Plate 9.5: Gas Welders Working along Madzindadzi Road
2.5 Disciplinary Perspectives on Informality
There are different views on informality given its broadness, diversity and cross−sector visibility (Miraftab, 2009). As stated earlier, it means “different things to dissimilar people”
(Schneider, 2005, p. 1). The analogue of the ‘blind man and elephant problem’ explains different views on urban informality (Schneider, 2005). Everybody touches the animal, yet only understands the part they touch. The first appearance of informality in national discourses was popularised by economists and later by other professionals (Villamizar−Duarte, 2015).
Sections 2.5.1 to 2.5.5 discuss professional bias and interpretation of informality from economic, sociological, business, planning and architectural, and psychological perspectives respectively.
30 2.5.1 The Economic Aspect of Informality
Economists view informality through the view of economic fundamentals such as externalities, nature and value of trade, and tax−contribution (Bairagya, 2010; Majumdar and Borbora, 2012). From a tax−contribution point of view, literature calling for the desire to structure the informal sector for simple tax collection, is vast and expanding fast (Granstrom, 2009; Shah, 2012; GoZ, 2014a; Keen and Kanbur, 2015). There is mounting realisation by economists that the informal sector is tax evasive and uses diverse strategies to do so. The nature of tax evasion has been characterised and classified into five categories described in Box 2.1 (Keen and Kanbur, 2015).
Box 2.1: Forms of Tax Evasion (Keen and Kanbur, 2015)
● The smallest firms, declare openly and remit no tax because their maximum sales are under the tax threshold;
● Adjusters are huge enough to generate maximum sales beyond the threshold but choose to operate just under the tax threshold to avoid tax;
● Ghosts, deceptively proclaim below the tax line or not declare at all;
● Cheats, produce over the threshold and declare certain, but not all, of their sales; and
● Large firms that declare honestly and pay the full amount of tax.
The classification in Box 2.1 was used to substantiate the assertion that the informal industry is dodging paying tax. Where the informal trade is large, relevant authorities find it difficult to collect revenue. This argument resonates well with the conclusion that the Zambian Government is finding it difficult to collect corporate tax from the informal sector though it pays some municipal fees and Value Added Tax (VAT) (Shah 2012). It was also observed that low revenue efficiency in Greece is partly attributed to the vast informal economy (IMF, 2013 cited in Kanbur and Keen, 2015).
Accessible studies on informality by economists used econometric models for analysis and
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inference (Sookram, Watson and Schneider, 2006; Chakrabarti and Kundu, 2009; Bairagya, 2010; Majumdar and Borbora, 2012). Amiss and warped in these accessible studies is the spatial component. One duo of scholars emphasised the need for spatial data by noting that economic forces breed interdependence among entities and data from these entities is generated at certain places (Pace and LeSage, 2010). Since the linkage of entities is more geographically concentrated, it seems sensible to scrutinise data using tools that can account for spatial dependence.It has been reasoned thatspatial econometric models can quantify how changes in explanatory variables directly impact regions, as well as the associated externalities (Pace and LeSage, 2010).
2.5.2 The Sociological Aspect of Informality
Long−running theme is sociology revolves around the welfare of people living and working together (Despres, 1988; Sparks and Barnett, 2010; ILO, 2013). Nitty−gritties such as nature of employment, working conditions and social protection are on the fore of analytical literature and policy discourse on informality (Despres, 1988; ILO, 2007; 2013; Luebker, 2008a; 2008b;
Sparks and Barnett, 2010). While issues surrounding informal employment are well documented, understanding of their spatial setting is relatively neglected in literature.
Understanding informal engagement in context of its spatial setting sensibly exposes locational driving and restrictive forces.
2.5.3 The Business Aspect of Informality
Registration of businesses differs between and within countries. In Zimbabwe, registering a business is three−fold (Mazongonda, 2015). Firstly, an organisation must get clearance from the local authority to start operating from a designated site. If the local authority does not consent, such an organisation is viewed as informal. Evidence from developing countries such
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as Zambia, Trinidad and Tobago, Senegal, Jamaica, and India has indicated that a substantial percentage of informal entities are not registered with planning authorities (IADB, 2006;
Sookram et al. 2006; Granstrom, 2009; Shah, 2012). Consequently, national governments are losing significant revenue because a substantial number of players in informal enterprise do not pay council licenses (Shah, 2012).
Secondly, it is stated that businesses can be seen and analysed through the eyes of their incorporation (Mazongonda, 2015). A significant percentage of organisations in the informal trade operate as sole traders and partnerships, and a paltry number as private limited companies (Mazongonda, 2015). Customers and informal operators prefer sole trader and partnership firms as they have more flexibility (Muponda, 2012; Uzhenyu, 2015). Their operating hours are flexible, they can easily bend to the requirements of customers and they give a personalised touch (Despres, 1988; Muponda, 2012; Mazongonda and Chirisa, 2017).
Thirdly, after successfully registering with the registrar of companies, an entity must register with the revenue authority to remit tax returns quarterly (Mazongonda, 2015). Literature has indicated that informal industries dodges paying tax using an array of strategies discussed in Section 2.5.1. The common strand when registering a business with the three authorities outlined immediately above is having a well spelt out place of operation. This brings the spatial component into play.
2.5.4 The Planning and Architectural Aspect of Informality
In recent years, urban informality is a wave of renewed attention, with renaissance of academic interest in informal housing, an area emphasised by architects and urbanites (Varley, 2013).
Since informal activities happen in space, this brings spatial planning into play. Spatial
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planning has been described as the two−way relationship between spatial structures and socio−economic processes which aims at facilitating and conditioning socio−economic processes by way of spatial structures (Bertolini, 2006). This is primarily achieved through town planning legislation. In Zimbabwe, this includes statutory plans, planning requirements and the Regional, Town and Country Planning Act (RTCPA) [Chapter 29:12].
The preamble of the RTCPA states that planning aims to promote “health, order, safety, convenience, amenity, and general welfare, as well as efficiency and economy in the process of growth and the enhancement of communications”. Available studies on urban informality through the eyes of scheduling and architecture have explained how the informal sector violates the goals of planning (Chirisa, 2007; 2009b; Ademola, 2012; Dube and Chirisa, 2012;
Uzhenyu, 2015). Whether informal operators’ psychographics (their attitude, knowledge and perception) are independent of town principles is yet to be scientifically tested. What has been established with substantial accuracy is that informal operators are clustered in home industries and subject to enforcement because they violate town planning goals (Chirisa, 2007;
Mazongonda and Chirisa, 2017; 2018).
The study on enforcement of planning regulations in Harare revealed the geographical distribution of illegal industrial activities (Mazongonda and Muromo, 2011). Empirical findings of this research highlighted that backyard and home industrial activities in Central, Eastern and Western districts of Harare account for 11%, 42% and 47% of enforcement orders served in Harare correspondingly. Welding, carpentry, tailoring, shoe repairing and motor mechanics were noted as the main examples of industrial undertakings being done in home industries. Interpreting these findings, it is conclusive to state that backyard and home industrial activities are largely pronounced in the Western district followed by Eastern and Central
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districts in that order. The term ‘home industry’ is used to define the concentration of firms that undertake industrial activities in residential areas (Mazongonda and Muromo, 2011). Part one of the Statutory Instrument 216 of 1994 states that home industries can house service, warehousing and general industries, and storage and special industries.
Recently, one scholar studied the development of latent entrepreneurship in home industries across Zimbabwe (Muponda, 2012). In Harare, the Complex and Gazaland in the Western district and Siyaso in the Central district were identified as home industries that attract huge volumes of activity (Muponda, 2012). The concentration of informal traders has been met with mixed reactions. For example, the spatiality of clustering has been associated with ease of management and agglomeration of economies of scale (Muponda, 2012; Mazongonda and Chirisa, 2018). On the contrary, one scholar discouraged over−concentration of informal activities in already built−up areas citing the fact that in as much both innovation and pollution have global impacts, these often result in more geographically concentrated impacts (Ademola, 2012). What needs determination, therefore, is the level of occurrence, abundance, or incidence of informal manufacturing per unit area, and the spatial dependence of manufacturers.
2.5.5 The Psychological Aspect of Informality
Psychology aims to understand what induces, restricts and exacerbates certain patterns of behaviour in individuals. Urban informality has some trends of behaviour that have been noted over time and described by many scholars (Chirisa, 2007; Shabaneh, 2008; Yiftachel, 2009;
Shah, 2012; Varley, 2013; Mazongonda and Chirisa, 2017). Dominating descriptions on trends of behaviour portray the informal sector as shy, disorderly, messy and chaotic. When the heavy hand of planning is visible and more active, informal trade hibernates and resurfaces at a later stage. For example, in Zimbabwe, a harsh clean−up campaign dubbed Operation
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Murambatsvina (OM) of 2005 dehumanised people by destroying their sources of livelihood, but the informal industry bounced back after this major clean−up campaign (Tibaijuka, 2005;
William, 2006; Gumbo and Geyer, 2011). This type of conduct is succinctly described as resilience, resistance and stubborn informality (Chirisa, 2007; Varley, 2013; Yiftachel 2009).
The resistive behaviour of informal operators is partly explained by general lack of economic opportunities (Kamete, 2010; Jerie, 2013). Some operators engage themselves in informal activities, not from desire, but necessity, and informality presents an alternative outlet for the jobless. A follow−up research on informal trade in Harare after OM revealed that “the engagement by households in informal economies is not only a headache to local authorities in the developing countries but also heartache to the households themselves” (Chirisa, 2009a, p.
257). Informal operators, from an ethical viewpoint, have operated against their desires. It is observed that the entire urban Harare is rather plagued by informal traders who are acting in conflict to their life goals (Chirisa, 2007; 2009a). But the strength of informal operations is yet to be accurately established and mapped to well inform policy.
The authorities have gotten to a point of embracing urban informality as a living reality (GoZ, 2014a). To this effect, some scholars have advocated for nurturing the development of small−firm clusters (Muponda, 2012; Mazongonda and Chirisa, 2017; 2018). This makes it easy to tax and foster effective management systems (GoZ, 2014a). However, informal sector taxation, being a new phenomenon, will probably be met with mixed reactions, misconceptions and misunderstandings. As such, it is vital to determine the likely behavioural reactions to the suggested tax measure ahead of time. It is essential since behaviour is a planned for action as described by the TPB (Ajzen and Fishbein, 1980; Ajzen 1991).
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