Covid-19 spurs digitisation of the informal sector

BY FIDELITY MHLANGA SCROLLING through her phone gallery, Tinotenda Chitima (26), an informal trader in Harare, selects the best photos of her clothing products before posting the catalogue on her WhatsApp status with the tagline #selling these wonderful products# and another titled #Letsdobusiness2gether. Minutes later, she smiles gleefully as several […]


SCROLLING through her phone gallery, Tinotenda Chitima (26), an informal trader in Harare, selects the best photos of her clothing products before posting the catalogue on her WhatsApp status with the tagline #selling these wonderful products# and another titled #Letsdobusiness2gether.

Minutes later, she smiles gleefully as several of her contacts place orders to buy some of the advertised merchandise on her status.

This has been her new way of trading after the outbreak of the Covid-19 pandemic that has disrupted every other way of life with governments all over the world coming up with lockdown restrictions to curb the spread of the disease.

“Soon after the announcement of lockdown regulations to contain Covid-19 in March this year, I felt so depressed as I tried to figure out how I was going to conduct my business,” she says.

“Movement was restricted and a curfew was imposed. I could not access my stall in Harare’s central business district (CBD).”

Zimbabwe imposed a national lockdown on March 30, restricting movement into the CBD with many businesses suspending operations in compliance with Covid-19 regulations, opening avenues for virtual trading by informal traders.

“I had to find another way of doing business to survive, and turned to social media though I am not technology-savvy,” said Chitima, who created a WhatsApp group comprising most of her clients.

“All along I thought social media was just for leisure, but I experimented through posting my products on my WhatsApp status. Since then, the results have been phenomenal. I have never looked back.”

After gaining a sizable number of clients on WhatsApp, Chitima, a university graduate, expanded her clientele base after opening Instagram, Facebook and Twitter pages dedicated to marketing her products.

Tinotenda is one of the many people embracing social media to market products.

Accomplish Sithole, who specialises in bedroom linen, says with formal employment remaining elusive since graduating from university in 2017, she had to find alternative ways to eke out a living.

“The need to sell products online was prompted by the need to increase finances. Covid-19 increased my social media presence so that I could market my products on that platform,” she said.

“With nothing to do, and bogged down in my small lodgings, I was bored and turned to social media to market my business.”

The use of social media platforms to sell goods and services surged during the lockdown. Even after the relaxation of the lockdown restrictions which allowed businesses to reopen, shoppers are still hooked to their suppliers whom they met on social media.

“Social media is now the new frontier of conducting business since shops were closed during the lockdown and physical interaction with clients and customers became difficult. Borders were closed, meaning that we could not travel out of the country to buy wares for resale,” Sithole said.

“We linked up with our suppliers through online agents who then ship goods to us for sale to clients we get via Facebook, Whatsapp, Instagram and in some instances Twitter.”

Sithole said Covid-19 came as a blessing in disguise because it increased the culture of online trading in Zimbabwe, while also making doing business cheaper.

“Social media also helps in terms of reducing costs like rentals and also increases one’s market and circle in the sense that you can post your product and other friends can share with their friends,” she said.

The informal traders are marketing the products imported from various countries among them China, Turkey, United Arab Emirates and South Africa and purchases are mostly done using MasterCard and VISA services.

While governments restricted movement of people, cargo can still be moved to different destinations.

Some shop owners who also embraced the selling of merchandise on social media say they have reduced their wage bill by half by retrenching workers whose roles can now be done online.

“I was one of the people who were reluctant to do business online, but during the lockdown we promoted our products on social media platforms,” said a trader who only identified himself as Samson.

“I started marketing my products on different social media platforms and got orders to deliver to clients around Harare although it was difficult navigating past roadblocks. I built a solid relationship with my clients and even after lockdown regulations were relaxed, I am still supplying them.” Samson.

Samson said he had since closed one of his two shops and sent home some of his staff.

Online traders sell vegetables, furniture, Covid-19 masks, sanitisers, food hampers, clothing, toiletries, and confectionery, among others.

With the easing of lockdown rules, informal traders also adopted the selling of goods in their vehicles parked in various locations.

Economist Victor Bhoroma said the coronavirus pandemic, much as it has had its negative effects, has spawned a significant growth in direct marketing on social media and informal trade via social media platforms.

“The growth has been accelerated by Covid-19 restrictions on traditional shopping, but it is necessitated by the entrepreneurial spirit among traders to reach customers through cost-effective channels,” he said.

“Internet penetration in Zimbabwe is now over 60%, so social media is now an effective tool for direct marketing in the market. It’s cost is limited to broadband charges only yet it is very disruptive to traditional print, digital and outdoor advertising.”

While urbanites have been embracing social media to market their products, generally active mobile telephone subscriptions declined by 6,7% to reach 12 798 98 as at June 30, 2020 from 13 724 522 recorded as at March 31, 2020.

According to the 2020 second quarter report released by the Postal and Telecommunications Regulatory Authority of Zimbabwe (Potraz), mobile internet and data traffic increased by 56.2% to record 10,407 terabytes from 6,661 terabytes in the previous quarter.

The rural folk have been lagging behind in accessing mobile networks due to poor network and low disposable income to meet the cost of ever rising data prices.

“Obviously the job losses, idle time and drop in income during this Covid-19 period have been key factors in the growth of informal trade on social media,” Bhoroma said.

“Most Zimbabweans are now pursuing various income-generating enterprises to augment their waning salaries or to make a living. The level of in-formalisation in the economy is now very high.”

In a study of 158 economies done by the International Monetary Fund, Zimbabwe was found to have the second largest informal economy as a percentage of its total economy in the world, after Bolivia.

In a 2018 working paper titled, “Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?”, Zimbabwe had a score of 60,6% and came second to Bolivia which topped at 62,3 %.

Bhoroma added that the new phenomenon was disruptive in that brick and mortar buildings which operate as sales offices, retail outlets or showrooms would realise limited consumer traffic and demand, yet property rentals remained high in most towns.

“In the end traditional business models of physical presence in urban zones will become outdated and unsustainable. Obviously this carries a threat to formal employment, job security and tax revenues. Most informal traders on social media are not tax-compliant as well,” he said.

Research and investment analyst Enock Rukarwa said in light of the unprecedented impact of Covid-19-induced operational strain, informal businesses started leveraging digital pockets as it became the new normal.

“The obtaining economic conditions in the form of sub-economic income levels and job losses are creating a new set of challenges demanding more than piecemeal solutions. Covid-19 crises exposed major vulnerabilities in company operations and supply chains creating a compelling case for flexible and mobile informal businesses. Informal business penetration has already caused a visible dent on formal operations and the only option now is to accelerate digital transformation,” he said.

With no Covid-19 cure or vaccination yet, Tinotenda still finds solace on social media marketing as formal business continuity now entails looking beyond linear value chains and industry boundaries to create dynamic value maps.

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