ closed shop. They informed the researcher that in 2008 there no spare parts in the formal market, they depended on imported spare parts which are pegged on inflationary prices. Here are some of the problems they are facing:• • • • • • Failing to replace worn-out machinery due to the foreign currency shortages Electricity load shedding Reduced business High rentals in foreign currency Lack of demand for their services due poor economic performance. Skills flight for greener pasture out side Zimbabwe.

4.2.5 Sector ‘E’ Vegetable markets/ Vending The vegetable markets respondents highlighted their concerns as follows:-


Health implications of vegetable vending business created serious challenges our business as the Harare Municipality could no longer remove garbage near our vegetable market citing lack of foreign currency to repair refuse collection vehicles.

Cholera out break and poor sanitary system across the whole city impacted negatively on our business.

Lack of trust from our traditional customers as many people feared for their dear lives as many cholera cases and deaths were reported in the mass media.

Unaffordable food prices against a background of poor incomes.

4.2 Number of cholera cases by provinces in Zimbabwe, up to 30th May 2009 Province Mash West Harare Manicaland Masvingo Mash Central midlands Mash East Mat South Mat North Bulawayo Source: Survey Report 2009 The worsening water coupled with lack of water purification chemical affected vegetable vendors in Harare. Respondents explain to the researcher that water is crucial to their daily business therefore the breakdown of the economy impacted heavily on their lives. See the bar char below. Cases per Province 22,74 19,517 13,589 11,639 10,390 7,149 6,525 5,257 1,166 445


Fig 4.4 Cholera cases as health system deteriorated due sanctions.


4.3: Number of cholera cases by provinces in Zimbabwe, up to 30th May 2009 Cases per Province 22,74

as M M M Bu as m h at at as C id la h So en N la wa vin Ea or nd ut tra yo go st th h s l

4.3: Number of cholera cases by provinces in Zimbabwe, up to 30th May 2009 Cases per Province 22,74


M M Ha ra re an ic al an d





Source: Adopted from WHO | Zimbabwe Health Cluster Bulletin No. 14 16 -31 May 2009.

4.3.2 Harare Nutritional Deficiencies 2000 to 2008 (Official data)


Year 2000 2001 2002 2003 2004 2005 2006 2007 2008

Kwashiorkor 00 959 00 683 00 732 00 834 10 375 16 375 14 992 12 252 11 098


04 343 05 363 04 701 03 741 03 393

Pellagra 00 080 00 040 00 055 00138 4 419 05 538 05 133 04 812 04 313

Other 00 961 00 608 00 517 00 839

Source: Survey Report 2009 (Ministry of Health)
The effects of economic sanctions can no longer be interpreted in isolation to reality as can be seen on the table. The nutritional deficiencies in Harare rapidly increased from 834 cases in 2003 to 10 375 in 2004. The trend worsened in 2005 where it reached 16 375 before it took a downward trend from 2006 to 2008. The downward trend should not be misread to mean positive changes in food availability as the years 2006, 2007 and 2008 respectively were most difficulty years after independence. Therefore, the downward trend signified break down of health system as many health professional left the country to the Western countries hence reduced surveys as a result manpower constrains. Some will argue that sanctions were not the only cause of nutritional deficiencies suggesting that drought also played its part on this. However, the impact of drought could not have serious implications if the were no sanctions imposed on the country as the country is rich in other natural resources which could have earned the country foreign currency. This was going to counter the


effects of drought as government could use the foreign currency to import food and medicine.

4.3.2 Ranking of major informal traders affected by economic sanctions Sector Rank Owner Rank Manager A B C D E (xi) 1 3 5 6 4 Customer (yi) 5 3 7 6 2 -4 0 -2 0 2 16 0 4 0 4

24 Spearman’s correlation coefficient rs = 1 _ 6 E dί² n(n² - 1) =1 – 6( 24 ) 5(5)² – 1)

= 1 – 144 5(25– 1) = 1 – 144 120 = 1 – 1. 2 = -0.2
There is a low negative relationship between Owner Managers and their Customers within the informal sector on matters the effect of economic sanctions as they are affected in a different ways. Their perceptions on sanctions impact differs slightly.

4.4 Major sanctions linked challenges of Informal Traders. Sector Major percentages


sanctions No % Formal market 71.67% system decline Liquidity crisis 61.67% in economy Raw material 68.33% shortage 66




system decline Food shortages 53.33% Health system 78.33% -

decline TOTAL Source: Survey Report 2009

Fig 4.5 Indicating sanctions linked challenges on informal traders
Major sanctions linked challenges of Informal Traders. percentages % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Formal market Liquidity crisis in Raw material Transport system Food shortages Health system A B C D E G

Major sanctions linked challenges of Informal Traders. percentages %

Source: Survey Report 2009 The illustration shown in the graph provides a level of economic strangulation on the activities of informal business. All respondents across sectors in the informal businesses revealed that brunt of ZIDERA weighed heavily on their socio-economic lives. 4.4.1 Formal Market Decline


Respondents stated in the questionnaires the following challenges:• • All formal businesses directed the products to the paralmarket/ black market Banking system failed to provide services to the public directing their business activities on the streets of Harare while queues formed as early as 03:00 every business day. • Basic commodities were totally removed from supermarkets, but easily available in abundance on the pavements out all major super markets in Harare at high prices. 4.4.2 Cash Crisis The respondents indicated in their various responses that they found it very difficult to keep their business activities due to incessant cash problems in the economy. The increasing prices of basic commodities against cash withdrawal limits and crippled social fabric. Here are some their responses:• • • • • Going for week out money to feed their families Absenteeism from work due to lack of cash Prohibitive cost of transport Hunger Reduced income as result of cash shortages

4.4.3 Raw Material Shortages Our operations came to a standstill as all supplies stopped production citing lack of foreign currency. This created a very serious situation for all informal traders resulting in many of us adopting cross- border trading. Below are some of the serious problems encountered:-


• • • • • •

Business closures Reduced working our and low business activities Redundancy Failure to honour business financial obligations Increased rentals 4.4.4 Transport System Decline

Many people who were interviewed describe their transport woes with chilling narrations, Some went on to say these so called targeted sanctions are really targeted to the poor and vulnerable groups in Harare. They highlighted their transport challenges as listed here:• People made to pay twice on a single trip as some commuter omnibus were not keen to complete their designated distances. • • None availability of transport due to fuel shortages Unstable transport fares

4.4.5 Food Shortages / Crisis Although respondents noted some improvement in supply of basic commodities they are not happy with the prices which they said are still beyond the reach for the poor who are in the majority in Harare. They indicated that the most difficult years on food shortages that heat them were 2006 through 2008. Some claimed that they went through a period without a single meal raging from two days to three in some instances. Below are some of the difficulties they claim to have experienced:• High prices on basic commodities on the black market as all major and minor suppliers of these goods no longer stocking goods • Malnutrition heat hard on the poor 69

• • • • •

Wasting Stunting Reduced production as many ours are spent looking for food Ill health due starvation. Breakdown of their social and cultural system.

4.4.6 Health System Decline The economic sanctions eat inside the economic body health services deteriorated, government hospitals ran out of medicine coupled with hordes of health professionals who decided to leave employment, the situation turned serious. • • • • • • • • Private health services became unbearable to the vulnerable in Harare Reduced life expectancy Overwhelming loss of lives due to the shortages of medicine Doctors and nurses endless strike actions Derail costs increased Work stoppages Reduced incomes Absenteeism

4.4.7 Education System Stagnation Near total collapse of education as all teachers in public school completed over a year and some months on strike demanding better salaries. Informal traders whose businesses were negatively affected by economic sanctions were on the receiving end.


• •

Failed to send their children private schools Results for grade 7, forms 4 and 6 were delayed to lack of funding as makers demanded payments in foreign currency.

Great exodus of qualified teachers into other countries for the perceived greener pastures.

4.5 Importance of Informal trading Businesses on Economic Development in Zimbabwe Sector benefits A B C D E F Total Source: Survey Report 2009 Areas of percentage

importance Supply of 98% products Source of 94%

employment Market for 25% other firms Area innovation Source income National revenue of 59% of 95% 15%


Fig 4.6 Showing Importance of Informal Business
120% 100% 80% 60% 40% 20% 0% Area of innovation Supply of products Source of employment Market for other firms Source of income National revenue Series1







Source Survey Report 2009 4.5.1 Supply of Products The informal businesses in Harare provide 98% of their customers with low priced goods when compared to the prices one can find in the formal sector. Products on these markets range from furniture, hardware, clothing, vegetables, engineering services, vehicle repairs, food and brick molding. 4.5.2 Source of Employment Formal employment is currently estimated to be at 0.06% due to the impact of economic sanctions imposed on Zimbabwe by EU, Britain and the United States of America in 2000 and 2001 respectively. This prevailing condition leaves 94% of the majority who are economically active with little choice but to engage in the informal economy.


4.5.3 Market for Other Firms Products such as furniture, window frames, and vehicle repairs from the informal markets 25% find their way into the formal market. Furniture formal businesses are very familiar with a renowned furniture manufacturing establishment in Harare’s Glen View suburb shelf companies. Also construction companies get the building materials from these informal hardware shops in home industries. 4.5.4 Area of Innovation Many school leavers who find them- selves unemployed as a result of poor economic performance end up joining the informal trading were they eventually acquire skills in different fields. Many of them, at list 59% become innovative entrepreneurs, able to generate income and create employment for others. 4.5.5 Source of Income Informal businesses create incomes 95% for both owner managers and their employees. The income help the keeping their children in school. Informal traders are motivated due to continue running their businesses hence creating opportunities of business growth. 4.5.6 National Revenue A large section85% informal sector does not maintain proper books of accounts; therefore they do not currently contribute meaningfully to the national revenue at most 15%. There is need for policy makers to take advantage this potential revenue base currently under utilized.


However, there are some among informal businesses who are currently paying taxes to ZIMRA.

4.6 Response Strategies by Informal Traders on ZIDERA Effects Strategies Owner manager Product diversification Increased stalls Longer 49 46 57 81.67% 76.67% 95% 71.67% 65% 68.33% %

working hours Cross border 43 trading Soft loans 39

from RBZ Illegal money 41 market transactions Illegal foreign 40 currency exchange Total -



Source; survey Report 2009

Fig 4.7 Response Strategies on ZIDERA


% 1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 49/60 Product diversification 46/60 57/60 43/60 39/60 41/60 40/60 % 81.67% 76.67% 95%

71.67% 65%


Increased Longer Cross Soft Illegal Illegal stalls working border loans money foreign hours trading from marketcurrency RBZ transactions exchange

Source: Survey Report 2009

4.6.1 Product diversification as a strategy


Informal traders adopted new marketing strategies to counter the effects of economic sanctions as increased by 81.67% variety of products which they were not used to before the onset of sanctions. People who used to just selling vegetables had now added clothing retailing. Those who used to service vehicles were now adding basic commodities and fuel.

4.6.2 Increased Market Stalls A case in point appeared recently in media where a number of the informal traders were found to own 10 stall and sub-let to illegal vendors and charging them US$30, 00 per month each stall reported to be rented by 12 illegal vendors. This prompted the Harare Municipality to revisit their By-laws. Overall increase stands at 76.67%. 4.6.3Longer Working Hours Informal traders adopted 95% long working ours as a way of increasing sales even though at times no real sales would be realized as a result of harsh economic environment prevailing in Zimbabwe. This also presented unprecedented social cost as families find themselves tied to business those other family commitments. Health environment became uncritical vendors deposits un- wanted garbage in the vicinity of their operating environment. This posed a lot of health challenges as Harare City Council did not collect refuse for long periods.

4.6.4 Cross Border Trading


Cross border trading used to be the preserve of the young age group in Zimbabwe; however, as the population of informal traders felt the heat of economic sanctions they were left with no choice but to follow the foot step of their children by about 71.67% in order to survive. This helped a lot of people in the country as basic commodities started to come in though at high prices. Products like soap, sugar, meali meal, salt, cooking, sanitary and many other basic products were not in the market including baby feeding products. So these were imported by the informal traders. 4.6.5 Soft loans from RBZ The Reserve Bank of Zimbabwe helped small micro enterprises approximately at 65% access to soft loans as revolving funds at concessionary rates in order to promote production of basic goods. Some of the informal traders benefited and it helped in the improvement of their businesses.

4.6.6 Illegal money market transactions (burning money) There was 68.33% rampant illegal dealing involving not only informal traders but also individuals and the formal market comprising banking institution and Zimbabwe Stock Exchange. An individual could be heard boasting that he or she is sextillion rich without having done any productive performance except giving a colleague working at CFX Bank or POSB US% 5,00 .

4.6.7 Illegal Foreign Currency Exchange


At this juncture, the economic was evidently controlled by excessive greed, corrupted mindsets and chicanery. It was very ease to get money from the streets as it was difficult to access cash in the formal banking system. When the country was reeling under the scotching heat of economic sanctions, 66.67% of ordinary people were stashing foreign currency at road port and other numerous streets in Harare. The foreign currency was used to buy out the local currency at hyperinflationary pricing system. Some informal traders claim that they were trying to burst the British led economic sanctions but this had a very negative effect on the overall performance of the economy.


4.7 Opportunities and Ways of Improving Informal Business in Harare 4.7.1 Opportunities Sector Informal Engineering opportunities • Increased business opportunities as big organization in the formal set are operating below capacity hence create market informal engineering products • Reduced competition from established companies who have shut down operations • Informal Clothing Retailing • • • Business growth as their products are cheaper in prices that those from the formal market. Reduced competition from established clothing manufacturers Low operational cost Flexible business as they take their products to customer’s door steps Informal Carpentry • • • Opportunities to enter in mainstream retail business. Business growth as they are now supply the markets previously dominated by established companies Higher profits as the market confidence has improved since they remained resilient during a period characterized by harsh Informal Vehicle Repairs • • • economic environment Multi currency system introduced the government just before the inclusive government came in existence, enables to access spare parts at reasonable prices Increased businesses as customers are able to access cash. Business boost as a result of the fall in cholera outbreak.



Vegetable Markets

Improved income as a result can afford to look after their children.

4.7 Ways of improving informal business in Harare  Harare Municipality should enforce City By-Laws in order to bring sanity in informal people’ markets  Establish proper market structures to reduce over crowding which pose health challenges  Improve informal businesses by providing environment management services consistently  Ministry of Small to Medium Enterprise Development should provide training in business management and accounting so that the informal business can grow into big organizations. The is need for leadership training so that the informal traders can improve the leadership skills  Informal traders who are in the industrial and commercial business need financial assistance in the form of capital injections for them to grow into sustainable business entities.  Government policy direction should put informal sector on its centre of economic development. Government should put more resources aimed at empowering the country for a high level of self sustenance. 4.8 Chapter Summary This chapter looked at data presentation, discussion and analysis of the findings. There researcher discovered that the United States of America ‘s


sanctions Act called Zimbabwe Democracy and Economic Recovery Act of 2001 brought with it a lot of suffering on the informal traders and their families. Their businesses were severely affected across their all sectors within the informal businesses. Here are some of the major findings; lack of raw materials as formal market system declined, reduced business activities as cash crisis continue to exist, transport problems affected the operations they are failing to collect raw materials a number of times as a result of transport, persistent food shortages and high food prices, cholera and the malfunctioning public health institution and the prohibitive prices charged in the private clinics and hospitals heavily affected their operations. Therefore the impact of sanctions on informal businesses remains a big challenge as their effects are hindering progress despite response strategies adopted by the informal businesses where they extended working hours per day, engaged in foreign currency illegal transactions, also involving themselves in illegal money market transactions (burning money) through financial institutions and the Zimbabwe Stock Exchange, they also diversified their products where they became cross border traders selling food staffs. The focus is now on chapter V: Summary, Conclusion and

Recommendations, which give the focused version of the research results and procedures.



This chapter marks the final part of the research project it summarise the research by revealing the topic focus, reasons for study, methodology and limitations of the study.


Major findings and recommendations are also given. 5.1: Summary The research was focused on the impact of economic sanctions on the informal businesses in Harare Zimbabwe. It looked on the major sectors of informal trading affected by the sanctions and the major sanctions linked challenges of the informal traders. This project also wanted to unearth the response strategies adopted by informal traders to defend themselves against the sanctions. However the research has removed myth surrounding the issue of EU, Britain and United States of America illegal economic sanctions to the extent that they are targeted against 135 individuals in Zimbabwe government is replete with misrepresentations of facts on the part these countries. All black Zimbabwean are the targeted people. The research methodology; informal trader in five diverse sectors were studied and questionnaires, depth interviews, case studies, secondary data was employed as tools of this research to be completed. The use of the internet also helped in accessing relevant data. The researcher experienced some difficulties in the field as some of the targeted informal traders failed to return the questionnaires prejudicing the sample under the study of much needed research data by 29%. Only 71% of the questionnaires were returned. This research was curried out under very difficult conditions as work commitments interfered heavily. Financial constrains also affected this project as the material required lots of cash which I did not have.

5.2: Conclusions


5.2.1 The major sector of informal traders highly affected by sanctions are; informal engineering businesses, informal clothing retailing businesses, informal carpentry businesses, informal vehicle repairs and services businesses and vegetable markets / vendors. All were affected economically and socially. They suffered lost production due to the lack highly strategic resources such as; operating capital, cash crisis across the entire economy, raw material, dwindling customer base, suppliers, transport, health, food and nutrition, water and sanitation, power cuts, education and accommodation. They also lost critical skills as a result of preventable diseases due to lack of medicine and endless strikes by doctors and nurses. Informal sector was affected by the closure of steel manufacturing organizations. They could not find raw materials in the local markets as they used to do before the imposition of sanctions. They suffered seriously on financial requirements of their business as hyperinflation was destroying their working capital. The business was reduced as their customers no longer afford to buy because of ever increasing prices of goods. Skills fight some of their workers left for South Africa for greener pastures. 5.2.2 The researcher wanted to find out what challenges informal traders faced in their businesses as a result of economic sanctions Informal traders get these second hand cloths from Zambia, so were failing to raise foreign currency to travel. 5.2.3 The major sanctions linked challenges affecting informal traders were affected by shortage of raw materials as timber processing companies had closed down their business. Their operations were crippled by severe cash shortages, they reported that much of their time was spent looking for money.


Their operations were affected by increased staff turnover. The were failing to send their children to private schools as public school teachers engaged in endless strikes as a result of harsh economic conditions. 5.2.4 The importance of informal businesses on economic development in Zimbabwe; they are suppliers of products and services to the wider society, an ever growing source of employment, supply to other firms in the formal market, an area of innovation on school and college leavers, a source of income to owner managers, employees and their families, an untapped source of national revenue. Informal sector is the future of big business development of the indigenous people of Zimbabwe. 5.2.5 The response strategies by informal traders on Zimbabwe Democracy and Economic Recovery Act 2001(ZIDERA) environment. The informal traders realized that there was nothing positive for them in this punitive imperial document, that democracy; economic recovery could not translate into empowering them as the economy was already in their hands. There fears that the document was an instrument of a deadly economic warfare became clear as the following developments keep raveling before them Endless cross border trips in order to survive as there was no basic commodities in the city of Harare, enduring longer working hours, engaging in illegal money market transactions (burning money), doubling in illegal foreign currency exchanges in many streets of Harare led by road port area, illegal increase of market stalls in highfields suburb and illegal dealing involving financial institutions and Zimbabwe Stock Exchange and attempts to diversify products are some of the strategies adopted by the informal businesses.


5.3 Recommendations 5.3.1 Informal traders in Harare require great support from policy makers so that they can contribute meaningfully to the economic development. The environment of the informal businesses should bias towards growth in order to create real economic empowerment. There is need for the government to invest in the informal sector involved in all types of business including those involved in mineral extraction they need to be given some licenses to operate legally. Zimbabweans are hard working people they are self motivated only what they need is to be encouraged to open bank accounts and receiving training on how to manage their small business. 5.3.2 The government should establish small business development bank which should provide a strategy for economic emancipation taking addavantage of strategic mineral reserves endowed in our country. 5.3.3 Informal businesses are profitable, need proper management so that the untapped revenue can start to flow into the government coffers. This will reduce over reliance on multinational organizations which abandon the country for adopting developmental policies which they misinterpret deliberately to stifle noble policies of national interests. 5.3.4 The is need for the informal traders to establish products exhibition centre where they can make once off sales, this should be guided and controlled by central government to monitor the quality of products. The informal traders who produce quality products should be encouraged registering with Standards Association of Zimbabwe. The products can export to earn the country foreign currency if will managed. 5.3.5 Registration of informal traders should not be prohibitive; however, there is need to keep tracking these businesses through inspections their performance.


5.3.6 There is need for proper storage facilities at strategic business areas, meant to protect informal traders’ goods from rain, sun bleach and theft. Furniture products produced in Glen View is of good quality it requires shelter so that it does not affected by both human and natural causes. 5.3.7 There is important that stereotyping of informal traders as people who not educated be campaigned against as the majority of them now are school leavers who have acquired academic and vocational qualification. Although some of informal traders might not have Degrees or Diplomas their skilled and literate. 5.3.8 The informal traders should be given legal protection against formal organizations who exploit informal traders through corruption. 5.3.9 The is urgent need for media organizations who took a leading role to campaign for the unilateral imposition of sanctions to swallow their corporate or individual pride and begin to campaign again, now for the removal of these incriminating economic sanctions which happen to know the race to attach in Zimbabwe. The inclusive government’s treasured efforts should wholeheartedly be focused in fighting against dehumanizing economic sanctions targeted at all black people in Zimbabwe since 2000. There is need for the public media in Zimbabwe to broad cast the contents of USA enacted sanctions document so that we do not keep hearing highly ignorant ranting of the so called civil society though they are military out of uniform not NGO but rather FGO (Foreign Governmental Organizations) they have an inherent dislike of peace, harmony, black empowerment for obvious reasons. Keep an endless supply of cheap labour while Britain and its friends enjoy the fruits of peoples’ toil, excessively exploiting the masses and under conditions of undeterred looting of peoples’ heritage in exchange for charity.


The inclusive government should create a forum that consistently educates the public about the real intentions of ZIDERA to the people of this sacred nation. 5.3.10: There is need for informal traders to coordinate their businesses so that they enjoy the economies of scale. They need to identify their strength, weakness, and opportunities threats when arriving on their business decisions.

5.4: Summary This is the last chapter. Topic for further study: “The role of Zimbabwe Congress of Trade Unions (ZCTU), ZANU PF, MDC and Mass media Organizations on the Imposition of Economic Sanctions”


Ghosh.B.N. (1992) Scientific Method and Social Research Sterling Publishers Private Limited Baffour Ankomah (2007) New African Magazine I C Publications Brian Raftopoulos and Ian Phimister (1997) Keep On Knocking Published by Baobab Books box 567, Harare, Zimbabwe


William H. Kaempfer and Anton D. Lowernberg (1988) The Theory of internatiol Economic Sanctions Lisa L. Martin (1993) Credibility, Costs, and Institutions Cooperation on Economic Sanctions Rodrick Mupedziswa and Perpetua Gumbo (1998) Structural Adjustment and Women Informal Sector Traders in Harare Zimbabwe Nordiska Afrikainstitutet Congressional Record, Volume 147 (2001) Zimbabwe Democracy and Economic Recovery Act 2001 Harare Municipality reporter (The Herald August 3, 2009: 1) Council to flush out flea market landlords. Stenlet Kwenda (July 2009: 1-3) Another Murambatsina to be unleashed. http:// allafrica. Com/stories/200907201191.html Manuel Bessler (2004) Sanctions Assessment Hand book Assessing the Humanitarian Implications of Sanctions Produced by the United Nations Office for Coordination of Humanitarian Affairs. Reuters AlertNet – Zimbabwe: Malnutrition among children on the rise Source: IRIN a04999912c52d46cba79.htm (8/13/2009: 1-4) The Financial Gazette (April 23-29 2009: c3 –c4) Dollarisation, Zimbabwe’s Sickly Economy 13739blbcl


Tafataona Mahoso (The Herald May 6 2009) IMF, Donors Trusted Apartheid, UDI but they can’t Trust Gono Interview of Mr Biti by SWR (The Herald May 5 2009) ZDERA blocking IMF, World Bank: Biti Godfrey Sagotora (The Herald July 27 2009) Gono has done a great job The Herald (November 12 2008, p 4) see Comment; Urgent action needed on water crisis. The Financial Gazette (18-24 June 2009) Harare battles to regain sun shine status. Mr L Gwindi interviewed by Brain Mangwende. The Financial Gazette (staff reporter) April 16-22, 2009 p2: GDP drops sharply: Biti Muchengetwa S (2006) Business Statistics Workbook module STWB 102 M Nyoni (2004) Labour Statistics CSO The Financial Gazette (July 9-15, 2009 p11) SA defers special permit for Zim migrants Victoria Ruzvidzo (The Herald 22 November, 2008 p1-2) Four more errant banks kicked out Victoria Ruzvidzo (The Herald 21 November, 2008) RBZ gets tough on bank indiscipline The Herald Reporter (17 December, 2008) Cholera cases on the decline: WHO The Herald Reporter (15 August, 2009) Fulfil your GPA part, MDC told: Masawi The Herald (14 October, 2008 p4) Junious Ricardo Standon :GVOTS victim of global chase game : See letter forex shops ripping us off


The Sunday Mail (November 16-22. p5) Tafataona Mahoso :Rylander justifies external interference: See comment on Cholera out break Zimbabwe Economic Recovery Programme (2009) Harare Tribune Kingdom Financial Holdings Ltd the 2009 National Budget statement Review (The Herald’s issue 11 July 2008 p7: Governor’s interview with Munyaradzi Huni) Ohio State University Duke University online Publication (April 3, 2002) Dean Lacy and Emerson M S Niou: Theory of Economic Sanctions and Issue Linkage Rudy, Mikel 2008: Prospect Theory and Economic Sanctions towards an Economic Coercion: Online htt://.

citation/1/3/7/6/6 pages137661/p7/28/2009 Zimbabwe Democracy and Economic Recovery Act; Statement by the President (December 21, 2008) RBZ Supplimentary Report 30 September, 2008 p5) dealing with Economic Incest: In action is not an option Statutory Instrument 57 of 1983 chapter 214 (Harare People’s Markets) By- Laws, 1983 The Financal Gazette (April 23-29, 2009 pC1) Companies and Markets The Sunday Mail (2-8, 2008 p5) High Density Suburb Residence pay to get Well Water The Herald (21 July, 2008) Zimbabwe A True African Success Story: (Obi Egbuma)


Mikel Drinkwater (3 January, 1989 p287-305) Technical Development Peasant impoverishment: Land use Policy in Zimbabwe’s Midlands Province: Journal of Southern African Studies: Vol 1 No 2 Aguy Georgias (15 September, 2008) EU Sanctions patently illegal