ECONOMY DOMINATED BY INFORMAL SECTOR : ZIMSTAT

The Zimbabwean economy is dominated by informal micro-businesses, according to a preliminary report of the 2023 Economic Census released yesterday by the Zimbabwe National Statistics Agency (ZimStat).

ZimStat said the census was held during the period June 2024 to March 2025.

It identified a total of 204 798 operational business establishments across the country, with a significant majority operating outside formal registration frameworks.

The latest statistics confirm the strong narrative about the domineering influence of the country’s unregistered enterprises, confirming that Zimbabwe’s real economy might in fact be significantly bigger than was believed.

A large portion of the country’s workforce is engaged in the informal sector, with some estimates suggesting that over 80 percent of the population relies on it for employment, according to the International Labour Organisation.

The Zimbabwe National Chamber of Commerce, one of the country’s biggest and most influential business lobby groups, estimates the sector to constitute about 64,1 percent, approximately US$42 billion, of the gross domestic product (GDP).

The Government is actively encouraging the formalisation of its informal sector through various initiatives aimed at increasing tax compliance, providing access to formal financial services, and offering legal protections.

These efforts include promoting electronic transactions, developing a Small to Medium Enterprises (SMEs) Formalisation Strategy, and streamlining the formalisation process.

ZimStat director general Mrs Tafadzwa Bandama said the economic census, being the most comprehensive enumeration of business and economic activities in the country, was a cornerstone of national planning and policy formulation and evaluation.

“We present to you the preliminary findings, which offer early insight into the structure of the economy as well as the distribution and scale of activities that are carried out in the country in the provinces and districts, even at the world level.

“The results are critical for identifying growth opportunities in the country, mapping investment strategies and potential in the country and addressing structural challenges within the economy to inform evidence-based and decision-making in the country,” she said.

According to ZimStat, of the total business establishments surveyed, 76,1 percent of the operations were categorised as informal, meaning they were not registered by the Registrar of Companies, Registrar of Cooperatives, Zimbabwe Revenue Authority, National Social Security Authority, or did not consistently keep records.

The remaining proportion comprised formal businesses. The report further highlighted that 87,9 percent of all establishments were micro-enterprises, adhering to the criteria set out in the Small and Medium Enterprises Act.

“The majority of these establishments, 87,9 percent were micro-enterprises, with only 18,9 percent of them operating formally,” Mrs Mationesa Phiri, director for production statistics ZimStat said during the presentation of the results.

The report shows that the wholesale and retail trade sector dominated the business landscape, comprising 73,13 percent of establishments, followed by manufacturing at 8,24 percent.

“However, the census revealed that only 23,9 percent of all establishments were operating formally, with Bulawayo province having the highest proportion of formal establishments at 46,4 percent,” said Mrs Phiri.

While all 2 031 large establishments identified were formal, only 18,9 percent of the 180 073 micro-establishments had formal status, underscoring the prevalence of informality among smaller ventures.

Sectorally, the “Wholesale and retail trade; repair of motor vehicles and motorcycles” sector emerged as the largest contributor, accounting for 73,13 percent of all establishments. This was followed by the manufacturing sector, which comprised 8,24 percent of the total.

Within the manufacturing sector specifically, 19,0 per cent of its 16 877 establishments were formal.

Geographical analysis revealed a strong urban concentration, with approximately 87 percent of establishments located in urban areas, compared to 13,3 percent in rural settings.

Provincial data on formality showed considerable variation. Bulawayo province stood out with 40,4 percent of its 15 840 establishments operating formally, a significantly higher proportion than most other provinces.

The majority of provinces recorded less than 30 percent of their establishments as formal, with Bulawayo (29,2 percent) and Matabeleland North (20,3 percent) being the only exceptions with more than 20 percent of establishments registered with the Registrar of Companies. Overall, less than 20 percent (17,6 percent) of establishments in the manufacturing sector were registered with the Registrar of Companies.

In terms of business structure, sole proprietorships dominated the landscape, making up 89,42 percent of the 204 798 establishments at a national level. Private limited companies constituted a smaller, but still significant, 7,13 percent of the total.

The preliminary findings paint a clear picture of a predominantly informal, micro-enterprise-driven economy in Zimbabwe.

Speaking at the dissemination event held in Harare on Wednesday, ZimStat board chairperson Mr John Mafararika said the economic census stood as a cornerstone of Zimbabwe’s statistical system and a vital tool for driving informed decisions at all levels of Government and business.

“This is a landmark operation that speaks directly to Zimstat’s mandate of producing comprehensive, reliable and timely statistics,” he said.

“Such data is essential in guiding economic policy, shaping business strategy, supporting research and even household-level decision-making.”

The 2023 Economic Census provides an updated national snapshot of the structure, size and distribution of economic activities across sectors. Herald