Published: 16 January 2014

ZIMBABWE has to face the reality that the informal sector is now the dominant force of the economy, Finance and Economic Development Minister Patrick Chinamasa has said.

Giving the keynote address at the Mandel-Gibbs 2014 Economic Symposium yesterday, Minister Chinamasa said there were more economically active people in the informal sector compared to those in the formal sector.

"How can we tap value from the informal sector? They are not contributing value to the fiscus. There are no linkages between the formal and informal sector," he said.

World Bank country economist Ms Nadia Piffaretti said it was high time Government started paying attention to the massive informal sector which was now at 46 percent compared to South Africa at 17 percent and Malawi at 13 percent.

She noted that SME's were at 60 percent post dollarisation.

"How well are you treating start ups," she said.

"For example, Apple started in a garage but now it is one of the most valuable companies in the world.

Government should not underestimate start ups."

She said the push for foreign direct investment should not be confined to the Government alone but should be initiated by domestic entrepreneurs who are searching for new technology.

Ms Piffaretti said while the global economy was stabilising with an anticipated 2013 growth rate of 3,6 percent, Zimbabwe would experience some problems as they were in the middle of falling international prices and the weakening of the rand against the US dollar.

"The rand has lost a lot of ground and that situation is not going to reverse anytime soon. And this presents problems because the economy experienced a rebound when the dollar was weak but now when it is going the opposite direction Zimbabwe finds itself in serious problems as it has a weak economy being funded by a strong dollar."

She added: "That brings in the issue of competitiveness. It's cheaper to import than to export therefore the import bill will continue rising on a permanent basis. On the other hand investors at the moment get nice returns on dollar assets." 
- herald

You might also want to read this

• Chinamasa appointment to Air Zimbabwe board 'dubious'
• Red tape closing Zimbabwe for business
• Chinamasa pay rise headache
• Moyo, Chinamasa on reengagement crusade
• Zimbabwe told to prioritise domestic capital
• Infrastructure stock rising due to Treasury Bills
• Govt headache over moneychangers
• Zim moves to establish correspondent banks
• WATCH: Chinamasa on reforming Zim's budget structure
• Chinamasa hails UK $100m facility