By Daniel Chigundu
BARCLAYS Bank Zimbabwe Limited managing director George Guvamatanga has dismissed as false claims that there is US$7 billion circulating in the informal sector and not reaching the formal system.
Speaking recently Guvamatanga said the claims are nothing short of a clear sign that Zimbabweans cannot read, adding that it is impossible for such large amount to circulate outside the formal channels.
“Then we come to this US$7billion, when we talk about the informal sector and money circulating outside the market, there will always be money that circulate outside the market but not in this quantum of US$7 billion, because that quantum makes an assumption that there is an informal mobile telecommunication company out there, there is an informal Delta out there, an informal Blue Ribbon out there because the majority of people who are operating in the informal sector do so because they want to feed their families.
“So they would want to buy paraffin which has to be brought formally into the economy, or they would want to buy power which they have to buy from ZETDC, or they want to buy milk or mealie meal, or bread, so at the end of the day whether they start by selling tomatoes and onions they still need to buy bread from Lobels or Innscor , they still need airtime from Telecel, Econet, Netone, they will need paraffin which they buy from Zuva or whatever service station, that money always flow back into the formal system.
“What they might keep is the money they want to use because they order on a daily basis; it’s the money they want to use to restock for the following day. So because those people still need to meet the day to day requirements most of their money will find its way into the formal market whether we like it or not.
“So this figure of US$7 billion is a reflection of a nation that doesn’t or can’t count. We just don’t count, so this country I tell you will be a much better country, a better economy if we just took a little bit of time to count, just to understand things, what we have, what we don’t have, policy will be much better policy but we just don’t count,” Guvamatanga said .
According to the 2012 FinScope Survey, Zimbabwe has about 3.5 million SMEs operating in various sectors of the economy and the majority of these SMEs are unbanked.
Ministry of SMEs and Cooperative Development recently told a Parliamentary portfolio committee that they believe there is about US$7 billion circulating in the informal sector and that they are looking for ways to bring it to the formal sector.
One of the measures being implemented to that effect is the formalization of the informal sector. It is believed that only 15 percent of SMEs in the country are registered while 85 percent is unregistered owing to various reasons chief among them is trying to escape paying taxes to Zimra.
The Reserve Bank of Zimbabwe (RBZ) is also working on financial inclusion strategy that will see banks revising downwards their Know Your Clients requirements.
Agent banking and mobile money systems such as Ecocash, Telecash, One Wallet and GetCash have also been identified as measures that will also help produce desired results.