On ideology change and spatial and structural linkages between formal and informal economic sectors in Zimbabwean cities (1981-2010)

Date: November 18, 2013
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Zimbabwean cities have been experiencing wide-ranging economic restructuring since independence in 1980. The relationships between the declining formal economy and the growing informal economy concomitant with political and economic ideological shifts over the years have not been studied extensively and are not well understood. In this study the impact of political and economic ideological shifts on the growth, spatial and structural linkages between the two sectors over the three decades, from 1981-2010, in the country’s two main cities, Harare and Bulawayo, is investigated. Mixed-method approaches were applied to gather spatial, quantitative and qualitative data. Geospatial data were created using 1164 and 857 geographical positioning system locational points of informal economic enterprises in Harare and Bulawayo respectively. Maps of the two cities were scanned, georeferenced, projected and digitised. Longitudinal and crosssectional data were gathered from archival sources and through 300 and 600 questionnaire surveys of formal and informal economic operators respectively. Qualitative data was generated from 30 interviews that were conducted with professionals that influence the operations of the two sectors. The data were analysed using GIS, SPSS and Statistica software to reveal the temporal growth of the two sectors, as well as their spatial and structural linkages. It was found that the informal sector grew by 17% under the socialist policies of the 1980s. This increase was partly attributable to overurbanisation because the urban labour force increased at an average of 3% per annum compared to the formal economic sector that generated employment at an average of only 2.2% per annum throughout the 1980s. The shifts toward neo-liberal economic policies at the beginning of the 1990s resulted in immense retrenchments, forcing many workers to join the informal sector. As formal firms adjusted their operations to fight global competition, employment generation declined to an average of 1% per annum throughout the1990s. The informal sector responded by employing 61% of the labour force by 2001. The adoption of authoritarian policies at the beginning of the 2000s accelerated the decline of the formal economy which recorded negative growths for most of the first decade of the millennium. This led to the rapid rise of informal sector employment to an astronomic level of 87.8% in 2008. The investigation revealed substantial locational transformations of both formal and informal economic enterprises. During the 30-year period, informal economic businesses spread in low-income suburbs, city centres and neighbourhood and district shopping centres. 16.3% of formal economic enterprises left the city centres preferring secure medium density suburbs close to the CBDs, shopping complexes, industrial, office and business parks on the edges of the cities. 83.7% remained in the city centres and industrial centres where informalisation of operations was one of the strategies employed to fight competition, whilst 86.3% and 22.8% informal economic enterprises licensed and registered their operations respectively over the 30 year period. These spatial and structural changes resulted in linkages being formed between the two sectors. The nature of the linkages is largely influenced by the position of the informal businesses on a continuum of informal enterprises ranging from traditional, through transitional to semi-formal. It was found that traditional and transitional enterprises had strong backward linkages with formal businesses where they purchase their goods and raw materials. Forward linkages exist where semi-formal businesses sell furniture, building materials and clothing to formal businesses. Thus, a symbiosis exists, but linkages are very exploitative as formal businesses tend to dictate the terms of business. The reciprocal-supportive model was extended by adding four pillars that influence the operations of the two sectors to produce a differential complexity model of informalisation (DCMI). The reasons or causes of informalisation (RE); the subsectors that comprise the two sectors (SE); the various locations of the two sectors’ businesses (L); and the levels of formality and informality (Ls) are integrated in the DCMI to aid comprehension of the linkages between the two sectors. The model can be adjusted and applied to various urban settings, allowing for the development of the two sectors spatially, structurally and temporally.

Publisher: Stellenbosch University
Year of Publication: 2013

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