Protecting the backbone of Zimbabwe's economy

Protecting the backbone of Zimbabwe's economy

By Allan Mbotshwa

The informal sector, a cornerstone of Zimbabwe's economy, faces numerous challenges, including the threat of fire, the recent Mbare Traders' Market fire and the recurring Glenview Area 8 fires underscore the urgent need for informal traders to protect their livelihoods through insurance.

The devastating fire at the Mbare Traders' Market highlighted the vulnerability of informal traders to unforeseen disasters.

The loss of goods, equipment, and income left hundreds of traders struggling to rebuild their businesses.

This incident served as a stark reminder of the importance of risk management, including insurance.

The Glenview Area 8 fires, a recurring problem in Harare, pose a constant threat to informal traders operating in the area.

These fires, often caused by factors such as vandalism, inadequate infrastructure, and lack of fire prevention measures, have destroyed homes, businesses, and livelihoods.

Insurance can provide a crucial safety net for informal traders, helping them recover from losses and rebuild their businesses. By providing financial compensation for property damage, lost income, and legal liabilities, insurance can mitigate the devastating effects of fire and other disasters.

Speaking to the Business Connect, Mrs Mazvita Chipwanya a small grain trader in Mbare bemoaned the loss of over US $2000 worth of produce which was destroyed by the fire and she had no insurance which means her income and livelihood were brought to a standstill.

“I lost everything, all my goods I had recently bought new grains and it all went down the drain. I do not have anyone who can assist me with the loss I incurred,” she said.

Mrs Chipwanya is one of many informal traders who suffer massive losses when disasters happen and they do not have the proper insurance processes in place, this is a culmination of various issues, lack of knowledge about insurance, and the unavailability of proper insurance for the informal sector.

Several types of insurance can be beneficial for informal traders, including property insurance, which covers the loss or damage of goods, equipment, and structures used in the business; business interruption insurance, which compensates for lost income due to fire or other disasters that disrupt business operations; and liability insurance, which protects traders from legal claims arising from accidents or injuries.

“While insurance offers significant benefits, informal traders often face challenges in obtaining coverage.

High premiums, complex underwriting processes, and lack of awareness about insurance products can deter them from purchasing policies,” said Brenton Muchemwa, a local insurance agent in the country.

To address these challenges, governments, insurance companies, and non-governmental organizations can take the following steps: conduct awareness campaigns to inform informal traders about the benefits of insurance and how it can protect their livelihoods; streamline the application process to make it easier for informal traders to obtain insurance; offer subsidies or discounts to reduce insurance premiums for low-income traders; develop cooperative insurance programs tailored to the specific needs of informal traders; and foster partnerships between governments and insurance companies to create innovative insurance solutions for the informal sector.

While insurance can provide financial protection, it is also essential to focus on fire prevention measures.

This includes educating informal traders about fire safety practices and emergency procedures, conducting regular inspections of stalls and markets to identify potential fire hazards, ensuring that fire extinguishers are readily available and properly maintained, and promoting safe electrical practices to prevent fires caused by faulty wiring or overloading.

Insurance plays a vital role in protecting informal traders from the devastating consequences of fire and other disasters.

By addressing the challenges faced by this sector and promoting insurance awareness, governments, insurance companies, and non-governmental organizations can help ensure that informal traders have the protection they need to thrive and contribute to Zimbabwe's economic growth.