The Contribution of the Informal Sector to Poverty Alleviation in Zimbabwe

Abstract

The past decade(2000-2010) for Zimbabwe was characterized by worst economic performance since its independence in 1980. Capacity utilization shrank to 10% and unemployment rate was above 80% by 2008 as the private and public sector unleashed massive retrenchments. This impoverished the great majority. High poverty levels forced the jobless to join the informal sector which uses labour intensive methods of production. Even in the aftermath of a decade long economic downturn, Zimbabwe’s formal sector is still shrinking due to socio-economic factors  that hinder the local industry full capacity utilization. The retrenched are joining and actively participating in the informal sector. It is against this background of growing importance of the informal sector in alleviating national poverty that this paper put forward some policy intervention suggestions in promoting the growth of the sector.

Key words: Informal sector, poverty reduction, policy intervention