Informal haven for corrupt politicians

Independent investigation has revealed that ruling party activists and influential politicians are using the informal economy as a conduit for smuggled and illegal goods, reports MALVERN MKUDU.

Illegal medicine, pesticides and other products continue to find their way onto local stalls and flea markets that operate mostly at night in central business districts across the country.

This is detrimental to the revival of the manufacturing sector. Many of these traders are unlicensed and owe their very existence to political protection from powerful Zanu (PF) officials, who demand rent and other economic favours in exchange for permission and protection to operate with impunity.

It's 7pm at the Copacabana rank in Harare. The central business district is alive with eager customers flocking to traders’ tents stacked with a variety of goods from neighbouring countries and China. The tents sport the ruling party colours, perhaps to reinforce the point that the party controls this sector of the economy.

A trader who identified herself as Amai Ryan sells a popular drink called Tweezer and Corn Flakes. She says business is good and she thanks the party for providing her with economic opportunities. Asked if she fears being chased away from her spot by municipal authorities, she brags that she promotes sales on behalf of a ‘Chief' , but refused to name her benefactor.

No taxes paid

Despite most of the informal sector operating in non-designated areas and posing a health risk, the city authorities do not react or enforce the rules. The majority of traders are unlicensed and do not pay taxes.

“Do you really think we are here because this government cares about our plight? There are big people behind this business. We are small fry in the grand scheme of things. Why do you think policemen do not arrest us?” questioned Amai Ryan, pointing to two cops strolling around.

Unseen bribery, favouritism, mutual favours and other forms of exchanges take place in this parallel economy with little disruption from the police officers who patrol the area.

The informal economy is generally viewed as unregistered, economic activities existing outside of state regulations based on informal access and distribution of state resources.

The perks include relief from or avoidance of taxes and duties, cops and customs officials turning a blind eye. Despite the revenue authority's patrol teams on highways and police roadblocks, illegal goods continue to find their way to markets.

Order not wanted

“Order is not wanted in this sector, my brother, because order means we now operate under the watchful eye of the government.” said Kenneth Mashiri, who sells insecticide for $1.

It is against this background that the informal or parallel economy has come under the control of unscrupulous, powerful politicians who use the unpoliced informal sector to push smuggled goods and avoid or evade paying tax.

Last week a senior Zanu (PF) official, Joseph Chinotimba, staged a one-man demonstration in defence of informal transport operators in the city centre and then immediately appointed himself as their patron.

Political analysts attributed Chinotimba’s actions to the ruling party’s desire to control the informal sector for political gain. Politicians offer protection to informal traders in exchange of votes and rent.

Economic chaos

Political analyst Ibbo Mandaza is of the opinion that politicians will get involved in anything in order to control the electorate. “Yesterday it was the churches, now it’s the informal economy. What is happening is not really surprising.” he said.

Chinotimba’s actions of defending lawlessness without raising a finger to rectify legitimate complaints against such operations proves that politicians have a vested interest in the perpetuation of economic chaos.

This has been going on for a long time. Ruling party activist Jim Kunaka reportedly collected rent from traders operating in Mbare for years before he fell out with the party hierarchy. Despite several reports to the police to stop Kunaka at the time, no action was ever taken.

In 2012, 673 Zanu (PF) members from Mashonaland East were nabbed at the Forbes border post for trying to smuggle second hand clothes from Mozambique. The smuggled clothes and other goods end up in informal markets and are sold at places like Mbare, Mupedzanhamo and other flea markets in the city centre at prices that suffocate the textile industry of the country.

Clothes are not the only items sold in these informal markets. Beverages, food stuffs and detergents are sold on pavements at cheaper prices than those charged by retail supermarkets.

Kenneth Mashiri, a man who sells his wares near Cleveland House thanks Grace Mugabe for allowing him and others like him to operate from anywhere in town.

Thanks to Grace

“Amai Mugabe has liberated us my brother. This is why we are able to operate from anywhere in town,” he says. He will not divulge who he and other traders pay for this privilege, claiming that it is a 'sensitive matter'.

Powerful politicians muscle their way in and take control of trading spots. They then determine who will operate their businesses and how much rent will be payable by coercing people to attend political party meetings.

In Mutare, powerful Zanu (PF) politician Esau Mupfumi took over the lucrative Meikles Park flea market and now charges a fee of $1 per day to those wishing to operate on the premises. Mupfumi initially took over the property under the pretext of building a hotel, but there is no sign of this. He continues to collect rent from informal traders though.

Contrary to statements claiming that the informal sector is growing and providing employment for many urban dwellers, it has emerged as a playground for the exploitation of vulnerable urban dwellers.

By controlling the informal sector, powerful politicians collect and pocket revenue that is supposed to be going to the treasury as tax. The same politicians preach empowerment of the masses, but are, in fact the true beneficiaries of the chaos in the informal sector.

$7 billion

A shop owner from First Street, who refused to be identified said “Even though we pay our licences and taxes to the revenue authorities, we do not receive any protection from the authorities. Someone up there is benefiting from this chaos that is prejudicing the state”.

It is believed that $7 billion is circulating within the informal sector and is believed to employ more than 800,000 people in the country. While many have called for order in the informal sector, government continues to drag its heels on tax policies and regulations.

The Revenue Authority has announced that it will launch what it is calling the '100% search programme’ meant to plug the flow of South African goods into the local market.

These moves are not likely to amount to anything if powerful politicians continue to command unfettered control of the informal sector. Ironically, without political intervention in these operations the government continues to lose revenue.

Post published in: Business

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