Emergence of the informal sector and its impact on formal retail businesses

Author
Munashe Luckson Mapfumo
Title
Emergence of the informal sector and its impact on formal retail businesses
Abstract
Informal sector is attracting a lot of attention around many developing countries and Zimbabwe is not an exception. The informal sector has been growing lately at a high rate and it produced positive and negative impacts to an economy. However, the informal sector has created many distortions to formal sector businesses and this created the purpose of conducting this research on the impact that the formal retail businesses have encountered due to the introduction of the emergence of the informal sector. The study's objectives were reached using a descriptive survey approach that included both primary and secondary data sources, as well as observations, focused group discussions, questionnaires, and interviews. Data from 20 respondents and observations were analyzed, and arguments were clarified with tables and diagrams. According to the report, the shadow economy is already causing distortions by establishing unfair competition with formal enterprises since they pay no taxes and do not adhere with government laws, resulting in lower sales, market share, financial liquidity, and profits after tax. The research concluded that the emergence of the informal sector definitely has impacted the formal retail businesses as they provide goods and services without following certain government requirements thereby providing at lower costs that those of informal retailers, which created a burden in doing formal retail businesses. In light of the above it is recommended there is need as a nation and by the government and appropriate authorities to move forward by ensuring that all areas that demand attention, particularly the issue of significant economic informalization, are addressed.
Date
2022
Publisher
BUSE
Keywords
Informal sector
Formal sector
Supervisor
N/A
Item sets
Department of Intelligence and Security Studies
Media
Munashe Mapfumo.pdf

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