Zimbabwe’s Shrinking Formal Economy and the Rise of Street Survival

A Nation Turns to Informality Amid Misrule and Economic Collapse..

By Shingirai Vambe

In the heart of Harare’s bustling downtown, where the scent of roasted maize mingles with exhaust fumes and pavement vendors shout over blaring music to lure customers, it becomes vividly clear that Zimbabwe’s economy has taken refuge on the streets.

This explosion of informal trade, market stalls, mobile vendors, and street-side service providers, is not an accident of innovation or entrepreneurial spirit alone. It is a response to a nation’s prolonged economic breakdown, fuelled by years of political mismanagement, entrenched corruption, and structural collapse.

Since the turn of the millennium, and more acutely following the 2017 military-assisted transition that ousted Robert Mugabe, Zimbabwe has seen a consistent deterioration of its formal economy. Factories that once belched smoke in the industrial zones of Bulawayo and Harare now lie in ruins, their rusting gates guarded by unpaid security. Head offices of multinational companies have shuttered or scaled down, citing currency instability and policy inconsistency. Capital flight has become routine. Formal job opportunities have dwindled to near extinction, and graduates from the country’s many universities now find themselves joining queues for street vending licences, or hustling airtime and vegetables for survival.

Former Finance Minister and opposition stalwart Tendai Biti has long sounded the alarm. “The formal economy has virtually collapsed,” he remarked in a recent address. “Zimbabweans are earning less than a dollar a day, forced into the informal sector just to survive. This is not entrepreneurship, it’s survivalism. It’s a hustle economy born of desperation, not innovation.”

Biti’s words are now echoed by empirical evidence. The Zimbabwe National Statistics Agency (ZIMSTAT), in its preliminary findings from the 2023 Economic Census, confirmed that over 76 percent of all business establishments in the country are informal. The census, conducted between June 2024 and March 2025, found 204,798 operational businesses—but only a minority were formally registered. Of these, a staggering 87.9 percent were classified as micro-enterprises, and just 18.9 percent of those were formally operating.

The implications of these figures are profound. Thousands of university graduates—teachers, accountants, engineers, nurses, now work as shop assistants, gas vendors, or pushcarts operators. What should have been the country’s productive middle class has been thrust into precarious, unregulated jobs. These are not positions with salaries, pensions, or medical aid, but gigs that pay barely enough to buy a loaf of bread.

As one former economics student now selling second-hand clothes in Mbare put it, “This is not the life we imagined. But the factory where I interned during my final year shut down in 2021. Since then, I’ve had no choice.”

According to the International Labour Organisation (ILO), over 80 percent of Zimbabwe’s working population now depends on informal employment. The Zimbabwe National Chamber of Commerce estimates that this sector contributes about 64.1 percent of the national GDP, roughly US$42 billion. That’s more than what formal industries, banks, and conglomerates produce combined.

*Street hawkers have taken over so many sidewalks in Harare’s city center that some vendors are turning their cars into makeshift shops.*

Yet this enormous sector remains under-regulated, undertaxed, and unsupported. The government, aware of its shrinking tax base, has rolled out an SME Formalisation Strategy and introduced mandatory Point of Sale (POS) systems to capture tax revenue from informal traders. The aim is to create a seamless migration from informality to formal business operations. But critics argue the state’s heavy-handed approach, such as sporadic police raids on street vendors, undermines these intentions.

“Formalization without support is just coercion,” notes economist Gift Mugano “You cannot demand tax compliance from people whose entire existence is hand-to-mouth. You have to make formalization worthwhile,” added Mugano.

ZIMSTAT’s Director General, Mrs. Tafadzwa Bandama, described the 2023 Economic Census as “the most comprehensive enumeration of business and economic activities since independence.” She explained that the census provided critical insight into the spatial and sectoral distribution of enterprises, shedding light on the true scale of the informal economy.

The report showed that 73.13 percent of establishments were in wholesale and retail trade, while only 8.24 percent were in manufacturing—underscoring the erosion of Zimbabwe’s once-strong industrial base. Manufacturing itself has become largely informal, with just 17.6 percent of manufacturing establishments officially registered.

In cities like Bulawayo, once dubbed the “industrial hub of Zimbabwe” only 40.4 percent of its 15,840 establishments were formally registered. Other provinces like Matabeleland North and Midlands fared even worse, with most businesses operating outside the formal system.

Notably, 89.42 percent of all enterprises in the country were sole proprietorships, while only 7.13 percent were structured as private limited companies, further illustrating the dominance of one-person survivalist operations.

In an effort to bring some order to this chaos, the government has initiated training workshops, access to credit facilities, and streamlined registration processes. POS machines have been mandated to curb under-the-table cash transactions and improve revenue collection.

Infrastructure development is also being touted as a pillar of reform, with investments in roads, water, and electricity meant to reduce operating costs and encourage formal business growth. But these measures are yet to show tangible benefits for the average vendor or small-scale trader.

ZIMSTAT board chairperson, Mr. John Mafararika, framed the Economic Census as a “landmark operation” that will guide government policy and national planning. Yet many analysts question whether government policy has the political will or strategic coherence to address the root causes of economic informality—namely, corruption, policy instability, and a failure to protect investments.

The persistence of informality is both a symptom and a consequence of deeper national failures. While the government seeks to rein in this sector through regulation and taxation, the fact remains: the informal economy is now the real economy of Zimbabwe.

Without genuine political and economic reform, grounded in transparency, investment guarantees, and protection of property rights, efforts to formalize the informal sector may be akin to building castles in the sand.

For now, the streets remain Zimbabwe’s most active marketplace, its most dynamic employer, and sadly, its last refuge for millions trying to survive what many now see as the long, slow death of the formal economy.