MIDLANDS STATE UNIVERSITY

Faculty of Commerce

ENTERPREUNEURSHIP (ENT205)

MODE OF ENTRY: VISITING - GWERU

LEVEL: 2.1

LECTURER: MR D. MAPETERE

SURNAME FORENAMES REG NUMBER PROGRAMME

Museka Virimai K R1813667W B. Comm

Accounting

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QUESTION 1:

With the aid of practical examples, identify and explain any 5 strategies that entrepreneurs
in Zimbabwe may adopt in order to recover from Covid-19 lockdown induced loss of
business [20 marks].

The corona virus pandemic hit the world from China in November 2019. As the disease spread
like veld fire, killing many people across the globe, business entities were not left out of the
predicament. The majority of nations across the globe including Zimbabwe enforced national
lockdowns restricting movement and conduct of business.it is no doubt that the pandemic
induced loss of business. The writer hereby explores the strategies that entrepreneurs in
Zimbabwe may adopt to recover from the covid-19 induced loss of business.

● Finding new ways of reaching out to you customers

Since government imposed lockdown have restricted movements, this means that access to
products of an entrepreneur by his customers was severely affected. However, as a way of
mitigating the effects of this to his business, an entrepreneur can use social media platform to
keep marketing their goods and services and also offer an extra an extra mile of delivering their
products to the doorstep of their customers just like the Solatech Marketing of Bulawayo have
recently embarked on. In Masvingo, poultry food outlet Gain (Pvt) Ltd has mobilized its
customers operate in the vicinity of each other to combine their mobile money, make payments
through ecocash platform and deliveries would be made to their places.

● Assure the watchdog authorities of total compliance with lockdown regulations.

For an entrepreneur’s business to remain with a flame unextinguished in the hands of the law
enforcement agencies it must comply with the lockdown regulations and meet all the minimum

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health standards which include checking of temperature of every customers and sanitize them
upon their every entry into business premises ensuring that everyone is wearing a face mask and
ensuring social distancing between one another. the business should stick to government
imposed closing and opening hours between 07:00 to 16:30. adhering to these regulations have
given a green light to most of these retail outlets in Zimbabwe since onset of phase 3 lockdown
as addressed by the President. butcheries such as heads and hooves in Harare, hardware shops
such as Build Easy in Bulawayo and retail shops such as Food world in Gweru have managed to
survive and show signs that they are on recovery path due to their compliance to these lockdown
stipulations.

● Embrace and exhaust all business opportunities left after the imposition of all
restrictions.

The fact that lockdown rules burned all consumption of food by the customers in restaurants
does not mean that food is not allowed to be sold. Food outlets such as chicken inn and chicken
slice still continue with their businesses yet adjusting to new regulations of selling food on take
aways basis only. In the same vein, bars are not allowed to accommodate their customers to
consume beer on the premises and they have responded to this by adapting to new conditions
whereby beer is sold to customer to drink at their own homes. Through this, many businesses
have managed to survive and are expected to be seen back on their feet after the lockdown have
been lifted.

● Open up everything to you employees in terms of how the business finances have
been affected by Covid-19 lockdown.

This will enable them to empathize with you and accept adjustments which might be done to
their earnings. At the same time show an optimistic attitude and also speak positive language

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 pertaining to the future of the business. This will give them a sense of job security yet at the
same time motivate them to keep on unleashing their maximum energies for the future success of
the enterprise.

● Be flexible and be easily hurt in business

Many negative changes which affect small business and startups have emerged during the
enforcement of lockdown regulations. However, the manner in which the survival of small
business is being achieved is considerably determined by how the entrepreneurs will be prepared
to cope up with new developments. In transport business for instance, most omnibus operators
have been booted out of business by the government ban on all public service vehicles that are
not subcontracted under Zupco but a few who are flexible enough simply crossed the line and
kept on operation under the Zupco banner. Evidence reveals that they are now being shielded
from the harsh dictates of the law and operations are even more lucrative than before. hence its
becoming apparent enough that they will manage to remain afloat through this difficult time and
their business performance attest to the fact that they will be able to fully recover the post covid-
19 lockdown era.

QUESTION 2
Raising 5 relevant and practical examples, evaluate the impact of the current non-economic
participation of the informal sector in Zimbabwe after destruction of vending stalls/market
places by urban local authorities [20 marks].
During the national lockdown in response to the Covid-19 pandemic, the government of
Zimbabwe through its urban local authorities destroyed illegally placed vending stall. The vending
stalls accommodated a variety of informal traders which complimented the formal market. With
the aid of relevant and practical examples, the writer seeks to explore the impact of the current
non-economic participation of the informal traders in Zimbabwe following their demise.

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Loss of government revenue
More that 80 percent of the businesses in Zimbabwe are dominated by the informal traders. The
informal traders were a major source of revenue for the government through operating taxes
which were payable through the local authorities. However, the destruction of market stalls
meant that the government revenue base has dwindled. In addition to that, informal traders
accounted for a large portion of importers of raw materials and marketable wares. While it is not
yet evident on how revenue from imports has reduced due to the lockdown regulations limiting
cross boarder movement, it is argued that the government will lose import tax revenue as a result
of non-participation of the informal sector.

Rate of unemployment will rise

As allude above, the majority of employable people in Zimbabwe are in the informal trade
business. Unemployment rate is defined as the total number of people within a specific
employable age who are unemployed and actively looking for employment. The vending stalls
were a source of jobs. The destruction of market places has destroyed jobs for many and
increased the rate of unemployment. Rate of criminal offenses will go up as youths will not be
occupied as well as people engaging into illicit deals for survival.

Skyrocketing of prices
Prices of basic commodities went up on an exponential scale as witnessed during lockdown
where big retail shops began overcharging and holding stocks for speculation. The main reason
of price rises is that exclusion of informal traders has somehow monopolized trading to big firms
like TM, OK supermarkets et cetera. Within three weeks after the beginning of lockdown to the
21st of April, prices of basic commodities increased by more than 100 percent. A 2 kilograms of
sugar, for instance was costing $45 on 1 April was now at $95 on 21 April 2020. This led to a
cabinet decision to introduce price moratorium where prices which were applicable on March 25
were to be restored and this of course had had no effect on the prevailing price increases. The
economics law of demand as ascribed by Ison et al (2007) states that too many customers
chasing few goods cause raise in prices. The further exponential increase in prices regardless of
price moratorium directive can largely be attributed to increase in demand and lack of
competition from informal market.

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Loss of livelihood for many Zimbabweans
According to economist Robert Johnson's report in April 2019, millions had turned to informal
sector, where most also operated from illegal spaces and structures. This means that a huge
number of people were left economically vulnerable and their levels of poverty were grossly
exacerbated. According to an urgent application Zimbabwe Lawyers for Human rights at
Chinhoyi High Court, it argued that the vendors whose stalls had been demolished can no longer
afford to feed their families, educate their children and pay off their accommodation rentals. This
gives evidence that a significant number of citizens are consequently living under grinding
poverty.

An incredible loss for farmers in their business

Farmers producing perishables products such as tomatoes and vegetables are suffering huge
losses as a result of a ban on vending activities. When their products are ready for market, they
realize that the market is not ready for their products ending up losing tones of their produce into
bins. The first phase of lockdown was announcement by the President on the 20th of March
2020, and before the end of the week, it was reported on the ZTV news that farmers from
Manicaland and other parts of the country were counting them loses as the markets to which they
used to sell their fruits and vegetables were now closed. In response to their predicament, the
President of Zimbabwe opened up a leeway to allow for the selling of horticultural products
during the lockdown, but the sales volumes remained low due to the elimination of a middleman.
This will in turn affect production as the same farmer will become financially incapacitated to
return into the field during the next season.

However, it can also be noted that the non-participation of the informal sector is yielding positive
results to some extent. This is especially so because vendors were now selling harmful products
such as alcohol, tablets and lotion that would endanger people's health. H-Metro newspaper of 14
May 2020 reported that vendors at Mupedzanhamo in Harare were now embarking on selling
skin lightening creams, hips and breasts enlargement creams and penis enlargement tablets.
Therefore, it is arguable enough that the move to detract illegal vending activities came to the
rescue of scores of potential customers of these harmful products.

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Orderliness have been restored in cities and towns which has eased congestion and paved way
for greater and more economically impacting investments. In Bulawayo, for instance large
portions of streets such as Lobengula street had totally been blocked by vendors. But after the
government restructuring exercise the places have been cleaned to become unobstructed for
passing of vehicles and some portions have been earmarked for formal businesses which pay tax
to the government.

References

Ison, S and Wall, S (2007) Economics, 4th Ed; Pearson Education, Essex

H-Metro; Skin lightening creams-brisk business at Mupedzanhamo; 14 May 2020

Newsday; Zimbabwe Human Rights Lawyers challenges demolition of illegal markets; 06 May
2020

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