In Zimbabwe, the Economic Structural Adjustment Programme of the 1990’s led to the growth of the Informal Economy. This is because liberalization of the economy took place and led to subsequent de-regulation of the labour market thereby exposing local industries to increased competition from foreign products.
This exposure put industries a risk of extinction. The clothing/textile industries for example were threatened by the dumping of finished products and second hand items by foreign producers.
ZIMPREST and other economic adjustment programmes which followed ESAP also proved to be a disaster as it amounted to, “Reconstruction of Hiroshima from ashes of the Atomic Bomb of the Second World War” [beyond ESAP ZCTU by T.F Kondo].
The situation was made worse by high levels of corruption and nepotism in business and government as well as high government expenditure, lack of transparency and unpunished fraudulent offenders who cost the nation millions of dollars. Removal of government subsidies also meant shortage of basic commodities, high cost of living and poverty among the majority of Zimbabweans.
Companies closed up as they could not withstand competition and many workers were retrenched. These retrenchees then had no choice but to join the vast numbers already in the Informal Sector.
Those still at work could no longer afford to meet basic social services expenses including school fees and health. Children, mostly girls, dropped out of school. High rates of mortality triggered by prevalence of poverty and diseases like AIDS and kwashiorkor were recorded. Life expectancy dropped and Zimbabwe was robbed of the productive age and society lost its moral dignity as affected and unemployed youths turned to prostitution and drug abuse. The State Social Welfare Fund could not cope with the demand of its services and more children turned to the streets. The Zimbabwean society was basically at crossroads and so many people resorted to informal trade as a way of survival under such harsh economic environment.