Biti says the informal economy is a dead economy

Movement for Democratic Change secretary-general Tendai Biti, who was Finance Minister just seven ago, today said the informal economy is a dead economy and it was a tragedy that the government was celebrating the creation of such an economy.

According to a statement released by the party after his press conference in Harare, Biti said 84 percent of the formal sector had collapsed and the government seemed not to have a clue about what to do.

“84 percent of the formal sector has collapsed. Day to day, we are seeing the deindustrialisation of the formal sector. The problem of the informal economy is that it is a dead economy that does not pay taxes and it is a tragedy that this clueless government of the day is celebrating the creation of the informal market,” he said.

As Finance Minister Tendai Biti said on 7 June last year the informal sector employed 3.7 million people and generated US$1.7 billion a year.

He argued that unemployed in the country was only 9 percent and nowhere near the 85 percent often touted.

“We have always had this argument about what is the percentage of people that are employed or unemployed in Zimbabwe. Textbook economists will say 85 percent but that is not true. If we had a population like that most people in Zimbabwe would have died, it is not possible,” he said at the launch of the Poverty Income Consumption and Expenditure Survey by the Zimbabwe National Statistics Agency.

“One is either a farmer, selling juice cards (airtime vouchers), driving an emergency taxi or you are working as a hair dresser. The fact of the matter is most people are economically active.”

Below is his full statement:

Tuesday, 04 February 2014

Zanu PF government abandons the people – Hon. Biti

The national economic and political crises in the country are characterised by heavy deindustrialisation, a serious cash crunch and a national debt crisis, Hon. Tendai Biti, the MDC Secretary General and shadow Minister of Finance and Economic Development said today.

Addressing a press conference at the party’s headquarters, Harvest House in Harare, Hon. Biti said the MDC will not bury its head in the sand and ignore the national crises that are affecting Zimbabwe.
“There is no question that Zimbabwe is mired in a serious, deep crisis,” he said.

“There is confidence breakdown of the social contract, collapse in government revenue, capital account deficit. There is no doubt that the government of the day is no government as it is clueless, impotent, sterile, idea free and indifferent,” said Hon. Biti.

He said it was evidenced in the past six months that the Zanu PF government had no capacity from an economic point of view to govern.

“84 percent of the formal sector has collapsed. Day to day, we are seeing the deindustrialisation of the formal sector. The problem of the informal economy is that it is a dead economy that does not pay taxes and it is a tragedy that this clueless government of the day is celebrating the creation of the informal market,” he said adding that Zimbabwe needed US$4 billion in order to resuscitate key sectors such as mining, agriculture and rail cargo transport.

“That the (NRZ) National Railways of Zimbabwe has collapsed is an indictment to the Zanu PF government,” said Hon. Biti calling upon Zanu PF to be pragmatic and honest by engaging the international community in negotiations.

Turning to corruption that has rocked most parastatals over illicit salaries, Hon. Biti said the people of Zimbabwe been shocked by this level of corruption by Zanu PF linked officials and called for the establishment of an independent commission of inquiry that is headed by a retired judge.

“What has been disclosed so far is a tip of the iceberg. Suspending the board chairperson or firing the CEO is not enough. The commission of inquiry should look into all these scandals,” he said.

Hon. Biti said that the populist policies of Zanu PF, in slashing of rates, had led to the failure by local authorities to pay even basic salaries and called on the government to provide grants to the authorities so that they are able to provide better service delivery.

“We believe that logic should prevail. The government should provide a grant so that the local authorities will not fail to provide rudimentary services,” he said adding that it was a crime and unconstitutional for Zanu PF to fail to pay school fees for over one million children through the Basic Education Assistance Model (BEAM).

The government has abandoned its role of leading and this has led to the unprecedented suffering that the people are going through. The avenues of surviving are very minimal,” said Hon. Biti.

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