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Can the informal sector be formalized and contribute to economic growth?

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By SME BusinessLink Staff

640_427_women_flea_marketNinety percent of Zimbabweans a re making a living in the informal sector. Thus a huge chunk of the economy is not recognized officially in terms of GDP, economic growth and tax revenues.  I know numerous traders who generate revenues above the VAT threshold of $5,000 per month. Imagine how much potential VAT is being lost in the informal sector?

The prevailing liquidity crisis can also partly be attributed to the reluctance to use banking services by informal sector players.

Is it possible to formalize this part of the economy so that it plays a role in economic development while enabling the operators to grow their outfits into real businesses that build value for them?

I liked the experience narrated by one columnist about life on the ground for informal traders. Read about it here.

 

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