New Economy needs New Technologies
Zimbabwe faces an economic environment many African countries inherited at independence and which they have been trying to change: the domination of economic life by the informal sector. While most African countries have been growing from the informal to the formal economy, Zimbabwe has in the last decade experienced a decline in the formal economy and a rapid growth in the informal. The use of import substitution inherited in 1980s has all but died, but a new formal economy is taking too long to evolve at a time when more young Zimbabweans join the market after graduating from various institutions of learning. It is estimated that close to 90% of the adult population is engaged in the informal sector, with nearly two-thirds of them operate as micro enterprises (one person traders and producers) and estimated to earn less than US$200 a month.
Six years ago, Zimbabwe closed a chapter of hyper-inflation; where too much much was chasing too few goods. Today, Zimbabwe is faced by deflation, with too many goods chasing too little money as the country has been importing twice as much as it has been exporting after adopting a multi-currency regime dominated by the US$. The economy has cumulatively imported more goods (funded from remittances and other external sources), but less money is entering the economy as a result of the shrinking export base.
In the last three months, Harare has experienced an invasion of informal traders (referred to as vendors, hawkers, street traders, etc.) and they have taken over every single available square meter of pavement in the Central Business District (CBD); blocking entrances to offices, shops, and other businesses. Goods are laid out on the pavement, on areas usually used for parking, or supplied from car boots by the more affluent informal traders. Roads for cars have been reduced from two to single lanes, sometimes to zero as traders jostle for trading spaces and visibility by prospective customers with declining disposable incomes. These traders, many with imported and few locally-produced goods, are all struggling to sustain their families by capturing the few dollars in the economy.
Zimbabweans are a hard working people. They are willing to produce if the market is there, but the decline of formal economic production activities has been so rapid that informal economic production has in the available time been unable to establish a viable cash-goods equilibrium. The liquidity crunch facing the whole economy has generated this mushrooming of informality - what the Minister of Finance in 2014 called The New Economy! At the same time, old and antiquated technologies are ill-suited to the needs of the New Informal Economy.
New technologies are urgently needed to process local raw materials into goods for export in order to match the importation of goods not produced in the country. New technologies are also needed to support those working in the informal economy so that they can reach the market without having to physically come to the streets; and to create an efficient and healthy trading environment that can help the new informal exist symbiotically with the established formal. New technologies are urgently needed to foster these kinds of linkages between the informal and formal sectors in Zimbabwe as the New Economy goes from Informal to a rebalanced Formal-Informal New Economy.
The innovators and entrepreneurs of Zimbabwe have been challenged!