Zimbabwe’s economic landscape has undergone a significant transformation in recent years, with the informal sector now accounting for a substantial majority of the economy, estimated to be over 75%. As formal businesses struggle with a restrictive operating environment, many individuals have turned to informal trading as a means of survival. This has led to a proliferation of mobile cash cabins and container businesses across urban areas, including Chitungwiza. Now, Chitungwiza Municipality is taking action, demanding that these businesses without the necessary licenses and permits, cease operations, a move that highlights the complex challenges of regulating the thriving informal sector while also trying to generate revenue in a struggling economy.

Council’s Demand: Halt Operations or Face Confiscation

Chitungwiza Municipality has issued an ultimatum to all businesses operating from mobile cash cabins and containers. They require those without the necessary licenses, permits, or legitimate leases, to immediately cease operations by February 6, 2025, and vacate their current locations. The council has warned that failure to comply with this directive will result in the confiscation of goods and equipment.

The council’s directive stated:

The Chitungwiza Municipality hereby directs anyone running a business in mobile cash cabins or containers without the required licenses, permits, or legitimate leases to cease operations immediately and vacate the area you operate at, by February 6, 2025.

Failure to comply with this notice will result in confiscation of any goods and equipment. The Municipality firmly urges you to act promptly to avoid financial or legal consequences.

This move comes as no surprise given the recent measures undertaken by the council such as the durawall regularisation fees, as discussed in our previous article Chitungwiza Council Demands US$150 from Residents with Durawalls, and the Rusape Town Council’s tank certification charges as previously covered.

The Rise of the Informal Sector and Decline of Formal Business

The growth of the informal sector in Zimbabwe is not an anomaly, but rather a reflection of the prevailing economic conditions. As formal businesses face numerous challenges, including a restrictive regulatory environment, increasing costs, and declining consumer spending, many have been forced to scale back operations or shut down completely. N. Richards, a popular wholesaler, recently announced the closure of some of its Harare branches, a clear indication of the pressures facing established businesses. OK Zimbabwe, one of the country’s largest supermarket chains, is also facing challenges, with widespread reports of empty shelves in many of its branches.

In contrast, the informal sector has thrived, driven by the need for individuals to generate income and meet their daily needs. This has led to an explosion in the number of small-scale businesses, including mobile shops and container-based enterprises, which operate outside of the formal regulatory framework. While providing a crucial lifeline for many, they also create an uneven playing field. Formal businesses face the burden of taxes, licenses, and other fees while many informal operators often evade these obligations.

A Need for Clear Regulations and a Level Playing Field

While it is understandable that the Chitungwiza Municipality might seek to bring order to the growing informal trading environment and try to generate revenue, its approach must be balanced and fair. The appearance of containers without any evident regulation or compliance could indeed be concerning. The local authority has a responsibility to ensure order and that the environment is conducive for all businesses, including those in the formal sector.

The problem is that instead of working with residents to find a solution Chitungwiza seems to be taking a heavy-handed approach that is likely to further sour relations. Rather than simply issuing ultimatums, the council should first work to create clear regulations and publicise them so that residents are aware of what is required. The rules governing containers must be clear, transparent, and easily accessible to all interested parties.

The situation in Chitungwiza highlights the complex challenges of managing the urban informal economy. Local authorities must balance the need for regulation and revenue collection with the need to support those trying to make a living in challenging economic conditions.