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Why you should read this article. Alvin Nyika- Founding Chairperson of Core Foundation a Hybrid Organisation that focuses on social entrepreneurial development and wealth creation in rural and urban areas using entrepreneurial development and resource creation… To learn more about Alvin follow this link
One of the largest sources of employment for men and women in Zimbabwe is in informal enterprise. Indeed one of the measures of informal economy is the numbers of unregistered enterprises. Their lack of compliance with the legal regulatory frameworks means they are often unable to access the support and services they require. This affects their profitability and sustainability as well as the quality of employment provided to their workers.
This lack of compliance maybe because their activities are not included in the law which means they are operating outside the formal reach of the law or they are not covered in practice, which means that even where laws exist they are not applied or enforced or the compliance is discouraged by inappropriate, burdensome procedures and excessive cost.
Core foundation is currently assisting the Ministry of Small and Medium Enterprises and Cooperative Development in organizing a National SME Exposition to be held in October 2014. The exhibition will run concurrently with a Formalization of the Informal Sector Workshop meant to come up with strategies to formalize the sector. The concept of formalizing refers to the process of encouraging an enterprise to move from being informal to being fully complaint with the legal institutional frameworks governing business and employment.
Alvin Nyika the Chairman of Core Foundation said “to encourage the sector to become more formal, you need benefits for business registration and the process of business registration has to be easy, and there must be no penalties for registration, license requirements etc. or as few as possible. And there need to be advantages, e.g., free training, advisory services, free advertising perhaps, maybe the system could create an internship program and all of the registered businesses could get free interns which is something we are currently exploring with other different partners and organizations in this sectors”
The Exposition will target to empower 2000 SMEs in the 5 provinces of the country. The term “upgrade” is used to describe an improvement in the enterprises as measured by its ability to become more sustainable and profitable as well as to improve the working conditions of people employed in the enterprise and quality of employment offered.The challenges of moving toward formality and upgrading informal enterprise are separate but related issues. While formalization refers to the extent to which an enterprise complies with regulatory framework, upgrading refers to access informal enterprise have to the services and markets they require to become more profitable and sustainable.
Non-compliance often leads to enterprise owners and workers being harassed by officials and to a desire to keep out of sight. Thus non -compliance contributes to a process of marginalized in which informal enterprises are not officially recognized by state and often overlooked or disregarded by public and private services providers. Moving enterprises toward formality and upgrade are key process required in the promotion of sustainable enterprises that provide decent and productive employment for the youths.
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