ANALYSTS and other key business players have implored the Government to invest more in incentivising informal sector players to transition into formal business operations to enhance economic stability and improve tax revenues.

Mr James Wadi, an economic analyst said this while giving an appraisal of the 2025 National Budget at the post–budget breakfast meeting hosted by Business Weekly in collaboration with the Confederation of Zimbabwe Industries (CZI) and the Ministry of Finance, Economic Development and Investment Promotion on Monday.

Mr Wadi highlighted that nearly 86 percent of businesses across Africa operate within the informal sector and Zimbabwe has not been spared from this growing business phenomenon.

He emphasised the importance of making the formal sector more appealing to business owners, suggesting that this can be achieved through various means.

As part of the incentives, Mr Wadi said the Government could develop pension schemes specifically tailored for those in the informal sector or implement social insurance programmes and other conditional incentives that become available upon registering as formal enterprises.

Mr Wadi said the authorities should come up with strategic approaches that focus on protecting the rights of informal sector entrepreneurs, including ensuring the protection of their assets, thereby fostering an environment where business owners feel secure and valued.

He said the adoption of this perspective will shift Government’s goal to creating a business-friendly landscape that emphasizes the benefits of transitioning from informal to formal operations.

Mr Wadi expressed concern that economies characterised by high levels of informality are often perceived as high-risk environments by potential foreign investors.

This perception often impedes economic growth and development.

“We have talked about how we can reverse informalisation of the economy, and when I did my research I realised that informalisation is not only a Zimbabwean problem but an African one.

“We should make the formal sector attractive for businesses to move from being informal. From an investor perspective, often times economies with high informality are viewed as high risk environments, so if we are to remain highly infomalised, investors will see our environment as high risk,” said Mr Wadi.

Small to Medium Enterprises Association of Zimbabwe (SMEAZ) chief executive officer Mr Farai Mutambanengwe said there is need to create a more conducive environment for entrepreneurship, which is essential for sustainable economic growth in Zimbabwe.

“Over-regulation is continuing to perpetuate the problem. Regulations should encourage you to formalise so that you become successful. These are the issues that any budget must address,” he said.

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