Is Zim’s real private sector informal?

As I was drafting this piece, two questions lingered in my mind. Are fuel shocks exposing the economy we actually have?

And is the informal economy, in fact, Zimbabwe’s real private sector?

Zimbabwe’s economy has long been described in dual terms: formal and informal. One is measured, regulated, and policy-facing. The other is adaptive, fluid, and largely invisible to official frameworks.

That distinction is no longer analytically useful. The informal economy is not a subset of Zimbabwe’s economic system. It is its operational core. Recent fuel price increases, driven in part by escalating tensions in the Middle East, have made this reality impossible to ignore.

Fuel in Zimbabwe is not just another input cost. It is a systemic variable. As a fully import-dependent commodity priced in US dollars, fuel acts as a direct transmission channel between global geopolitics and local economic activity. When oil prices rise due to instability in the Middle East, Zimbabwe does not experience gradual adjustment. It experiences immediate recalibration. The speed and scale of this adjustment are far more pronounced than in most neighbouring economies.

However, the real story is not the price at the pump. It is how that price cascades through the informal economy. Transport operators adjust fares almost instantly. Cross-border traders reprice goods in real time. Market vendors pass on costs within hours, not weeks. Supply chains shorten, fragment, or stall altogether. In formal economies, such shocks are buffered through contracts, credit lines, and scale efficiencies. In Zimbabwe, they are absorbed and redistributed through millions of informal transactions.

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A disruption in global oil supply quickly translates into higher fuel import costs, increased transport fares, rising food and commodity prices, erosion of disposable incomes, and reduced trading volumes. In formal systems, these effects are often delayed or partially absorbed. In Zimbabwe’s informal economy, they are immediate and visible in commuter omnibus fares, in market pricing, and in household budgets. This is where macroeconomics meets lived experience.

The informal sector is often framed as a residual category, what remains when the formal economy fails to absorb labour. In Zimbabwe, that framing is outdated. The informal economy employs the majority of the workforce and drives a significant share of daily commerce. More importantly, it operates predominantly in US dollars and provides resilience where formal systems are thin or absent.

A visit to Harare’s Mbare Musika makes this clear. The scale of activity, transaction volumes, speed of pricing, and sophistication of trade reveal an ecosystem that is not peripheral, but central. It is increasingly difficult to avoid the conclusion that the informal economy is, in effect, Zimbabwe’s de facto private sector. Yet it operates without the tools that define functional private sectors elsewhere. There is limited access to affordable, structured credit. There are no meaningful mechanisms to hedge against fuel or currency volatility. Insulation from external shocks is minimal. As a result, when fuel prices rise, the informal sector does not adjust margins, it compresses them, passes costs forward, and redistributes economic pressure across consumers. This is not inefficiency. It is survival economics.

Fuel pricing is dollar-based, and informal trade is increasingly dollar-based. Each fuel price increase reinforces a behavioural trend that has been building over time. Transport costs are set in US dollar terms. Goods are benchmarked against US dollar replacement values. Consumers mentally price in US dollars, regardless of the medium of exchange.

The result is an entrenched form of bottom-up dollarisation. While policy signals a long-term desire to shift toward local currency usage, the market, particularly the informal market, continues to anchor itself in the US dollar. This brings into focus a deeper structural issue, which is the misalignment between policy design and economic reality. Despite its scale and centrality, the informal economy remains weakly integrated into Zimbabwe’s policy architecture. Tax frameworks are designed around formal entities.

Monetary policy largely assumes formal transmission channels. Financial inclusion strategies emphasise access, but often fall short on resilience. The result is a structural imbalance. The sector that carries the economy is the least supported by it.

Fuel price shocks expose this gap with clarity. They demonstrate that economic stability cannot be achieved through formal sector instruments alone when the majority of economic activity occurs outside them.

The policy objective, therefore, should not be to formalise the informal economy in a linear or rigid sense. That approach underestimates both its scale and its function. A more pragmatic path is to design economic strategy around the structure that already exists.

This requires three shifts.

First, informality must be recognised as core economic infrastructure, not a temporary condition. Second, shock-absorption mechanisms must be developed with informal operators in mind, particularly in areas such as transport and supply chains where fuel volatility has immediate effects. Third, financial inclusion must evolve beyond access to include resilience through working capital solutions, micro-insurance, and savings instruments that protect value in volatile environments.

Without this, inclusion remains superficial.

Zimbabwe is often analysed through the lens of what its economy should look like - formalised, industrialised, and policy-aligned. Yet recent fuel shocks, triggered thousands of kilometres away, are reminding us of a more immediate truth. Zimbabwe’s economy is not defined primarily by policy frameworks, but by how people actually transact, move, and survive. That reality is overwhelmingly informal.

Until economic strategy fully aligns with this structure, external shocks will continue to transmit faster, hit harder, and linger longer than necessary.

The informal economy is no longer a peripheral space requiring integration. It is the system around which everything else must now be designed until a deliberate structural shift is achieved.

Dennis is a business leader and public policy scholar. He is a Chartered Marketer and Fellow of the CIM (UK)and holds an MBA, Master in Public Policy and Governance and an MSc in Marketing. He can be contacted on info@kejadinsights.com.