ZIMBABWE OPEN UNIVERSITY

FACULT OF COMMERCE AND LAW

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 (2001 -2009)

BY

GWATIWA JULIUS

(PIN: P0347917 W)

RESEARCH PROJECT SUBMITTED TO THE ZIMBABWE OPEN UNIVERSITY AS A

PARTIAL FULFIMENT FOR THE ACADEMIC REQUIREMENTS OF THE EXECUTIVE

DIPLOMA IN BUSINESS LEADERSHIP (EDBL)

FACULT OF COMMERCE AND LAW

HARARE –ZIMBABWE

2009

1
 ZIMBABWE OPEN UNIVERSITY

RELEASE FORM

NAME OF AUTHOR: JULIUS GWATIWA

TITLE OF PROJECT: 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.

PROGRAMME FOR WHICH

PROJECT WAS PRESENTED: Executive Diploma in Business Leadership

YEAR GRANTED: 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: 3073/6

Kambuzuma
Harare
Zimbabwe

DATE August 2009

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 ZIMBABWE OPEN UNIVERSITY

APPROVAL FORM

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

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 DEDICATION

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

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 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 -

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 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.

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 TABLE OF CONTENTS

CONTENTS PAGE

Cover Page i
Release Form ii
Approval Form iii
Dedication iv
Abstract v
Acknowledgements vi
Table of Contents vii
List of tables’ viii
List of charts ix
List of Appendices x

CHAPTER 1: INTRODUCTION
1.0 Introduction 1
1.1 Background of the Study 1
1.2 Statement of the problem 3
1.2 Research objectives 3
1.3 Research Questions 4
1.4 Significance of the study 4
1.5 Research assumptions 5
1.6 Definition of Terms 5
1.7 Delimitations of the study 8
1.8 Limitations of the study 8
1.9 Chapter summary 9

CHAPTER II: LITERATURE REVIEW

2.0 Introduction 10
2.1 Impact of ZIDERA 10
2.2 The informal trading in Harare: Recent Studies 15
2.3 Escaping harsh Breton Woods Institutions 17
2.4 Zimbabwe Economy turned informal almost 90% 20
2.5 Plight of the Informal traders under a barrage of all types of sanctions 23
2.6 Theoretical orientation of informal trading 25
2.7Theory of Economic Sanctions 26
2.8 Registration of Harare People’s Markets 28
2.9 Informal Traders and the contextual meaning in the research 29
2.0 Summary 29

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 CHAPTER III:

RESEARCH METHODOLOGY

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

CHAPTER IV: DATA ANALYSIS, PRESENTATION AND DISCUSSION

4.0Introduction 39
4.1 Demographics of Respondents 40
4.2 Informal Engineering business Affected by Economic Sanctions 49
4.3.2Nutritional Deficiencies 54
4.5.1Supply of Products 63
4.6.1Product Diversification as a strategy 67
4.6 Ways of improving informal Business in Harare 71
4.7 Chapter Summary 72

CHAPTER V: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0 Introduction 73
5.1 Summary 73
5.2 Conclusions 74
5.3 Recommendations 76
5.4 Summary 78

References 82

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 LIST OF TABLES

TABLE DISCRIPTION PAGE

4.1 Age Distribution 39

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

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 LIST OF FIGURES

CHART DESCRIPTION PAGE

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

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 LIST OF APPENDICES

APPEDIX DISCRIPTION PAGE

1. Questionnaire An assessment of the impact of 77

Economic sanctions
2. Newspaper Cuttings Water woes, Inflation, Sanctions,
Cholera reports, Land Reform
3. Magazine Cuttings letter from Clare Short, sanctions reports
President Mugabe’s statements on sanctions

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 CHAPTER 1

INTRODUCTION

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

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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

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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 socio-

economic 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.

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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.

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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.

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(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

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 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

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 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.

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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.

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 CHAPTER II

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

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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

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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.

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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

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 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

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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)

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 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.

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 • 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

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 • 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

29
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.

30
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,

31
 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.

32
“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.

33
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

34
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.

35
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

36
(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

37
 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

38
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

39
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.

CHAPTER 111

RESEARCH METHODOLOGY

40
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

41
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

42
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. All existing informal traders / owner managers in Harare

ii. All existing informal business customers

3.2.2 Sample

43
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 60

Existing Customers who buy from informal businesses 150

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

44
 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

45
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.

46
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

47
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

48
 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.

CHAPTER 1V

DATA PRESENTATION AND DISCUSSION

4.0 Introduction

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

49
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.

50
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 Customer

Manager
No % age No % age
18 – 24 years 5 8.33% 20 13.33%
25 – 34 years 20 33.33% 40 26.67%
35 – 44 years 22 36.67% 55 36.67%
45 – 54 years 7 11.67% 20 13.33%
55 and above 6 10% 15 10%
Total 60 100% 150 100%

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

51
The table below shows gender results obtained from the research

4.2Sex table

Sex / Gender Owner Customer

Manager
No % No %
Male 35 58.33% 64 42.67%
Female 25 41.67% 86 57.33%
Total 60 100% 150 100%

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

52
 Owner Manager No

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

Fig 4.2 A Pie Chart of Customers of informal business products

Customer No

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

Source: Survey Report 2009

53
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 Customers

Managers
No % No %
‘O’ level and 29 48.33% 49 32.67%

below
‘A’ level / 21 35% 38 25.33%

certificate
Diploma 7 11.67% 30 20%
Degree and 3 5% 33 22%

above
Total 60 100% 150 100%
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

54
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 %
Engineering 10 16.67%
Vegetable 5 8.33%

vendor
Clothes 14 23.33%

retailing
Carpentry 25 41.67%
Vehicle repairs 6 10%
Total 60 100%

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.

55
 4.1.5Number of Employees

Employees Owner

Manager
No %
0 -5 employees 49 81.67%
6 – 10 5 8.33%

employees
11 – 15 2 3.33%

employees
16 – 20 3 5%

employees
21 – 25 1 1.67

employees
26 and above 0 0%
Total 60 100%
Source: Survey Report 2009

Fig 4.3 Representing Number of Employees

56
 60
4.1.5: Number
50
of Employees
40 Owner Manager
No
30
4.1.5: Number
20 of Employees
Owner Manager %
10
0

e
pl e s

25 plo e s

26 plo s
s
s

ov
an ee
– em ee

e
ye

e
em ye

ab
y
21 20 e lo y
oy
o
pl

d
p
em

m
em
-5
10

16 15
0
–

–
6
11

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”

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 customers

Manager
No % No %
Engineering 27 45% 59 39.33%
Vegetable 22 36.67% 47 31.33%

vendors
Clothing 19 31.67% 80 53.33%

retailing
Carpentry 50 83.33% 79 52.67%
Vehicle repairs 13 21.67% 39 26%
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

58
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:-

59
 • 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:-

60
 • 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 Cases per Province

Mash West 22,74
Harare 19,517
Manicaland 13,589
Masvingo 11,639
Mash Central 10,390
midlands 7,149
Mash East 6,525
Mat South 5,257
Mat North 1,166
Bulawayo 445

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.

61
Fig 4.4 Cholera cases as health system deteriorated due sanctions.

62
 4.3: Number of cholera cases by provinces in Zimbabwe, up
to 30th May 2009 Cases per Province 22,74

yo
wa
la
Bu

t h
or
N
at
M

h
ut
So
at
M

4.3: Number of cholera

t
as

cases by provinces in
E
h
as

Zimbabwe, up to 30th
M

May 2009 Cases per

s
nd

Province 22,74
la
id
m

l
tra
en
C
h
as
M

go
vin
as
M

d
an
al
ic
an
M

re
ra
Ha

0 10,000 20,000 30,000

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)

63
Year Kwashiorkor maramus Pellagra Other
2000 00 959 00 080 00 961
2001 00 683 00 040 00 608
2002 00 732 00 055 00 517
2003 00 834 00138 00 839
2004 10 375 04 343 4 419
2005 16 375 05 363 05 538
2006 14 992 04 701 05 133
2007 12 252 03 741 04 812
2008 11 098 03 393 04 313

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

64
 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 dί dί

Manager Customer

(xi) (yi)
A 1 5 -4 16
B 3 3 0 0
C 5 7 -2 4
D 6 6 0 0
E 4 2 2 4

65
 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 %
A Formal market 71.67%

system decline
B Liquidity crisis 61.67%

in economy
C Raw material 68.33%

shortage

66
 D Transport 48.33%

system decline
E Food shortages 53.33%
F 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% Major sanctions linked
50.00% challenges of Informal
40.00% Traders. percentages
30.00% %
20.00%
10.00%
0.00%
Transport
Formal

material

system
market
Liquidity

shortages
crisis in

Health
system
Raw

Food

A B C D E G

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

67
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:-

68
 • 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.

70
 • 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 Areas of percentage

importance
A Supply of 98%

products
B Source of 94%

employment
C Market for 25%

other firms
D Area of 59%

innovation
E Source of 95%

income
F National 15%

revenue
Total

Source: Survey Report 2009

71
Fig 4.6 Showing Importance of Informal Business

120%

100%

80%

60% Series1

40%

20%

0%
innovation

revenue
Supply of

Source of
other firms
Market for

National
employment
products

income
Source of

Area of

A B C D E F

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.

72
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.

73
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 49 81.67%

diversification
Increased 46 76.67%

stalls
Longer 57 95%

working hours
Cross border 43 71.67%

trading
Soft loans 39 65%

from RBZ
Illegal money 41 68.33%

market

transactions
Illegal foreign 40 66.67%

currency

exchange
Total - -

Source; survey Report 2009

Fig 4.7 Response Strategies on ZIDERA

74
 %

1 95%

0.9
81.67%
0.8 76.67%
71.67%
68.33%66.67%
0.7 65%

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

IncreasedLonger Cross Soft Illegal Illegal

stalls working border loans money foreign
hours trading from marketcurrency
RBZtransactions
exchange

Source: Survey Report 2009

4.6.1 Product diversification as a strategy

75
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

76
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

77
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.

78
4.7 Opportunities and Ways of Improving Informal Business in Harare

4.7.1 Opportunities

Sector opportunities
Informal • Increased business opportunities as big organization in the formal

Engineering set are operating below capacity hence create market informal

engineering products

• Reduced competition from established companies who have shut

down operations

• Business growth as their products are cheaper in prices that those

from the formal market.

Informal • Reduced competition from established clothing manufacturers

Clothing • Low operational cost

Retailing • Flexible business as they take their products to customer’s door

steps

• Opportunities to enter in mainstream retail business.

Informal • Business growth as they are now supply the markets previously

Carpentry dominated by established companies

• Higher profits as the market confidence has improved since they

remained resilient during a period characterized by harsh

economic environment
Informal • Multi currency system introduced the government just before the

Vehicle inclusive government came in existence, enables to access spare

Repairs parts at reasonable prices

• Increased businesses as customers are able to access cash.

Informal • Business boost as a result of the fall in cholera outbreak.

79
Vegetable • Improved income as a result can afford to look after their children.

Markets

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

80
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.

81
 CHAPTER V

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.0: Introduction

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.

82
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

83
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.

84
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.

85
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.

86
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.

87
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”

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