HARARE, Zimbabwe — Dusk falls and thousands of vendors fan out across central Harare. Through the night, they hawk their wares — vegetables, clothes, kitchen utensils, cellphones — from carts, wheelbarrows or even the pavement, transforming the city’s staid business district into a giant, freewheeling village market.
On Robert Mugabe Road, around the corner from the city’s remaining colonial-era luxury hotel, the Meikles, Victor Chitiyo has sold dress shirts since losing his job as a machine operator at a textile factory several years ago.
“Since then, I’ve never been employed,” Mr. Chitiyo, 38, said under the dim light of a street lamp. “If the economy improves, I’d want to be employed at a company again. But I don’t think that will happen. It’s been a long time since we were optimistic in Zimbabwe.”
Harare’s night market is the most visible evidence of Zimbabwe’s swelling informal economy, which the government estimates now employs all but a small share of the country’s work force.
Even as Zimbabwe’s government, banks, listed companies and other members of the formal economy lurch from one crisis to another, the thriving informal economy of street vendors, traders and others unrepresented in official statistics helps keep the country afloat. For the government of President Robert Mugabe, that parallel economy is both a source of stability — and a potential challenge.
Once one of Africa’s most advanced economies, Zimbabwe has rapidly deindustrialized and shed formal wage-paying jobs, forcing millions like Mr. Chitiyo to hustle on the streets in cities and towns.
From 2011 to 2014, the percentage of Zimbabweans scrambling to make a living in the informal economy shot up to an astonishing 95 percent of the work force from 84 percent, according to the government. And of that small number of salaried workers, about half are employed by the government, including patronage beneficiaries with few real duties.
Many more people are joining Mr. Chitiyo on Harare’s streets as the formal economy shows few signs of improvement. An acute cash shortage persists despite the introduction of a surrogate currency in November. The government, unable to pay its workers their Christmas bonuses, has offered them land instead. And despite repeated visits to Washington and European capitals, and promises of political and economic reforms, Zimbabwean officials have failed to secure fresh loans from skeptical international lenders.
“The government is moving into an increasingly untenable situation, and they are in desperate need of a bailout in the billions to restore liquidity in the country,” said John Robertson, an independent economist in Harare. “The formal sector has collapsed. The informal sector is now very much bigger, and it is actually keeping alive a very much higher percentage of the population.”
As long lines keep forming outside banks, the continuing decline of the formal economy has raised fears of a repeat of the 2008 hyperinflation crisis, which was fueled by the unrestrained printing of the old Zimbabwean dollar, including a $100 trillion note. Anxieties are mounting as a visibly frail Mr. Mugabe — who last month celebrated his 93rd birthday at a lavish party attended by thousands — was recently selected to lead his increasingly fractured party in national elections scheduled for next year.
The government has occasionally cracked down — sometimes violently — on the street vendors, who are not licensed, describing their activities, near the seat of government and businesses, as an eyesore. Some of the vendors have also staged protests against Mr. Mugabe’s rule.
But the government mostly turns a blind eye, clearly calculating that a permanent crackdown on the livelihoods of an increasing number of its citizens would result in greater political instability. According to an unspoken rule, the street vendors are allowed to operate only after dark on weekdays and starting in late afternoon on weekends.
“If I come too early, the police will take my wares away and I’ll be broke,” said Norest Muza, 28, who sold popcorn and chips while carrying her 2-year-old son on her back. “Evenings, the police don’t come.”
Many of the street vendors arrive in Harare’s business district at dusk and spend the night on the streets before going home at dawn with the morning’s first taxis and buses.
“How else can we survive when things are tough for everyone here in Zimbabwe?” asked Tichaona Murwira, 25, who was hawking cellphone chargers, sweets and cigarettes. “I’m a vendor because there is no job for me although I passed my secondary school education.”
Zimbabwe’s per capita gross national income peaked with independence in 1980, when Mr. Mugabe seized power, and bottomed out with the hyperinflation crisis of 2008. Though it has been slowly rising in recent years, it remains well below the level at independence.
Mr. Mugabe’s violent seizure of white-owned farms starting in 2000 precipitated a decline in manufacturing and a process of deindustrialization. Manufacturing peaked in 1992, accounting for about 30 percent of the gross domestic product. Now it is 11 percent and declining.
On Harare’s outskirts, industrial areas have been gutted. Abandoned factories are now used by the homeless, drug dealers, prostitutes and churches.
In Southerton — the district where Mr. Chitiyo, the street vendor, once worked as a machine operator — Philda Chinyoka, the pastor at the True Covenant International Ministries, a Pentecostal church, said she had moved her church to the area in 2014.
“The building was just empty,” she said. “I hear it used to be a tissue paper-making company.”
Inside a nearby abandoned building, with missing doors and broken windows, prostitutes operate day and night.
“The company that used to manufacture net wire here — I forget its name — closed shop in 2006,” said Esther Munetsi, 27, who has worked in the building as a prostitute for the last nine years.
With manufacturing’s sharp decline, as well as the resulting drop in exports and spike in imports, Zimbabwe suffers from a steep trade imbalance. That imbalance’s effect on the economy is exacerbated by the American dollar, which Zimbabwe adopted in 2009 to combat hyperinflation.
Because of the ballooning trade imbalance and widespread hoarding of the greenback, Zimbabwe has experienced a crippling shortage of dollars since last March. Efforts to encourage the use of plastic money — and the introduction, so far, of nearly $100 million into the market of a surrogate currency called bond notes — have helped, though not enough. Customers still stand for hours in long lines outside banks to try to withdraw the few dollars available.