Industrialist expresses concern over unfair informal sector competition

PROMINENT industrialist and chief executive officer of United Refineries Limited Group, Mr Busisa Moyo, has expressed concern over “unfair competition” imposed by unregulated informal business practices, which he says are increasingly becoming a threat to compliant business entities.

While the growth of informal businesses is a global phenomenon, the unregulated nature of informal business operations is creating an unfair trading environment, which has adverse implications on the economy.

By capitalising on loose regulatory patterns and with less operating costs compared to registered businesses, often, the informal businesses enjoy the advantage of selling products at cheaper prices as they do not have obligations like paying taxes, bills and labour.

Some operate in front of registered shops on pavements, unfairly competing with established shops in selling similar products.

Due to obligations, which are supposed to be met by registered businesses, their cost of doing business continues to rise, hence increasing the gap between their prices and the informal sector prices, said Mr Moyo.

He expressed this concern in a post on X (formerly Twitter) following the recent closure of TM Pick N’ Pay Harare Street branch, on August 31, 2024.

“Formal businesses are struggling to stay in the game because of informalisation and weak by-law enforcement,” said Mr Moyo.

He indicated that some business colleagues and customers have approached him expressing concern over what they called “endless” inspections of their premises and onerous health standards they have to abide by. Such factors tend to raise the cost of doing business while the informal sector is left untouched somehow by the same rules and laws, said Mr Moyo.

“The formal sector is already saddled with much, what can be done to bring balance so that the price of being visible, formal and law-abiding is not a shackle and systematically penalised.

“A lot of businesses are now being lured into informalising their operations in whole or in part. This hurts potential ratepayers who prefer legitimate businesses, ultimately, the city loses.”

Mr Moyo appealed to Bulawayo City Council mayor, Councillor David Coltart, to consider discussing the situation on the ground with stakeholders so that they can come up with a position, which benefits everyone. In his response on the same platform, Clr Coltart acknowledged the concern and revealed that he previously engaged a local supermarket owner who expressed the same challenge.

Mayor David Coltart

“Unlike the informal sector, he has to pay taxes, rates and his staff, but most of all he is compelled to sell his goods at the official ZiG rate,” he posted.

“He is buying the same goods he has to sell at the official ZiG from manufacturers who sell to him with impunity at the ZiG parallel rate.”

Clr Coltart said often informal traders buy goods at supermarkets using ZiG after burning their United States dollars and then sell the same for USD at a lower price than the supermarket can sell it for.

“Thus, totally undercutting the supermarket, right outside its doors,” he said. Clr Coltart has since promised to engage the business community so that they can have a meeting to discuss the above issues. The growth of informal businesses is also being attributed to smuggling in of cheap substandard goods, which include second hand clothes into the country, which has also affected the growth of local industries. —chronicles