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The Zambia Tax Platform says that Informality plays an integral role in defining the landscapes of labor Markets around the world especially in developing countries where larger shares of the Workforce is in the informal sector.
Private Sector Enhancement Expert Ellen Makinishi said the informal economy, as a driver of growth and development continues to prove effective in job creation, income generation and sustaining the needed aggregate output for the economy.
Ms Makinishi said the informal economy should be provided with incentives as it is faced with a myriad of challenges including the burden of hightax rates, low levels of skills and insufficient support.
She said these challenges act as a disincentive to formalize hence government intervention is needed.
Ms Makinishi said to address these challenges, one viable option is to analyze the existing social security mechanisms which mainly apply to formal employment with the predictability in monthly earnings and have stable and clear employment relationships.
She said the extension, to informal employment, remains low with gaps in legal frameworks and representation due to the absence of workers’ organizations
“Providing reforms in the public procurement sphere to encompass the informal sector is key to enhance transparency and national security. This will reduce the adverse risks of
corruption which provoke unfair competition among business entities,”she said.
Ms Makinishi said Public procurement offers the best opportunities for local suppliers to increase their sales through government contracts.
She said it is essential to address the bottlenecks that limit the informal sector such as access to finance, lack of managerial skills, equipment and technology, and regulatory issues that affect their ability to realize their potential.