EMPLOYMENT SECTOR Working Paper on the Informal Economy The Informal Sector in Sub-Saharan Africa

EMPLOYMENT SECTOR

Working Paper on

the Informal Economy

The Informal Sector in Sub-Saharan Africa

_____________________________________

Jantjie Xaba;

Pat Horn and

Shirin Motala

Employment Sector

International Labour Office Geneva

ii

Copyright © International Labour Organization 2002

First published 2002

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ILO

Informal Sector in Sub-Saharan Africa

Geneva, International Labour Office, 2002

ISBN 92-2-113248-X

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iii

Foreword

This report is the first of a series of papers that were commissioned under the auspices of

the ILO Inter-Sectoral Task Force on the Informal Economy in preparation for the general

discussion on the informal economy at the 90th International Labour Conference (ILC) in Geneva

in June 2002. The papers in this series include studies of regional trends, selected country level

studies and thematic investigations at the global level. Most of them seek to identify new trends

and patterns that have emerged over the last several years and to go into more depth regarding the

factors underlying the continuing growth of the informal economy, not only in developing

countries, but also in advanced countries and countries undergoing transition. Particular attention

has been paid to the impact of globalization, liberalization, privatisation, migration, industrial

reorganization and macro-economic policies prompting these trends.

The present paper, “The Informal Sector in Sub-Saharan Africa”, has been prepared by

Pat Horn, StreetNet, Durban, South Africa; Shirin Motala, consultant; and Jantjie Xaba, Trade

Union Research Project, South Africa. The study provides information on 13 predominantly

anglophone Sub-Saharan countries. Despite the lack of comparability of data, the authors

nonetheless find certain general trends. These include a decline or stagnation in formal

employment opportunities; an increase in informal sector activities, sometimes outnumbering

formal sector activities; and an increasingly important contribution by the informal economy to a

country’s GDP. Women are highly active in the informal economy, often a majority of such

workers. However, they are over-represented in low- income activities and under-represented in

higher income activities. Examples of a number of innovative and successful policies and

programmes for workers and enterprises in the informal economy are described, some of which

are already being replicated elsewhere in Africa and have good potential for promoting more

decent work in the informal economies of Sub-Saharan African countries.

The reader will observe that nearly all of the papers in this series attempt to tackle the

problem of conceptualising the informal sector. The development of a conceptual framework for

the International Labour Conference report was carried out at the same time as the production and

finalization of the papers included in this series. As such it was not possible to agree in advance

upon a single concept for use by the authors of these papers.

This paper was prepared under the supervision of Andrea Singh, International Focus

Programme on Boosting Employment through Small Enterprise Development (IFP/SEED). It

has been funded under the IFP/SEED Programme.

iv

v

Table ofcontents

Foreword ............................................................................................................................ iii

Abbreviations/Acronyms ................................................................................................. vii

List of Tables..................................................................................................................... vii

Acknowledgements .............................................................................................................ix

1. Introduction................................................................................................................. 1

2. Key factors specific to Sub-Saharan Africa ............................................................. 1

2.1 Population trends ......................................................................................... 1

2.2 Political change ........................................................................................... 1

2.3 Economic development indicators.............................................................. 1

2.4 Poverty indicators........................................................................................ 2

2.5 HIV/AIDS in Sub-Saharan Africa............................................................... 2

2.6 Socio-demographic profile of the South African region............................. 2

3. Informal sector in the 21 century - Changing nature and trends ........................... 3

3.1 Magnitude and size...................................................................................... 3

3.2 Informal economy in Sub-Saharan Africa ................................................. 9

4. Conceptual and measurement issues....................................................................... 10

5. Old and New Characteristics ................................................................................... 11

5.1 Definition of the informal economy .......................................................... 11

5.2 Segmentation and heterogeneity ............................................................... 13

5.3 Specific sub-groups................................................................................... 14

26

6. Nature of linkages between formal and informal sector ....................................... 19

7. Globalisation and macro-economic issues............................................................... 21

8. Fundamental principles and rights at work – Extent of Ratification of

core standards and other relevant international labour standards ...................... 23

8.1 Conventions relevant to the informal sector ............................................. 23

8.2 Regulatory frameworks............................................................................. 24

9. Entrepreneurship and micro-enterprise development .......................................... 25

10. Access to skills development to promote mobility and diversification................. 27

11. Expans ion of micro-credit and savings facilities.................................................... 28

vi

12. Social Protection ....................................................................................................... 29

12.1 Social security........................................................................................... 29

12.2 Social insurance ......................................................................................... 30

Case Study - UMASIDA Health Insurance Scheme: Tanzania........................... 31

13. Occupational safety and health issues ..................................................................... 32

Case Study -Measures to promote occupat ional health and safety

of informal traders in Dar es Salaam..................................................................... 33

14. Organisation and representation of role players in the informal sector.............. 34

15. Integrating provision of space and basic services for the informal sector

into urban planning exercises and urban management systems .......................... 41

Case Study - Accra, Ghana Working Group on street trading and hawking ....... 42

Case Study - Durban Metropolitan Local Government (South Africa) ............... 43

References ......................................................................................................................... 47

vii

Abbreviations/Acronyms

ACP Africa Caribbean Pacific

CBD Central Business District

DRC Democratic Republic of the Congo

GDP Gross Domestic Product

ICLS International Conference of Labour Statisticians

IPEC International Programme on the Elimination of Child Labour

LED Local Economic Development

MNC Multi-National Corporation

OH Occupational Health

OSH Occupational Safety and Health

SACU Southern African Customs Union

SADC Southern African Development Community

SAMP Southern African Migration Project

SAP Structural Adjustment Programme

SME Small and Medium Enterprise

SMME Small Medium and Micro Enterprise

SNA System of National Accounts

SSA Sub-Saharan Africa

UNICEF United Nations Childrens Fund

WIEGO Women in Informal Employment: Globalising and Organising

List of Tables

Table 1 Socio – Demographic Profile of the Sub-Saharan Region

Table 2 Size of the Informal Sector in Sub-Saharan Africa (excluding

Francophone countries)

Table 3 Employment in the Informal Sector in SSA (1980s)

Table 4 Trends in the Growth and Size of the Informal Sector in SSA

Table 5 Home-based Work

Table 6 Women in the Informal Sector in the African Continent

Table 7 Women and Men in non-agricultural labour in the informal economy

Table 8 Potential Negative Economic Impacts of Globalisation on the Informal

Economy

Table 9 Potential Negative Social and Welfare Impacts of Globalisation on the

Informal Economy

Table 10 Extent of Ratification of Fundamental Labour Rights Conventions

by selected countries in SSA

viii

ix

Acknowledgements

Judith Shier, Librarian at Trade Union Research Project (TURP)

Judgement Khoza, Assistant Librarian at TURP

Prof. Francie Lund, Senior Research Fellow at Centre for Social & Development Studies

(CSDS) at the University of Natal, Durban

Mary Smith, Librarian at CSDS

Imraan Valodia, Senior Research Fellow at CSDS

Caroline Skinner, Research Fellow at CSDS

Joanna Jackson, ILO

Andrea Singh, ILO

Flora Minja, ILO

Reeh Peter, ILO

Charles Mataya, University of Malawi

Jeremy Grest, Lecturer in Political Science Department at University of Natal, Durban

1

1. Introduction

This report attempts to provide an analysis of available secondary data on the informal

sector in Sub-Saharan Africa (SSA). This region has been divided into four sub-regions for the

purposes of this study, and data have been presented as far as possible within a regional context.

The four regions are noted below, with the countries for which we were able to obtain data in the

available time:

West Africa: Gambia, Ghana, and Nigeria

Central Africa: Cameroon, Gabon, Democratic Republic of Congo (DRC)

East Africa: Kenya, Tanzania and Uganda

Southern Africa: Angola, Botswana, Mozambique, Sout h Africa, Swaziland, Zambia

and Zimbabwe.

2. Key factors specific to Sub-Saharan Africa (SSA)

2.1 Population trends 1

The population in the SSA region (including Francophone Africa) is anticipated to reach

one billion by 2007. By 2005, half of the population is expected to reside in urban settlements.

2.2 Political change2

Over thirty multi-party elections have taken place during the 1990’s in SSA. However,

independent governments have inherited colonial structures and systems, as well as entrenched

privileges and inequitably distributed resources. Addressing these legacies will take many

decades.

2.3 Economic development indicators3

SSA Gross Domestic Product (GDP) grew at an annual rate of 1.7% in the 1980's and 2.4%

in the 1990's. However, due to rapid population growth rates, per capita income declined over the

last two decades. SSA is still reliant on primary commodities, mainly in agriculture and mining,

for 89% of its total exports. Aid to poor countries now averages only 0,27% of rich nation's GDP,

considerably less than the 1% target of the 1970's. External debt increased between 1975 and

1994, and so did debt service charges.

1 Hassim, Y. 1996, p.2.

2 ibid.

3 World Bank, 2001b.

2

2.4 Poverty indicators

SSA remains a poverty-prone continent with nearly half of its population living in poverty.4

It is estimated that 46.3% of SSA's population lives on less than $1 a day. 5 This income poverty

measure has declined since 1990 by only 0,3% in SSA.6

2.5 HIV/AIDs in Sub-Saharan Africa

According to the United Nations Development Programme, in nine countries in SSA,

(namely Botswana, Kenya, Malawi, Mozambique, Namibia, Rwanda, South Africa, Zambia and

Zimbabwe), life expectancy is expected to decline by an average of 17 years because of AIDS in

the early part of the 21st century. 7 The 20 countries with the highest HIV prevalence rates in the

world are located in SSA, and an estimated 70% of those infected with HIV.8. Of the 13

countries in the world with the highest maternal mortality rates (exceeding 500 deaths per

100,000 live births), 12 are in SSA.8

2.6 Socio-demographic profile of the Sub-Saharan region

A general economic profile of the region obtained from available statistics (see Table 1

below) does not indicate much about the informal economy because such statistics either do not

exist or are difficult to access. Where they are accessible, they have not been derived from a

consistent definition or using the same data-gathering techniques, which makes comparisons

difficult if not impossible. Collecting proper statistics on the informal economy is very difficult.

There is a tendency to under-report and under-estimate the size of the informal economy as

people do not necessarily consider what they are doing as ‘work’. Additionally, national

statistical agencies tend to register enterprises rather than workers. These are important provisos,

or necessary qualifying statements, for the data which follow.

4 Mihyo, P., 1997.

5 World Bank, 2001b, p.23.

6 Ibid.

7 UNDP, 2000.

8 World Bank, 2001b, p. 182.

3

Table 1: Socio-demographic profile of the Sub-Saharan region 9

Country Population in

millions

Total Labour

Force 1997

GNP per capita

(US $) 1998

GNP Annual Growth Rate

in per cent

1975 - 85. 1990 - 98

Central Africa

Cameroon 14.7 5.650m 610 5.4 0.5

DRC 49.8 20.074m 680 3.8 1.5

East Africa

Tanzania 32.9 16.170m 220 - 3.4

Kenya 30 14.376m 350 4.8 2.4

Uganda 21.5 10.309m 310 - 7.1

Southern Africa

Angola 12.4 5.298m 380 - -3.3

Mozambique 17.3 9.484m 210 - 5.8

South Africa 42.1 17.035m 3,310 1.7 1.7

Swaziland 0.9811 0.326m 1,400 6.0 3

Zambia 9.9 3.546m 330 0.6 1.4

Zimbabwe 11.9 5. 383m 620 3.0 1.8

West Africa

Ghana 11.9 8.632m 390 1.7 4.3

Nigeria 123.9 46.791m 300 1.5 3.5

The profile, which emerges of this continent, is one of poor economic performance and

deepening poverty for the vast majority of the residents. It is important, however, to categorise

and characterise the poor. A recent World Bank report11 identifies three overlapping categories

of the poor, namely: chronic poverty versus transitory poverty; poor versus destitute; and

dependent versus economically active poor. The report suggests that female-headed households

and households with elderly, disabled, and orphaned persons are usually among the poorest.

The percentage of the labour force in the informal economy and estimated rates of

economic contribution to overall GDP are discussed below.

3. Informal economy in the 21st century - Changing nature and trends12

3.1 Magnitude and Size

Table 2: Size of the informal economy in Sub-Saharan Africa

Size of the Informal Economy on the African Continent

Informal economy as share of percent

Non-Agricultural Employment 78

Urban Employment 61

New Jobs 93

Source: Chen, M.A., 2001.

9 Ibid, and ILO 1998.

10http://www.fao.org/giews/english/basedocs/swa/swapop/e.stm

11World Bank, 2001

12 Unless otherwise specified, figures are derived from tables presented in World Bank 2001b, pp.274-316. Informal

sector figures are based on Charmes, J., 1998b and Sethuraman, S.V., 1997b.

4

Whereas in 1990, 21% of SSA’s 227 million labour force was working in the informal

economy13, by 1998 it was estimated to comprise 40-60% of urban employment.

Table 3: Employment in the informal economy in SSA (1980s)

Countries

(years)

Informal economy as a share of Women in the informal

economy as a share of

Total

Employment

Total

GDP

Total

Non-Agric

Employment

Total Non

Agric GDP

Total GDP Total Informal

GDP

DRC (1984) 18 17.2 38.3 37.9 14.9 39.3

Gambia (1983) 13.5 3.8 51.4 35.8 25.1

Zambia (1986) 17.3 3.3* 51.8 45.4 34.3

* Excluding subsistence agriculture.

Source: Charmes, J., 1998b.

Central Africa

Reliable data on Central Africa are scarce. The information below does not present

regional trends. Much of this region has been engulfed in wars, inevitably affecting the

economies of the countries in the region and reducing the possibilities of gathering reliable data

or doing proper research.

Cameroon

The total population has increased from 8.7 million in 1980 to 14.7 million in 1999. In that

time period, the total labour force increased from 4 million to 6 million. However, the GDP

growth rate decreased from 3.4 in 1980 to 1.3 in 1990. This change was largely the result of a

decrease in the service and industrial sectors. In Yaounde, in 1992, it was believed that 80% of all

new jobs created were in the informal economy. The use of child labour in the informal sector

has increased as a result of this economic crisis.14

DRC

This country’s population was 49.8 million in 1999, with 20 million economically active

people. Of this, women comprised 43%. The GPD growth rate was -5.1% in 1999. There is no

official defin ition of the informal sector for policy purposes in DRC, and no regulatory or legal

framework. This should be understood within the political and historical context, which has seen

the DRC engulfed in political turmoil for the last two decades.

13 Charmes, J., 1998b.

14 Trade Union World, 2001.

5

East Africa

Research available shows trends in the three countries below, but we cannot be sure that it

all comes from comparable sources. In Tanzania, for example, statistics have clearly been

affected by changing definitions as a result of economic liberalisation.

Tanzania

The World Development Report (2000/2001) claims that Tanzania has a population of 32.9

million, with a 3.2% average annual growth rate from 1980 to 1990. In spite of this population

growth rate, the growth rate of the formal labour force between the 1980/90 and 1990/99 periods

dropped from 3.3% to 2.6%. The average percentage of female labour force was fairly constant

being 50% in 1980-1990 and 49% in 1990-1999. The Tanzanian Government believes that a

third of the GDP originates from the small and medium enterprise (SME) sector. The SMEs

operating in the informal sector alone consist of more than 1.7 million businesses engaging about

3 million people, or about 20% of the Tanzanian labour force.15 The Government estimates that

there are about 700,000 new entrants into the labour force annually. The GDP was US$ 8.777m

in 1999, compared to the GDP of US$4.220m measured in 1990.16

One study on how to define and measure the size of the informal sector has challenged the

earlier methods used. Presently, the informal sector is measured according to the volume of retail

trade, volume of travel per capita, degree of urbanization and level of income taxation.17 The

study shows that the recognised informal sector has grown because of liberalization resulting in

legalisation of some of the “black market” activities, such as sale of televisions, video-recorders,

bicycles, etc. According to recent reports, “close to 60% of Tanzanian business comes from

informal economic activity”.18 However, in 1990, the informal sector was estimated to be

contributing only 33% to the GDP of Tanzania.

Kenya

The latest population figures shows that there were 30 million people in Kenya in 1999, of

whom 15 million people were employed. Between 1991 and 1994, the informal sector grew by

16.1% - faster than the formal sector, which only grew at 1.6% during that period. Women

constitute 46% of informal sector entrepreneurs, and 40% of the employees.19 The informal

economy now accounts for around 40% of urban employment; between 1985 and 1990 the

informal economy grew at an estimated rate of 9% per year.20

15 Ministry of Trade and Industry, Tanzania, 2001, p.9.

16 World Bank, 2001b.

17 Bagachwa, M. S. D. and Naho, A., 1995.

18 Financial Mail, 25 May 2001.

19 Alder, G. et al, 1998.

20 Sethuraman, S.V., 1997b

6

Uganda

The Ugandan population was 21.5 million in 1999, compared to 12.8 million in 1980. The

total labour force was 11 million in 1999. Of this total, female employment was 48%. Informal

sector employment exceeds formal sector employment. The dominant activity in the informal

economy is retail trading - 50% of all informal workers are involved in street or market vending.

Southern Africa

Similarly in this region, there is no real basis for comparison between countries. Different

studies have produced the results detailed below.

Angola

The latest population figures show that there were 12,4 million people in 1999, and the total

labour force was 6 million, 46% women. The GDP growth rate was 3,4% during 1980-1990, and

decreased in 1990-1999 to 0,8%, after of 30 years of civil war, resulting in the collapse of the

country’s service and agricultural sectors.21 The informal economy apparently had not been

measured in Angola until 1977-78, but by the 1990s, 36% of all non-farm employment was

believed to be in the informal sector. The dominant activity is retail trade, with over 50%

engaged in this kind of work.

Mozambique

The overall population increased from 12.1 million in 1980 to 17.3 million in 1999. About

71.3% of women in rural areas live in conditions of abject poverty. Research on the informal

sector highlights several reasons for these conditions. Most Mozambican men were part of the

forced migrant labour system called chibalo (employed in South African mines and farms). A

large number of women were employed in the agriculture sector. The adoption of Structural

Adjustment Programmes (SAPs) in the late 1990s led to job losses in the formal sector, decline in

income of women, long hours of work, lack of job security, and cuts in food, fuel and essential

services, which forced women to work intensively in the informal economy to supplement their

incomes.22 One factor shaping the Mozambican informal economy was refugees relocating to

urban areas because of war in the 1990s.23 The research further suggests that the size of the

informal sector is affected by the economy not being able to absorb migrants from rural areas.

The two largest demographic groups involved in the informal economy are women and children.

A study 24 of the incidence of women working in the informal and the formal economy found that

73% of women said that work in the formal sector is their primary activity, but 96% (i.e. 23%

higher), which includes both those doing informal work as a primary activity and those doing it

as a secondary activity, said informal self-employment was a better option for them. The main

economic activities in the informal economy are trade and agriculture. Between 30 and 40% of

21 World Bank, 2001b.

22 Monteiro, Natahna Texeira. Women in the Informal Economy, Mozambique (accessed on

http://dana.ucc.nau.edu/~nm5/precis.html) on 15 June 2001.

23 Muleide, 1994.

24 ibid, p.5.

7

urban households are dependent on the informal economy. There is a lack of rigorous research in

Mozambique, however, on the operational definition and methodology to measure the informal

economy.

South Africa

South Africa is the most recent country in the Southern African region to become a

democratic state (in 1994). Unemployment has been increasing among the African population

since 1990. According to the World Development Report, South Africa had a population of 42.1

million in 1999 of whom only 17 million people were economically active. South Africa’s GDP

average annual growth was 1.0% in 1980/90. From 1990 to 1999, it rose to 1.9%.25 The change

of Government, the acceptance of South Africa into the global economy in the second half of the

1990s, the reduction of the tariff protective policies, and adoption of other macro-economic

policy reforms are some of the reasons that are argued by some to have led to the increased

growth of GDP in the 1990/1999 period.

Statistics on the informal sector in South Africa are still highly unreliable for the following

reasons: until the 1990s, under the apartheid system, statistics in South Africa excluded all South

Africans living in the so-called “homelands” or “Bantustans”, resulting in all South African

statistics being significantly skewed. After1994, the Government for some time avoided adopting

a policy on the informal sector or the informal economy, preferring to relate rather to the small,

medium and micro enterprises (SMME) sector.

Statistics are only now starting to be more systematically collected. The October Household

Survey of 2000 (the main source of unemployment information) showed that there were 3.2

million unemployed people in 1999, 10.4 million people employed in the formal economy, and

1.9 million in the informal economy. This appears to be an under-estimation of the informal

economy, which leads us to look at how unemployment and informal sector are defined. South

Africa uses two standard definitions of unemployment, i.e. the official or narrow definition and

the expanded definition. The official (narrow) definition says people are unemployed if:

1) they are part of the economically active population;

2) they did not work in seven days before they were interviewed;

3) they want to work and are available to start work within a week of interview; and

4) they have taken steps to look for employment or start some form of selfemployment

in the four weeks before being interviewed.

The expanded definition uses only the first two criteria to measure and define

unemployment.

Since it is unclear how work - or the economically active population - is defined by

statisticians and interviewees, the informal sector in all probability, therefore, includes people

who are officially employed as well as people who are officially unemployed, according to the

statistics. Statistics South Africa defines the informal sector as those businesses that are not

25 World Bank, 2001b, p.295.

8

registered. They are generally small in nature, and are seldom run from business premises.26

Instead, they are run from homes, street pavements or other informal arrangements. However,

self-employed individuals have not yet been included as part of informal sector.

Swaziland

The urban informal economy in the 1980s accounted for 10% of national employment and

was growing by an average annual rate of 15% contrasting sharply with the decline of formal

wage employment of 1% annually. By the 1990s, the informal economy was contributing 22% to

the national employment. 27

Zambia

Population figures show that there were 10 million people in 1999. The average annual

GDP growth rate was 2.6% and 4 million people employed. The informal economy is growing

faster than the formal economy, and some formal shop owners are selling their goods largely to

operators in the informal economy in order to evade paying tax.28 About 43% of urban

employment is in the informal economy.29

Zimbabwe

Zimbabwe’s economic profile shows that out of 11.9 million population in 1999, only

247,000 people have access to telephones. The formal economy has shown negative job growth,

and some jobs in the informal economy have shown positive growth30. In 1996, 1.56 million

people worked in the informal economy compared to 1.26 million people in the formal economy.

The total labour force increased from 3 million in 1980 to 5 million in 1999, 44 % of whom were

women.

A recent study31 found that 31% of women in the informal economy are traders selling fruit

and vegetables. Other women are involved in cross-border activities (19.5%), which forms the

second largest economic activity in the Zimbabwean informal economy. Home-based work in

Harare is widespread, but it is not well documented. This work involves simple, unskilled,

labour-intensive tasks mostly subcontracted by manufacturing companies. However, this and

other forms of informal work such as small businesses, vendors and “illegal” trade lack

recognition by the Government. The country has a high unemployment rate (65%) and has an

estimated potential to absorb only 200,000 new entrants to the job market each year.

26 Statistics South Africa, 2000.

27 Matsebula, S.M.,1996.

28 Mupedziswa, R. and Gumbo, P., 2001.

29 Sethuraman, S.V., 1997b.

30 Latham, S., 1998.

31 Mupedizwa, R and Gumbo, P., 2001.

9

West Africa

Ghana

The population was 18.9 million in 1999, about 80% higher than the 10.7 million in 1980.

The labour force is 9 million people, with women forming 51%. The informal sector employs

89% of the total labour force. Of this, 56% are engaged in agriculture and 21% in retail trade.

Women constitute 77% of the informal labour force. Informal trading is a major source of

employment for women, men, youth and children. Since 1990, the annual growth rate of GDP

has increased from 3.0% to 4.3%.32

Nigeria

In 1999, there were 123.9 million people, making Nigeria the most populous country in

Africa with an official labour force of 50 million. The oil industry contributes 40% to the annual

GDP. This oil-producing country saw a dramatic increase in the informal economy when the

price of oil declined in 1980. The informal economy accounts for about a third of the urban

labour force.33 The main economic activity in the informal economy is retail trade. Most workers

in the informal economy run front shops, stalls, kiosks or hawk goods.

3.2 Informal economy in SSA

The table below summarises the trends regarding the informal economy in SSA (excluding

Francophone West Africa)

Table 4: Trends in the growth and size of the informal economy in SSA

Country Growth of Informal Economy

Central Africa

Cameroon In 1992, 80% of all jobs created were in the informal economy

DRC No figures available for the informal economy

East Africa

Tanzania 1990 - Informal economy contributed 33% of GDP

Kenya 1995 - Informal sector employed 2.2 m people while formal economy employed 1.6m.

Uganda Informal economy employment exceeds formal employment

Southern Africa

Angola By 1990’s 26% of all non-farm employment was believed to be in the informal

economy.

Mozambique 30-40% of urban households dependent on informal economy in the 1990’s.

South Africa In 1996 the urban informal economy employed 1 m people. In 1999, this increased to

1.9 million.34

Swaziland By the 1990’s, informal sector contributed 22% of national employment compared to

10% in the 1980’s.

Zambia 43% of urban employment is in the informal economy.

Zimbabwe In 1996, the informal economy employed 1.56m people as compared with 1.26 m

people in the formal economy.

32 World Bank, 2001.

33 Simon, P.B., 1998.

34 Increase due to improved data-gathering techniques, not dramatic increas e in numbers.

10

West Africa

Ghana 89% of labour force employed in the informal economy

Nigeria Informal economy employs 1/3 of urban labour force

The pattern emerging appears to be fairly uniform across all countries in the SSA region

and reflects the following:

-  a decline or stagnation in the growth of formal employment;

-  increase in informal sector activities in the region. In some instances the informal

economy plays a far more significant role in the country’s economy than the formal

economy, as reflected in the number of economically active people working in the

informal economy;

-  in addition, the informal economy is making an important contribution to the country’s

economic growth, as the GDP data reflects; and

-  growth in the informal economy, while being more rapid in urban areas, is also evident in

rural communities.

4. Conceptual and measurement issues

There are almost as many definitions of the informal sector as there are writers about the

informal sector. The phenomenon includes various and numerous kinds of activities, which

makes it hard for researchers to analyse labour market changes in developing countries.35

Jhabvala, in “Definition and Measurement of the Informal Sector”36, emphasised that the

issues of definition and measurement could not be separated from each other. She pointed out

that the definition of informal sector given by the 15th ICLS/1993 SNA is biased towards

estimating the contribution of the informal sector in national accounts through an enterprise

approach wherein a large number of workers, such as home-based workers, women agricultural

workers, street vendors, and certain other workers in the informal economy remain unaccounted

and invisible.

She suggested, instead, that a household approach be utilised to capture the informal

economy for purposes of measuring its size. This approach would involve first finding the

informal workers within the household through a household survey and then identifying the

enterprises through these workers.

WIEGO has identified other groups of informal workers which include: self-employed (in

own-account activities and family businesses), paid workers in informal enterprises, unpaid

workers in family businesses, casual workers without fixed employer, sub-contract workers

linked to informal enterprises, and sub-contract workers linked to formal enterprises.37

Charmes argues that it is imperative that the labour market surveys used by most

countries be changed for two reasons:

35 Charmes J., 1998.

36 http://www.nic.in/stat.def_measure.htm

37 WIEGO, 1999.

11

1) to regularly provide reliable indicators about the growth of employment in the

informal economy (by tracking down the workers); and

2) to provide information about enterprises or locations where workers in the informal

economy perform their operations.38

It is within this framework that this analysis has been approached.

5. Old and new characteristics

According to Mhone, the development of the informal economy in different regions of SSA

was shaped by the colonial legacy of each particular region, i.e. whether settlers dominated an

economy, or whether the colony relied on revenue from cheap migrant labour prior to

independence, after which informal economies flourished everywhere. Compared to other Third

World countries, and West Africa in particular, in Southern Africa the initial conditions

pertaining to the conjuncture of traditional socio-economic systems and colonialism were not

conducive to the full-fledged development of the informal economy. On the advent of

colonialism, traditional African socio -economic systems in Southern Africa had not evolved

sophisticated craft industries and market economies, such as obtained in West Africa and

elsewhere, that could have formed a nucleus for small-scale indigenous entrepreneurship and

enterprise similar to those that have been a part of the informal economy elsewhere.39 However,

as these economies failed to “generate adequate productive employment in the face of increasing

population and urbanisation”,40 the informal economy developed even in Southern Africa. Since

independence from colonialism, major political disturbances, destruction of institutions and

policy reform processes including deregulation have further impacted on the growth of the

informal economy.

Tokman41 provides a useful assessment of old and new characteristics of informal sector.

Traditionally, the informal sector was perceived as compressing mainly ‘survivalist’ activities.

Various negative aspects were used to describe the informal sector ranging from undeclared

labour, tax evasion, unregulated enterprises, illegal and criminal activity. The informal economy

was also seen as providing employment and reducing poverty. But the adoption of neo-liberal

policies by most governments has led to the development of new features of the informal

economy. One way that this has happened is through the spread of contractual employment

including those in the formal economy, and the increase in small and micro enterprises, which

traditionally, formed part of the informal economy.

5.1 Definition of the informal economy

Some have questioned the relevance of the term ‘informal sector’ because it implies that

part of the economy is outside government regulation. Moreover, it has been suggested by others

that the use of the term ‘informal sector’ should not be limited only to activities that are not

38 Charmes, J. (on line)

39 Mhone, 1996, p. 11.

40 ibid. p.13.

41 Cited in ILO, 2001.

12

regulated or subject to control by government, but should include activities that are linked to the

formal economy as well, for example through subcontracting.

The ILO aims to meet the global challenge of reducing the “decent work deficit in the

informal economy”.42 “Decent work” is work with fair and equal treatment, decent

remuneration, fair conditions of employment, safety and social protection, opportunities for

training and development, and collective participation.43

A particular category of informal work, which has been given attention in the ILO in recent

years is home-based work. Chen, Sebstad and O’Connell44 provide a description of home-based

work in the textile and garment industry as an increasing type of work in the informal economy.

The research defines home-based work as remunerative work carried out by workers within their

homes, i.e. subcontracted workers and independent own-account workers. The prevalence of

home-based work in industrial (and less industrial) countries in both urban and rural areas is

evidence that home-based work is an important source of informal work in the garment and

textile industry. Evidence further suggests that home-based work is an important source of

employment throughout the world and in SSA, especially in manufacturing and service

activities.45 The terms ‘home-based work’ and ‘home work’ are often used interchangeably. The

ILO Convention No.177 on Home Work which defines ‘homeworkers’ as ‘employees’, and

therefore distinct from ‘home-based own-account workers’ who are more independent and not

‘employed’ by ‘employers’ as such. However, in a study on home-based work carried out in

South Africa in preparation for the discussion on this Convention in 1995, “of the total number of

(601) home-based workers interviewed, only 20 (3%) were on contract to someone else, and can

thus be regarded as homeworkers”.46 We have come across no evidence to suggest a higher

incidence of home-based workers as defined by the ILO Convention as home-workers elsewhere

in SSA. However, home -based work is widely prevale nt as indicated in Table 5.

Chen47 suggests that the more invisible informal workers, namely home -based workers or

industrial outworkers, contribute more to global trade than other sectors of the informal economy.

She argues that home-based workers comprise a significant share of the workforce in key export

industries, particularly those involving simple manual tasks such as labour-intensive operations,

simple machines or portable technology. This is largely applicable to the textile, garments and

footwear industry.

42 ILO 2001 (a)

43 Egger P. and Sengenberger W., 2001, p.1.

44 Chen, Sebstad and O’Connell, 1999, p.605.

45 Chen, M. et al, 1999

46 Budlender, D. and Theron, J., 1995.

47 Chen, M. A., 2001.

13

Table 5: Home -based work

Country Percentage of enterprises which

are home-based

Nature of Study Data Source

South Africa 71% of enterprises are located

within the home or homestead

Survey of 5253 enterprises

in two urban communities

Liedholm and McPherson,

1991

Botswana 77% of enterprises are home -based Nationwide survey of a

sample of 1362 enterprises

Gemini Group, 1992

Lesotho 60% of enterprises, 88% of

women’s manufacturing

enterprises and 57% of women’s

service enterprises are home-based

Not known Fisseha, 1991

Swaziland 68% of enterprises are home -based Nationwide baseline survey

of 2759 enterprises

Fisseha & McPherson, 1991

Zimbabwe 77% of enterprises are home -based Nationwide baseline survey

of 5575 enterprises

McPherson, 1991

Kenya 32% of enterprises, 37% of rural

and 16% of urban enterprises are

home-based

Nationwide survey of a

sample of 5353 current

businesses and 1990

previous businesses

Parker & Torres, 1994

Malawi 54% of enterprises are home -based Not known Liedholm & Mead, 1994

5.2. Segmentation and heterogeneity

When defining the informal economy, Chen, Sebstad and O’Connelle48 argue that the

concept encompasses many different economic activities, including home-based work, street

vendors, entrepreneurs who employ other workers, self-employed and casual workers whose

work is seasonal or who work in outsourced industries. Although the informal economy employs

both men and women and allows women greater ease of access (because women can work in the

informal economy at the same time as attending to many of their domestic responsibilities,

something which is not always possible to balance in formal employment), women tend to be

concentrated in low-productivity and often unremunerated jobs.49

Charmes50 distinguishes between the following sub-categories of enterprises in the informal

economy:

1) family enterprises comprised of independent owners and family workers; and

2) micro-enterprises that consist of less than ten employees or which are not

registered as enterprises.

For the purpose of measuring the informal economy, Charmes suggested the following

further segmentation:

1) Home-based workers, those workers whose work is largely casualised and

undertaken at domestic premises;

2) Seasonal or temporary jobs;

48 Chen, Sebstad and O'Connel, 1999.

49 WIEGO, 1999, p.10.

50 Charmes, J., 1998.

14

3) Second job; and

4) Street vendors.

The informal economy is dynamic, and the multiplicity of activities shows that there is still

more research to be done to properly understand the heterogeneity of the sector.

5.3 Specific sub-groups

Gender

An effect of the growing informalization of the economy has been a rise in the number of

women participating in the informal economy.51 Available data do not always accurately reflect

the extent of women’s involvement in the informal economy. This is because much of women’s

informal work is uncounted in official statistics, or unpaid, or both.

According to Chen,52 most women in the informal economy in Africa are either selfemployed

or unpaid workers in family enterprises. Average incomes are lower in informal than in

formal employment. The gender gap in income appears higher in the informal economy due to

two interrelated factors:

a) informal incomes decline as one moves across different types of employment from

employer to self-employed, casual wage worker, etc. ; and

b) women are under-represented in high income activities and over-represented in lowincome

activities such as subcontracted work. A majority of women in the informal

economy are own-account traders and producers or casual and subcontracted workers.

Relatively few are employers who hire paid workers.

In some countries in SSA, Chen notes that virtually all of the female non-agricultural labour

force is in the informal sector (see Table 6).

Table 6: Women in the informal economy in the African continent

Size and contribution of informal economy in trade, and

women traders in informal trade in Africa,

Informal sector as a share of: Women traders as a share of:

Total Trade

Employment

Total Trade GDP Total Informal

Trade

Employment

Total Infor mal

Trade GDP

Benin 99.1 69.8 92.2 64.3

Burkina Faso 94.7 45.7 65.9 30.1

Chad 99.2 66.7 61.8 41.2

Mali 98.1 56.7 81.3 46.1

Tunisia 87.6 55.6 7.9 4.4

Kenya 84.9 61.5 50.2 27.3

Source: Charmes, J. World Development Report, 2000

51 World Labour Report, 1997.

52 Chen, M.A., 2001.

15

The data for Tunisia, a predominantly Islamic country, differ significantly from the other

countries in this table due to the strictly-enforced practice of purdah, which discourages women

to work outside the home. This was also found in a study in the predominantly Islamic province

of Kaduna, Nigeria53, where 72% of participants in informal retailing were men. In the rest of the

countries in the table, women are highly represented in informal work, though less so in informal

trade GDP, which indicates that they are concentrated in low-income work in the informal

economy.

Table 7: Women and men in non-agricultural labour in the informal economy

Percentage of non -agricultural labour force in the informal economy (1991/1997)

Africa Women Men

Benin 97 83

Chad 97 59

Guinea 84 61

Kenya 83 59

Mali 96 91

South Africa 30 14

Source: Charmes, J., cited in “The World’s Women 2000”, United Nations, New York.

The pattern emerging from the country data appears to confirm Chen’s analysis (2001) that

women are over-represented in the informal economy worldwide.

Child labour

The two main sources of information on child labour used in this report are the ILO’s

International Programme on the Elimination of Child Labour (IPEC) and UNICEF-studies. The

ILO and others distinguish between child work and child labour, with the latter term being used

to describe less acceptable practices. The ILO uses the concept of “hazardous” to distinguish

between “work” and “labour” with characteristics such as:

- working at too young an age;

- working for hours that are too long;

- working under strain;

- working on the streets;

- working for inadequate pay;

- working without stimulation;

- assuming too much responsibility; and

- being subject to intimidation.

A further definition to which the Child’s Rights Convention refers is the right of every child

“to be protected from economic exploitation and from any work that is likely to be hazardous or

interfere with the child’s education, or be harmful to the child’s health, or physical, mental,

spiritual, moral or social development”.54

53 Simon, P.B. 1998 and Amin, A.A. 1994.

54 UN Children’s Rights Convention (Article 32.1).

16

The ILO has undertaken studies on child labour in Kenya, Malawi, South Africa, Tanzania

and Zimbabwe. It is estimated that there was a 32% incidence of child labour in Africa in 1998,

i.e. 61% of the world’s55 children engaged in economic activities aged between 5 and 14 years.

UNICEF studies showed that, in the year 2000, the incidence of child labour was particularly

high in West and Central African countries such as Benin, Burkina Faso, Cameroon, Gabon and

Nigeria.

Central Africa

Cameroon has seen increased incidence of child labour since its economy showed some

signs of decline in mid-1990s.56 With the informal economy becoming very important for the

survival of many, the incidence of child labour increased. Child labour is practised in different

forms in rural and urban environments. In the rural areas, children are mainly involved in

agricultural activities, including 'invisible' child labour (i.e. forced labour)57, although they also

perform domestic tasks. In the urban environment, child labour takes the form of domestic

labour, street child labour, and apprenticeships.

West Africa

Ghana has a high incidence of child labour, particularly of girl children. The World Bank

Report (1998) estimated child labour to be at 28%, and of this percentage, 13% were children

under 14 years. Accra and other urban centres where street vending is active, account for 12% of

child labour. Only 1.4% of these children combine work with schooling. 58 Interestingly, a survey

conducted by the Ghana Education Service in 1989 on school drop-outs between the ages of 7-15

years found a large number engaged in hawking goods or in other income - generating activities on

the streets.59

Nigeria: In 1992, three large scale studies of working children funded by the Ford

Foundation and UNICEF in Nigeria found six categories of children working on the streets in

urban areas: 64.3% were street vendors in mobile or stationary positions and were largely female.

The other five categories included shoe-shine boys (3.9%), car washers/watchers (5.9%) and head

loaders/feet washers in markets (7.6%). In these other categories of work boys predominated.

Millions of children of both sexes engaged in hawking as part and full-time activity in urban and

semi- urban areas such as Lagos, Ibadan, Oshogbo, Aba, Onitsha, Kano, Maiduguri and Abuja.60

A study on Nigerian informal traders found that 10% of informal traders were children between

the ages of 5 and 14.61

55 ILO, 1998, p.14.

56 Amin, A.A., 1994.

57 Trade Union World, 2001.

58 Accra Municipal Assembly, 1999.

59 Arthur, E., 1995.

60 Oyerinde, T., 2001.

61 Trade Union World, 2000b.

17

East Africa

The ILO estimates that of the 17 million working children in the African region, 32.9% are

in East Africa.62 In Kenya, children constitute 20 to 30% of casual labour force on all types of

plantations. Two types of child labour can be identified: 1) family work, which occurs when

children work on family farms for which no payment is involved; and 2) child wage labour in

which children work outside the family farm, for which they are paid. The impact of child labour

on the education level in Kenya is significant. The ILO estimated that in 1997 there were more

than 3 million children between the age of 6 and 14 years who either had no formal education at

all or had dropped out of school.63

In Tanzania, an ILO study shows that children aged 7-15 are employed mostly in the

plantations as labourers in their own right. The conditions under which children work are

characterised by lack of medical examination or facilities, no contracts, food, accommodation or

transportation. Children are expected to work the same as adults and earn the same wage as

adults.64

Southern Africa

The ILO reports that children in South Africa work in farms with their parents as security

for employment and to avoid eviction from the farms where they live. This is a tradition that was

borne out of apartheid wherein people were allowed to stay on farms as labour tenants to serve as

a “reserve army” of workers for the farmers.

Research undertaken in South Africa found that despite the promulgation of legislation

protecting children under 16 years of age from engaging in employment, the lack of effective

monitoring and other measures to reduce the incidence and deal with offenders has meant that

child labour activities have continued. In fact, some of the most hazardous forms of child labour

concern the increasing involvement of young children in commercial sex activities.65

A report66 on the effects of globalisation on children’s rights raises concerns about the

increasing risk of more children being drawn into the labour market, especially in the informal

economy. It is clear that eradication of the most harmful forms of child labour will necessitate

promoting efforts to reduce poverty.

Migrants

Southern Africa

The most comprehensive study on migrants in the informal economy was done by the

Southern African Migration Project (SAMP)67 borne out of initiatives aimed at providing

62 ILO, 1997, p.4.

63 ILO, 1997 (IPEC policy).

64 ibid.

65 Unpublished data, personal involvement of researcher Shirin Motala in that initiative.

66 Norton, A. et al., 2000.

67 Perbedy, S. 1998.

18

information about migration within the Southern African region. SAMP found that there is a

negative perception among South Africans about migrants, which has led to negative

stereotyping of migrants in the informal sector. In its 1998 report, SAMP showed that informal

cross-border trade existed within South Africa before 1994 when the democratic government

came into power. The study found the following:

· nearly 40% of migrants had formal educational qualifications including university

experience;

· the motive for travelling across the border is not always political, but economic as well.

SAMP found that 78% of SADC migrants buy goods from South African retail and

manufacturing sectors to trade in other countries;

· over 20% of foreign traders employ South Africans in their business operations; and

· many migrants who are street traders are women, most enter on visitor visas, and men

come mainly from Mozambique, Zimbabwe, Botswana and Zambia.

Angola and Mozambique: Migration from rural to urban areas was reported in

Mozambique and Angola.68 The study found that most such migrants end up in the informal

sector. The reasons for this type of migration were political turmoil, civil wars, destruction of

infrastructure and the departure of the settler population, all of which have substantially reduced

the capacity of these countries to manage and produce income - generating opportunities for the

rural population.

South Africa: A study on migrants in the informal sector was undertaken in Durban by

SAMP in 1998. South Africa had started making inroads in the development of the informal

sector by changing its anti- immigration policies to allow flexible cross-border trade between

informal sector participants. The South African Government issued a White Paper on

International Migration in 1999. This policy seeks to protect South Africa against an influx of

“illegal immigrants” from Southern Africa by recognising the existence of informal cross-border

traders, and recommends the introduction of a renewable three- month visitors' visa which would

legalise the economic activities of traders entering South Africa.69

Zimbabwe: Nearly 20% of Zimbabwean women involved in cross-border trade obtain their

goods from South Africa and Zambia.70

West Africa

A study by WIDTECH71 in West African countries found that, parallel to the process of

eliminating trade barriers in the region, women in the informal sector are involved in cross-border

trade, usually carried out informally. Cross-border traders in West Africa are of three types. The

first group includes retailers who own small businesses and sell imported goods. The second

group includes wholesalers/retailers who trade and travel across the region and to even the Far

East and European cities. Their preferred markets are Dubai and Hong Kong where prices are

68 Sethuraman, S.V., 1997b.

69 Perdeby, S., 1998.

70 Latham, S., 1998.

71 Dejene, Y., 2001.

19

lower and the selection and quality of goods is higher. The third group includes wholesalers who

import goods directly from manufacturers (not necessarily in the informal sector only) in the

region.

People with disabilities

Very little is known or documented about workers with disabilities in the informal sector.

In many developing countries, the chances of disabled persons finding salaried employment or

work in the formal sector are far smaller than for their able-bodied peers. The lack of information

about the size, composition and situation of working age people with disabilities in many

countries including the African continent remains a barrier to formulating policies and

programmes to address their needs. However, where this information exists, there is a high level

of unemployment among working age individuals with disabilities, and here again women fare

worse then men.72

According to a discussion document by Susan Parker of the ILO,73 disability leaders are

focussing on the right to work as an important focal point within overall human rights. Parker

notes that in Africa they are doing so through the OAU-proclaimed African Decade for Disabled

Persons, now in its second year. She identified some examples of interventions aimed at

supporting employment for disabled workers:

· In Bulawayo, Zimbabwe, an NGO serves as an administrative umbrella for about 20 cooperatives

organized some years ago in the informal economy;

· In some war-torn countries, organizations of disabled persons have identified opportunities in

the marketplace such as coffin- making in a township in South Africa, and prostheses-making

at the height of wars in Liberia and Sierra Leone. These are generally sheltered employment

centres as they are often state- or donor- funded and are non-competitive.

6. Nature of linkages between formal and informal sector

There are a few studies that have attempted to understand the extent to which the informal

economy is integrated into the national economy and particularly its relationship to the formal

economy. There are forward linkages (to markets beyond the borders of the informal economy)

and backward linkages (in the form of inputs from outside the informal economy). Meagher74

observed that linkages between formal and informal economy in developing countries warrant

further research, especially when the informal economy becomes a refuge from the formal

economy. A similar study done by May and Stavrou75 found that in South Africa the formal

economy depends on the informal economy to act as a source of goods and services and to

provide a market for its own produce.

72 Parker, S. Personal communication.

73 Comments based on a review by Susan Parker of the Annotated outline of the Report for the General Discussion

on the Informal Sector, International Labour Conference, 2002.

74 Meagher, K., 1989, p.13.

75 May. J.D. and Stavrou, S.E., 1989; p.13.

20

However, Meagher argues that in the third world countries, the linkages between informal

and formal economy have led to informalisation of work in the formal economy as a means to

enhance the profit of the firms. She argues that this linkage has negative consequences for

informal labour because it has cheapened labour, and working conditions have deteriorated.

Further, informal workers in Kenya and Nigeria (the two countries she studied) work longer

hours, demand no formal wages and have minimal overheads.

She found that in South Africa and Nigeria, formal distributors and manufacturers are

beginning to use informal operators to extend their market to a wider public, and even into rural

areas. Further, the market for goods and services produced in the informal economy becomes a

formal economy market, and amongst participants in the informal econo my there is fierce

competition for consumers in low- income groups.

There is a growing body of research focussing on value chains of goods and services.76

Value chains involve the full range of activities and stakeholders who are involved in bringing a

product from conception, sourcing of raw materials, marketing, distribution and delivery to the

final consumer. It is evident that stakeholders in the informal economy, in the manufacturing and

more particularly the retailing of goods, play a significant role in many of these value chains.

East Africa

Bullock77 found that some sectors of the formal economy in Tanzania and Kenya like

manufacturing, services and agriculture are linked to the informal economy through production

and consumption. The Tanzanian Government SME policy states that the informal economy

complements large industries by performing certain operations, providing raw materials for the

latter and utilising their outputs to produce other products. Many large enterprises serve as a

training ground for entrepreneurial and managerial development. In the garment and textile

industries, companies have found it easier to subcontract work to women who work at home.

South Africa

A South African study by May and Stavrou78 also found the following forms of linkages

that exist between the formal and the informal economy. First, there are informal workers who

collect paper, glass and metal recyclable goods. These workers are integrally linked to the formal

economy through recycling of waste materials, so their fortunes depend on demand for waste

products from the formal economy. Second, the study found the utilisation of casual workers by

subcontractors in the formal economy. South Africa’s employment of casual workers has

increased further with the growth of the global economy.

Two other studies undertaken in Durban show clearly the complementary relationship

between the two sectors. A study by Witt79 on fruit and vegetable trading in the informal

economy found that the physical movement of fresh produce from the point of production to the

76 http://www.ids.ac.uk/ids/global/valchn.html and Baden, S., 2001.

77 Bullock, S., 1995.

78 op cit.

79 Witt, H., 2000.

21

point of consumption may be along various channels. Some of these channels are obviously

‘formal’ - the products are recorded, officially graded, inspected and so forth. Other channels are

less ‘formal’. Another study by Motala80 on garment trading in the informal economy found that

the formal economy traders provide storage facilities to informal traders on their property. It also

found that:

-  formal manufacturers are important suppliers of goods to street traders;

-  formal import firms supply imported goods to street traders; and

-  some formal Central Business District (CBD) traders rely directly and almost exclusively on

informal traders for their livelihoods.

7. Globalisation and macro-economic issues

Not enough is known yet about the exact impact of globalisation on the informal economy,

whether globalisation presents new possibilities for workers in the informal economy to enter

global markets or how practically accessible such possibilities are - these are all areas in which

further research is needed.

Globalisation is a process in which economic institutions compete with the help of the latest

technology and policies for markets, products, customer services, suppliers and best prices and

quality. From the perspective of survivalists in the informal economy, the process has been very

biased, i.e. has privileged powerful economic institutions like multi- national corporations

(MNCs), but not women and small economies (WIEGO, 1999, p.12).

The Southern African Development Community (SADC) is presently involved in prolonged

and contentious negotiations to establish a free trade area for the region based on the SADC

protocol on trade and development. Because most of the SSA countries suffered from colonial

oppression over the years, many developing countries have come to regard the promotion of

informal work and small, medium and micro enterprises (SMMEs) as an important part of the

process of economic reform and institutional restructuring.

The SADC trade proto col seeks to promote liberalisation of trade and investment, finance,

and free movement of people and goods by reducing tariff barriers. SSA countries have adopted

different responses to globalisation. Some have adopted Structural Adjustment Programmes

(SAPs) - others have joined regional organisations such as the SADC, the Southern African

Customs Union (SACU) and the African Caribbean Pacific (ACP).

WIEGO and HomeNet have developed some hypotheses as to possible negative

consequences of globalisation for workers in the lower end of the informal economy81 as seen

below in Tables 8 and 9.

80 Motala, S., 2000.

81 Lazo, L., 2000.

22

Table 8: Potential negative economic impacts of globalisation on the

informal economy

Effects Informal sector workers Informal sector producers

Employment Layoff resulting in:

Unemployment, shifts to selfemployment,

casual work, migration

(urban, rural, overseas)

Loss of livelihood, shifts to subcontract

work. Shifts between sectors, e.g. to

agriculture

Intensification of work migration (urban,

rural, overseas)

Production Scarcity of raw materials

Drop in market demand

Loss of marketing outlets

Competition + crowding

Drop in volume of production

Income Drop in real wages Rise in cost of living

Rise in input

Public Spending Lack of public services

Rise in cost of public services

Lack of public services

Rise in costs of public services

Table 9: Potential negative social and welfare impacts of globalisation on workers

in the informal economy

Health Education Social

Decline in health services Decline in Education Services Rise in alcohol and drug addiction

Decline in reproductive services Decline in School Enrolments Rise in violence and workplace

Rise in health care costs Rise in school dropouts Rise in child labour

Ris e in contraceptive costs Rise in absenteeism Rise in prostitution

Rise in malnutrition

Rise in incidence of certain

diseases e.g. HIV/AIDs

Psychological Security Demography

Rise in stress Rise in crime Rise in fertility

Rise in mental health problems,

depression

Rise in civil unrest

Rise in suicide rate Rise in human rights violations

However, the challenge for the informal economy is to gain from globalisation and global

markets. Another benefit hoped for in the long term would be trade linkages and inflow of

capital investments into the formal economy, potentially eventually absorbing part of the

informal economy. It is likely that collective grassroots responses to globalisation, especially

those whose organisation is enhanced by the “exploitation of information and communication

technology by women to build profile and links and strengthen their information networks, etc.,

across borders”82 will start showing some more significant positive consequences of globalisation

for the poorer section of the informal economy in the developing world including SSA,

particularly women. But this has yet to be thoroughly recorded, monitored and analysed.

82 Horn, P., 2001.

23

8. Fundamental principles and rights at work - extent of ratification of core

standards, and other relevant international labour standards

In some parts of the African region, the struggle against inhuman working conditions in the

informal economy has taken different forms. The Universal Declaration of Human Rights

recognizes the right to work, to freely choose employment and to have just and favourable

working conditions. Unions have experienced globalisation as putting pressure on workers’

incomes, causing rights and protections to be compromised, and the concern has developed that

labour rights should be regarded as important as human rights. A look at ratification of the ILO

core Conventions in SSA shows that many have been ratified. However, those dealing with child

labour (Conventions Nos.138 and 182) have still not been ratified by ma ny countries (see Table

10).

Table 10: Extent of ratification of fundamental labour rights conventions by countries

in SSA83

Countries Forced and

compulsory labour

FOA and collective

bargaining

Discrimination in

employment and

occupation

Abolition of child

labour

Conventions C 29 C 105 C 87 C 98 C 100 C 111 C 138 C 182

DRC 20/09/60 20/09/60 20/09/60 16/06/69 16/06/69 20/06/01 20/06/01 20/06/01

Somalia 18/11/63 08/12/61 X X X 08/12/61 X X

Uganda 04/06/63 04/06/63 X 04/06/63 X X X 21/06/01

Lesotho 03/10/66 14/06/01 31/10/66 31/10/66 27/01/99 27/01/98 14/06/01 14/06/01

Mozambique X 06/0/677 23/12/96 23/1296 06/06/77 06/06/77 X X

Cameroon 07/06/60 03/09/62 07/06/60 03/09/62 25/05/70 13/05/88 13/08/01 X

Nigeria 17/10/60 17/10/60 17/10/60 17/10/60 08/05/74 X X X

Swaziland 26/04/78 28/02/79 26/04/78 26/04/78 05/06/81 05/06/81 X X

Burkina Faso 21/11/60 25/08/97 21/11/60 16/04/62 30/06/69 16/04/62 11/02/99 25/07/01

Tanzania 30/01/62 30/01/62 18/04/00 30/01/62 26/02/02 26/02/02 16/12/98 12/09/01

Ethiopia X 24/03/99 04/06/83 04/06/83 24/03/99 11/06/66 27/05/99 X

Zimbabwe 27/08/98 27/08/98 X 27/08/98 14/12/89 23/06/99 06/06/00 11/12/00

Ghana 20/05/57 15/12/58 02/06/65 02/07/59 14/03/68 04/04/61 X 13/06/00

Zambia 02/12/64 22/02/65 02/09/96 02/09/96 02/06/72 23/10/79 09/02/76 10/12/01

Source: ILO (2002) Note that the crosses indicate conventions not ratified by countries.

Several countries (Angola, South Africa, Rwanda, DRC, Lesotho, Burkina Faso, Tanzania,

Zambia, Senegal, and Togo) have ratified all the core ILO Conventions. Nevertheless, most

African countries have not ratified the ILO Conventions that are essential to reducing the decent

work deficit, especially for informal workers in agricultural and home-based work activities.

8.1 Conventions relevant to the informal sector

None of the countries in Africa has ratified Convention No.177 on homework since it was

adopted in 1996. Convention No.175 on Part-time Work, adopted in 1994, has not been ratified

by countries covered by this report. Mauritius is the only African country that has ratified this

83 As of 1st May 2002.

24

Convention. However, this Convention really deals with what is commonly called ‘atypical’

(rather than informal) work.

With regard to the Conventions that are specific to agriculture, Convention No.99

(Minimum Wage-Fixing Machinery, 1951) has been ratified by Cameroon, Central African

Republic, Côte d’Ivoire, Sierra Leone, Senegal, Gabon, Kenya, Zimbabwe, Swaziland, Malawi

and Zambia.84 The only countries in Africa that have ratified Convention No.129 (Labour

Inspections in Agriculture, 1969) are Burkina Faso, Côte d’Ivoire, Kenya, Malawi and

Zimbabwe.

Another Convention that is crucial to the development of the conditions of work for rural

people is Convention No.141 and Recommendation No.149 (Rural Workers’ Organisation,

1975). This Convention has only been ratified by four African States, namely Zambia, Mali,

Kenya and Burkina Faso. The importance of this Convention and Recommendation lies in the

recognition of the rights of rural workers to orga nise and represent their interests by improving

the conditions of work and the lives of the people involved in rural work.

8.2 Regulatory frameworks

The regulatory frameworks in many African countries reflect a colonial legacy of exclusion.

Many regulations appear more concerned with controlling and obstructing than with facilitating

and channelling efforts of informal sector traders. This kind of regulation exacerbates

underdevelopment. According to Mhone, “ in countries where settler interests were dominant…

a barrage of laws and regulations controlling labour flows and African urban settlement was

instituted to ensure that African labour was dependent on formal sector employment.

Simultaneously, educational, agricultural, taxation and land policies were instituted to ensure that

Africans did not develop independent market-oriented activities”.85 However, even in Ghana,

when hawkers wish to trade on the streets they have to secure permits to erect a stall. The local

authority has to approve this, but to grant such approval a plan has to be submitted - even if only

a crude trading structure is being constructed. Once approved, the stall cannot be inherited,

transferred, leased, exchanged or assigned. In a study on the laws relating to street vending in

Accra, Ghana, the regulatory environment has been noted86 as an impediment to the provision of

meaningful support by the State to the informal sector. The Accra Metropolitan Assembly

(Hawkers Permit) By-Laws 1995 regulates the legal status of Ghanaian street vendors.

Most informal traders do not (or are unable to) comply with regulations concerning

registration, licensing, tax payments, occupational safety, health, and working conditions. This

inability is ascribed to a number of factors, including cumbersome bureaucracies, high costs,

unreasonable demands, ambiguous regulations and negative state attitudes to workers in the

informal economy.87

84 ILO website.

85 Mhone, G., 1996, pp.11-12.

86 Arthur, E., 1995.

87 ILO, 1998.

25

9. Entrepreneurship and micro-enterprise development

The capacity of the informal economy to create jobs has tended to be overemphasised by

those who hope that the informal economy can succeed in job creation where the formal economy

has failed. For this reason, there have been a number of government interventions aimed at

developing the informal economy and SMMEs. There is sometimes a mistaken assumption that

SMMEs and the informal economy are the same phenomenon. While it is possible to document a

number of initiatives aimed at developing entrepreneurship and micro-enterprises in SSA (as we

have done below), the effectiveness of such initiatives is not always well documented.

Three countries considered in this report - South Africa, Tanzania and Nigeria - have

adopted macro-economic strategies advocating the development of a vibrant small, medium and

micro-enterprise (SMME) sector.

South Africa

The reconstruction initiatives of post-apartheid South Africa, promoting and supporting the

development of the small, medium and micro-enterprise (SMME) sector, including the informal

economy, have been of major policy significance. The new Government’s first intervention

started with the enactment of a national White Paper on Small Business under the guidance of the

Department of Trade and Industry. The vision for SMME development was to integrate small

businesses into the core of South African economic life. Accordingly, the policy objective was to

develop a new institutional framework for SMME development.

One of the objectives of the Government is “to enable all existing and would-be

entrepreneurs in small, micro and medium-sized enterprises to have access to high quality

business support services.” A policy in South Africa that seeks to promote entrepreneurship

(because of the anticipated potential of SMMEs to create employment and generate income) is

called Small Business Strategy. In 1996, it was estimated that SMMEs contributed over 60% of

the country’s GDP.88 For the purposes of this strategy, SMMEs are defined as enterprises with a

total annual turnover of up to R 0.5 million, total assets value of up to R 0.1 million and up to 4

full-time employees.

This definition ignores other actors in the informal economy, most of whom are engaged

in survivalist activities, viz. as casual workers and home-based workers. This overemphasis on

SMMEs results in the following unintended consequences:

· Lack of mobility from informal economy into the mainstream of economic activity

where economic opportunities are sustainable. Women, youth, the disabled; rural and poor

people are not generally elevated to the economic mainstream - instead, they remain mired

in survivalist activities.

88 Khula, 1999.

26

· Failure to distinguish between the SMME sector and survivalist enterprises. The two are

not the same. The South African Government reported in 1998 that there were 3.5 million

people within the informal survivalist economy, and 800 000 in the SMME sector.89

· Failure of governments to promote access of informal operators/workers to finance,

marketing of products and services, adequate infrastructure and entrepreneurial culture.

In fact, just prior to the second democratic election in South Africa in 1999, the Department

of Trade and Industry acknowledged that the Small Business strategy had not been successful in

relation to the poorest and most marginalised people it had been designed to assist. On the other

hand, Local Government is constitutionally committed to promoting Local Economic

Development (LED) and this is the level of government that probably impacts most on those

working in the informal economy.

Tanzania

The Tanzanian Government has developed a national policy called “SMEs Development

Policy 2000/2001” which is aimed at unleashing the potential of small, medium and microenterprises

through private-sector- led growth. The Tanzanian Government reports that SMMEs

contribute about 50% of industrial products’ GDP.90 The SMMEs Development policy

recognises the SMEs as a tool to increase the share of business growth and employment creation.

SMMEs are labour-intensive, create employment opportunities at relatively low levels of

investment per job created, and many SMMEs serve as a training ground for entrepreneurial and

management development.91

Nigeria

The Nigerian Government reports that SMMEs account for over 95% of non-oil productive

activities outside agriculture.92 In 1999, the Government developed an industrial policy aimed at

reforming SMMEs. The policy seeks to achieve the following objectives (among others):

- increase the role of private sector organisations in SMME promotion and

development;

- promote the deve lopment of entrepreneurship and trade skills;

- increase utilisation of local raw materials, technologies and skills to enhance value

addition;

- create employment opportunities and sustainable livelihoods; and

- promote rural development and dispersal of ind ustries.

89 Jobs Summit Resolutions, South African Government (1998).

90 Financial Mail, 25 May 2001.

91 Ministry of Trade and Industry, 2001 (Tanzania).

92 Ariyo, D., 1999.

27

General Observation

The ILO (1998/1999) sees training as being important for workers in the informal economy.

The continuing erosion of low-skilled jobs in many countries as a result of globalisation and

technological changes has affected most people, who are now joining the informal economy to

survive. However, lack of training for workers in the informal economy seems to be a common

shortcoming in the policies of the three Governments considered above.

10. Access to skills development to promote mobility and diversification

Developing countries often have relatively large populations with low or poor education.

Earnings in different types of informal work vary greatly as does the level of education of the

workers.

West Africa

In a survey of TV and radio repairers and hairdressers - occupations which are considered

“attractive” – 83% and 85%, respectively, of the traders had some school education. In the less

attractive meat and fish trade, fewer than 17% of the traders had been to school. 93

East Africa

The ILO conducted a study in 1995 on training, using mainly Kenya and Tanzania as a case

study. They found that lack of jobs in the formal economy and lack of skills in a large part of

labour force are the main reasons for growth of the informal economy. Thus, the question of

productivity and survival of informal enterprises is linked to access to markets and skills. The

main informal training system operating in the informal economy is traditional apprenticeship.94

Apprenticeship denotes three different kinds of training: (a) on-the-job-training; (b) traditional

apprenticeship; and (c) learning from relatives. Kenya is the only East African country with a

well-developed formal training system, and there are more apprentices enrolled in the informal

economy than trainees in the formal economy. However, there is little research on the impact of

training on earnings in the informal economy.

Kenya has led the rest of Africa in educational innovations, with a particular emphasis on

promoting self-employment and self-reliance. The inclusion of Business Education, Home

Science and Arts and Crafts in the school curriculum and the development of Vocational Training

Institutions, which draw their trainees directly from primary schools, reflect the advances made

by the Kenyan Government. In the early 1990s, there were no fewer than 573 Youth Polytechnics

with an enrolment of some 40,000 students, constituting by far the largest post-school training

being provided.95

93 ILO, 1998.

94 ibid.

95 King, K., 1995.

28

World Bank support for institutional training for the juakali96sector has included provision

of funding for a voucher programme, which provides coupons to self-employed people with

which they can purchase training in business management and other specific skills. A pilot

scheme funded by the World Bank in 1993 trained over 550 juakali clients. However, most of

these training interventions in Kenya have been externally funded (mostly one-off funding)

raising serious questions about their sustainability.97

General observation

There are several ways in which governments in the last decade have tried to change

schooling and training in such a way as to affect employment. Some of this has been achieved

through increasing access to vocational training, either within schooling curricula or through

post-school training opportunities for school leavers and unemployed individuals. According to

the ILO,98 the informal apprenticeship system, such as being practised by juakali operators in

Kenya, has proven effective in the transfer of skills in the informal economy. It is important to

recognise that not all apprenticeship training has come from informal sources. According to

King,99 a substantial number of workers in the informal economy acquire their major skills in the

formal economy, as a result of the shrinking formal labour market.

11. Expansion of micro-credit and savings facilities

Micro-credit has been regarded by many as a central component of poverty alleviation and

the promotion of small, micro and medium enterprises (SMMEs) operating in the informal

economy. It is recognised that the lack of access to micro- finance is a major impediment to

growth in the informal economy on the African continent. There is great diversity among

SMMEs - at the poorest level they are survivalist operators, who attempt to secure economic

livelihoods through informal work - while the larger enterprises have been targeted as important

vehicles for creating employment and local economic development.

In the absence of accessible and affordable financial services, the poor often turn to a range

of informal financial institutions, which operate parallel to the formal financial system. They

usually specialise in one particular financial product, unlike formal financial institutions, which

offer a wide range of services.

Southern Africa

In Zimbabwe, Nyathi100 reported that informal businesses have established an association

called ZISA to facilitate the financing for enterprises and to secure bank loans, mobilize donors

funding in order to meet the financial needs of operators in the informal economy.

96 Kenyan term referring to the informal manufacturing sector (meaning “under the hot sun”).

97 King, K., 1995.

98 ibid.

99 op.cit.

100 Nyathi, N., 1997.

29

Mozambican data shows that 36% of finance in the informal economy comes from

‘xitique’ (stokvels or group savings clubs).101

In South Africa, a study by Lund and van der Ruit shows that informal savings institutions

take the form of rotating savings and credit associations (ROSCAs), or stokvels. These are group

savings clubs where members pool their money. Members are paid out lump sums on a rotational

basis. This method of saving allows people to access large sums of money at specific times of

the year, to pay for big expenses. For example, one woman who belongs to a stokvel requested

that she be paid out in October, so that she could afford to plough her fields and purchase seeds in

November. Other popular forms of saving are grocery clubs and Christmas stokvels. The grocery

clubs collect money and then purchase staple foods in bulk, which are distributed to all the

members. People who belong to Christmas stokvels make regular contributions throughout the

year and then receive a pay-out before Christmas.102

East Africa

A Kenyan study103 revealed serious limitations in access by women to credit facilities.

About 85.4% had never tried to obtain access while 14.6% had tried and failed. About 19.4% of

those who had access to credit obtained it from relatives and friends.

Buckley104 argues that institutional finance for micro-enterprises is a fairly new

phenomenon in Kenya, Ghana and Malawi. However, informal finance has always been an

integral part of this economy. Informal finance may be casual loans obtained from micro-lenders,

or gifts from families and friends. The most common source of enterprise finance is a rotating

savings and credit association (ROSCA).

Research on East African Micro-Finance Institutions (MFIs)105 concluded that, despite the

mission of many of the MFIs to work with ‘poor entrepreneurs’ and micro-entrepreneurs, they

were clearly experiencing a problem with targeting. The report found that the focus was largely

on those “not so poor individuals and those who have an asset base that can serve as collateral or

quasi collateral”.

12. Social protection

12.1 Social security

One of the key current global problems is the fact that more than half of the world’s

population (workers and their dependants) are not included in any type of statutory social

protection. They are neither covered by a contribution-based social insurance scheme nor by taxfinanced

social assistance. In Sub -Saharan Africa, statutory social security coverage is estimated

at 5 to 10% of the working population and decreasing.

101 Muleide, 1994.

102 Lund, F. and van der Ruit, C., forthcoming.

103 Alder, G. et al., 1998.

104 Buckley, G., 1997.

105 Hulme, D., 1999.

30

The fundamental reason for low social security coverage in developing countries is that

many workers outside the formal sector are not able or willing to contribute a relatively high

percentage of their incomes to finance social security benefits, especially if they do not meet their

priority needs. In general, they give priority to more immediate needs, such as health and

education, in particular where structural adjustment measures have reduced or eliminated access

to free health care and primary education. In terms of pension benefits, they seek protection in

case of death and disability rather than for old age. In addition, they may not be familiar with,

and/or distrust, the way statutory social security schemes are managed. As a result, some groups

of workers outside the formal economy have set up schemes that better meet with their priority

needs and contributory capacity.

Pensions

With the exception of South Africa, non-contributory pensio ns such as the Old Age pension

available to women over 60 and men over 65 years of age is non-existent elsewhere in SSA,

except sometimes on large commercial farming concerns. Research by Ardington and Lund has

shown that pensions in South Africa play an important role in the provision of credit for informal

work.106

12.2 Social insurance

Health care

Few countries in SSA have free comprehensive health care services available to its citizens.

In some places, state-funded health care has completely disappeared. In those that offer a limited

service, there has been a steady movement back towards a ‘user pays’ principle. Despite common

perceptions to the contrary, the cost of traditional healers is often as expensive as formal medical

care. In addition, hea lth care services have been overwhelmed by the high incidence of

HIV/AIDS.

In many low-income developing countries, governments can no longer guarantee free

access to health care, with the result that working people themselves have started to organize

their own access to such services. The UMASIDA scheme in Tanzania is self- financing and

independent (see Case Study below).

In most low- income developing countries, such as Tanzania, not more than 5-15% of the

working population and their dependants are covered by statutory social insurance, mainly for

pensions and health. Extension and reform of the statutory social insurance system could reach

another 5-10% of the population, i.e. most so far uncovered regular workers and some casual

workers in the formal sector. At the other side of the income scale are the 30% of poor

households who can probably only be helped by tax-financed social assistance, social services

and poverty alleviation measures. In between these two groups are the bulk of the working

population (about 40-60%) who are above the poverty line but not eligible for statutory social

insurance. They have some contributory capacity and may be interested in contributing to social

insurance programmes tailored to their needs.

106 Ardington, E. and Lund, F., 1995.

31

Schemes set up by informal workers tend to provide mutual support through the pooling of

resources based on the principles of insurance. In some cases, they also extend help to those in

need within the overall framework of certain basic regulatory conditions. In this system, it is the

group itself that decides on the size and source of contributions by group members. The

collection and management of contributions, as well as the disbursement of benefits, are matters

for the group to consider and arrange.

The analysis of such schemes (van Ginneken, 1996) has shown that there are two

fundamental requirements for setting up self- financed social insurance schemes:

- the existence of an association based on trust;

- an administration that is capable of collecting contributions and paying benefits.

Case Study: UMASIDA107 Health Insurance Scheme – Tanzania

UMASIDA is an umbrella health insurance organization for the informal economy in Dar es Salaam,

Tanzania. UMASIDA is an abbreviation in ki-Swahili (Umoja wa Matibabu katika Sekta Isiyo Ra smi Dar es

Salaam), which means in English: health care community fund for the informal sector in Dar es Salaam. It grew out

of an ILO/UNDP project that, in 1994-96, experimented with the provision of integrated services for the urban

informal sector in Bogota, Dar es Salaam and Manila.108

The main objective of the scheme is to provide health care to all its members and their families on an

insurance basis. One of the innovations of the project was that it not only concentrated on economic services, such as

the provision of credit and training in finance, production, management and marketing, but also on social services,

such as access to health care as well as occupational safety and health measures. The idea behind this concept is that

access to social services has a strong impact on productivity, and that organizations of informal sector workers would

be an appropriate vehicle for organizing such services.

Until 1993, the whole Tanzanian population was treated by the National Health Service free of charg e, but

since that time the Government has put in place cost-sharing arrangements so that people have to pay part of their

medical bills themselves. In addition, the Government opened up health services to the private sector, resulting in the

emergence of many private clinics and dispensaries, particularly in the cities. Safety and health services are generally

only provided in the formal economy through the Inspectorate of Factories in the Ministry of Labour.

The main advantage of health insurance schemes for informal workers is that they improve health expenditure

efficiency (the relation between quality and cost of health services). There are basically three reasons why informal

workers would prefer group schemes to individual spending and financing 109

- by making regular contributions, the problem of indebtedness brought about by high medical bills can be

overcome;

- the financial power of the group may enable administrators to negotiate services of better quality or

representing better value for money from private health care providers; and

- the group may be willing to spend on preventive and health promotion activities so as to keep down the

cost of curative services.

107 Kiwara, A.D., 1997.

108 ILO, 1999.

109 van Gi nneken, W., 1998.

32

Child care

In SSA countries, child care is modelled along colonial lines. Hence, where the British were

the occupying power, the system is not very strong, while in Francophone Africa (which is

modelled along French lines) the system is much better.

Assumptions are often made that women prefer to work in the informal sector due to the

ease of child care. This assumption is usually inaccurate and it is far more likely that if the

children are young (not of school-going age) and if the country does not provide free or

comprehensive education for children then mothers are more likely to be found working along

side their children in the informal economy, either in the streets, at home or in the fields.

Food security

A study in Accra, Ghana, found that food insecurity was associated with the type of

employment and household structure. Female-headed households and those occupational groups

that are predominantly female (e.g. petty trading and food vending) have the highest levels of

vulnerability to food price shocks or income shocks.110

Burial costs

Informal and formal funeral insurance schemes have emerged as a way of enabling

households to cope with the enormous costs of paying for funerals, which normally cost 15 times

the household’s average monthly income. In the context of HIV/AIDS, the need to ensure the

sustainability and growth of informal insurers is vital. More research is required on this aspect of

social protection.

13. Occupational safety and health issues

Inadequate occupational safety and health standards and environmental hazards are evident

in the informal economy, and it is clear that informal workers do not have the necessary

awareness and resources to implement health and safety measures. Torres111 cites ILO work,

which has found that informal employees “often work in appalling, often dangerous and

unhealthy conditions, without even basic sanitary facilities, in the shanty towns of urban areas”.

Bullock112 found that in Tanzania, Kenya and Sierra Leone, home-based workers work in

sweatshop conditions. Firms sometimes use home-based work because they can ignore

regulations, such as health and safety standards, which apply to workplaces.

In Côte d’Ivoire, the National Union of Informal Sector Women (SYNAFSI), established in

1990, demanded provision of drinking fountains, lavatories in the market places, and the

110 Levin et al., 1999.

111 Torres, L., 1998.

112 Bullock, S., 1994.

33

provision of first aid posts.113 From these demands the poor health and safety conditions of

market women can be extrapolated.

Home-based enterprises studied in Zimbabwe were found to pose considerable health,

safety and environmental risks in terms of vulnerability of wooden housing structures to fire

hazards and the large number of children that have contact with such enterprises. 114

Case study: Measures to promote occupational health and safety of informal traders in

Dar es Salaam, Tanzania115

In 1994, the ILO launched an Interdepartmental Project on the Informal Sector (INTERDEP) with the view to

designing a comprehensive approach to occupational safety and health (OSH) of informal workers. Three country

case studies were undertaken, including one in Tanzania, which is reported here.

The objective of the project was to improve health and safety standards through the introduction of simple lowcost

measures for the improvement of informal sector working and living conditions and the reduction of diseases

and accidents.

The project involved public awareness-raising of occupational health and safety hazards at a selected number of

clusters in the informal sector in Dar es Salaam and provision of occupational and preventative services. It covered

ten business clusters, encouraged the formation and training of safety and health committees within the microenterprises

in each cluster and the training of one of the members of the committee as a First-Aider.

Cluster committees received on-the-spot guidance weekly from a safety engineer, posters to build public

awareness were developed and 28 health care workers from the City Council were trained on occupational health and

safety and are referred patients by the First-Aider of a cluster if needed. Health nurses also visited the clusters,

undertook health promotion work including basic sanitation, immunization campaigns and maintained contact with

the First-Aiders.

Outcomes of the project:

- Eleven informal sector operators from 10 clusters were trained in First Aid and 28 health workers in

occupational health services;

- First aid services of 9 of the clusters were started. Operators’ health was checked by visiting health care

workers. Health education was also given on various topics;

- A total of 61 operators (10 women and 51 men) who were members of the Safety and Health Committees

from 8 trades were trained;

- Some practical improvements were carried out in 4 clusters including cleaning of worksites, clothes and

uniforms and the daily collection of waste;

- Four other clusters have started mobilizing funds for maintaining toilets;

- Waste disposal was improved in one cluster; and

- City Council sanitary services to the clusters have generally improved.

A number of prerequisites for sustainable short- and long-term strategies on OSH for the informal sector in Dar

es Salaam were identified in the report:

- Enhancing the knowledge and skills of the operators involved in the improvement of their working

conditions and working environment;

- Provision of institutional support for services vital for the improvement of the working conditions of the

informal sector clusters, including the provision of occupational health services;

113 Gahe-Mahan, B., 1994.

114 TARSC Monograph, 9/95, 1995.

115 ILO, 1999.

34

- Land acquisition and financial empowerment to enable the operators to make improvement of working

conditions and environment in their workplace; and

- A clear government policy and/or enabling political will to provide and improve OSH for the informal

economy.

The report also identifies a number of priorities. These include improving access to drinking water, improving

general sanitation and providing First Aid services, including the training of First Aid officers. Access to

occupational health services, in particular health promotion programmes and periodic health examinations, were also

noted as a priority issue. Improved working conditions, such as better ventilation, waste-water drainage and lighting

were mentioned in the list of priorities as well. Other priority areas pertain mainly to the organization of work and

the work process such as: safe use of materials and equipment, use of personal protective equipment, reduction of

monotony and other work processes which induce fatigue and loss of productivity. Awareness-raising is an important

aspect of most of the above-mentioned points.

The report also emphasizes the need for initiatives to be low-cost and designed in a practical way that will

promote sustainability. As is widely known for development projects in general, and is pointed out in the paper, all

too often outside initiatives fail as soon as external resources are depleted.

Source: A working paper of the Interdepartmental project that was run between 1994/95, was produced in 1996

by V. Forastieri, P. G. Riwa and D. Swai. Promoting Productivity and Social Protection n the Urban Informal

Sector: Dar es Salaam, Occupational Safety and Health in the Informal Sector (Report on Intervention Strategies)

(Ref. IDP INF./WP-6).

14. Organisation and representation of role players in the informal sector

Workers in the informal economy are often referred to as the unorganised sector. However,

this is not an accurate description, as there are many instances of organisation of workers in the

informal economy. In the World Labour Report 1997-98, the following grounds for informal

workers joining together and organising were identified:

· To address problems and demands that members cannot solve individually and/or the

State is unable to meet;

· To overcome business constraints;

· In response to government or non-government programmes to deal with specific

problems; and

· In response to support provided by donor and development agencies to initiatives

aimed at combating gender discrimination and inequalities.116

The report goes on to identify the existence of the following types of informal workers’

organisations:

· Neighbourhood associations;

· Trade-based associations, made up of operators who share similar trade interests, who

often deal with the same suppliers and middlemen, who relate to the same government

institutions and have to comply with the same regulations, and who are confronted with

the same constraints in terms of access to services, assets and markets;

· Multi-trade, area-based associations whose members share common concerns such as

keeping their immediate surroundings clean as a service to the clientele, thus avoiding the

116 World Labour Report,1997-98, pp.196-197.

35

attention of health inspectors or trade officers, and preventing police harassment and/or

theft; and

· Solidarity groups of common ethnic, religious or geographic origin.117

However, the report points out that “a characteristic common to most informal sector

organisations is their fragility. They often disband even before achieving their objectives or as

soon as these are reached, or pass periodically from activity to hibernation. Only rarely do they

evolve into more settled, structured institutions pursuing long-term development and political

objectives.”118

Awuah also points out that “market trader mobilisation is at a grassroots level”, and shows

how such mobilisation has been effective in articulating demands vis-à-vis the State and local

government. However, he also points to certain limitations experienced in such organisations,

and observes that “the changes which they are able to secure tend not to be transformative , but

rather based on reforms in the existing social structure”.119

We can safely infer that examples of self-organisation along the lines described above

abound among workers in the informal sector. An in-depth study in progress of informal sector

associations in Zimbabwe certainly bears this out.120 A study of street vendor organisations in

South Africa121 has, however, attempted to go further and identify what it takes for organisations

to be more able to represent the interests of its members in a sustained way. The study compares

eight different street traders’ organisations in different parts of South Africa and assesses the

various functions, which they either partially or fully perform.122 Barriers to effective

organisation and representation experienced by these organisations are examined123 before

coming to some conclusions.124 Among the conclusions drawn is that membership-based

organisations can more effectively represent informal traders than service organisations, which

means that organisations need to be “democratically constituted, and accountable to members …

linked to membership control and accountability”. 125 The importance of negotiations is also

stressed. These characteristics are largely defining trade unions.

Not surprisingly therefore, there are examples of organisation along trade union lines which

have emerged among workers in the informal sector in Africa, and informal sector organisations

with strong links with the trade union movement, although these are less prolific than the

associations.

West Africa 126

117 ibid, pp.197-198.

118 ibid, p.199.

119 Awuah, E., 1997, p.420.

120 ILO/SAMAT.

121 Lund, F. and Skinner, C., 1999.

122 ibid (chapter 5).

123 ibid (chapter 6).

124 ibid (chapter 7).

125 ibid (chapter 7, p.45).

126 In November 1996, the International Federation of Chemical, Energy, Mine and General Workers Unions (ICEM)

commissioned Pat Horn and Ruth Masikane from the Self-Employed Women’s Union (SEWU) in South Africa to

36

In Ghana, the General Agricultural Workers Union (GAWU) of the Trades Union

Congress (TUC) started organising informal sector agricultural workers in 1979. As a result of

structural adjustment programmes, formal employment in the agricultural sector declined and

GAWU’s membership dropped from 130,000 to 30,000, which prompted the union to see its

future in organising the informal sector. The jurisdiction of the union is described as follows in

its amended constitution: “ … all employment in Agricultural services or undertakings generally,

including Rural Workers and self-employed Peasant Labour”.127 GAWU was supported in its

initiatives to organise workers in the informal sector by the International Union of Food,

Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF) and

the International Labour Organisation (ILO).

The Industrial and Commercial Union (ICU) also affiliated to the TUC of Ghana, then

started to organise informal home -based hairdressers into the Ghana Hairdressers and Beauticians

Association (GHABA) which was formed as one of the organised sectors of the ICU. Having

started this initiative, the ICU was then approached by other self-employed informal workers

such as home-based seamstresses, to form a sector of the union for them too. With the assistance

of the Danish women workers union (KAD), the ICU launched a campaign to organise informal

workers in other sectors in February1999.

By this time, the whole Ghana TUC had already committed itself to organising workers in

the informal sector. At its conference in August 1996 the TUC, which is the only national trade

union centre in Ghana, committed itself to the organisation of workers in the informal sector.128

In terms of this commitment, every affiliate of the TUC was obliged to identify that part of the

informal sector linked to its area of activity, and to organise the workers in that part of the

informal sector.

In Senegal, in 1996, the national trade union centre (CNTS) had the following informal

sector affiliates, which were also affiliated to the IUF:

- Syndicat National des Travailleurs Ruraux (SYNTR) for rural workers;

- Syndicat National des Pêcheurs Artisanaux du Sénégal (SYNAPAS) for fisherartisans,

formed in September 1996 with 10,000 members.

In addition at the time, the CNTS was investigating ways to organise self-employed

informal sector artisans such as tailors, carpenters, metal- workers, panel-beaters and vehiclerepairers.

The women’s wing of the CNTS was initiating a campaign to organise young girls

working as domestic workers (including family labour).129

undertake an investigation of informal sector workers’ organisations in five countries in West Africa. The

information about Ghana, Senegal, Côte d’Ivoire and Benin was learnt first-hand during this investigation.

127 GAWU constitution Article 4(a) p.6.

128 Secretary-General’s address in The Ghanaian Worker, 1996, p.10.

129 Discussions with Mody Guirot, General Secretary of the Senegal Mine Workers Union, and Fatou Ndiaye Gueye,

President of women’s department of CNTS, November 1996, in Dakar.

37

In Côte d’Ivoire, some of the trade unions have formed working relationships with market

vendors’ associations, building their collective bargaining capacity and assisting them with some

of their struggles. SYNASEG, affiliated to the ICEM and the national trade union centre

FESACI, has a strong working relationship with COVIMY, the vendors’ association operating in

the Marcory market in Abidjan. Dignité, an independent union affiliated to the IUF, has been

organising in the informal sector and has developed working relationships with the vendors’

associations in other markets in Abidjan. A woman unionist formerly from Dignité formed a

union for women in the informal sector working in markets and in rural village co-operatives,

called SYNAFSI, also affiliated to FESACI.130

There are many informal sector workers’ unions in Benin, including:

-  SYNAPAAB (fishing workers - 1500 members*)

-  House & Restaurant workers (1000 members*)

-  Sheet-metal workers (500 members*)

-  ONPB (agricultural workers – 4000 members*)

-  SYNAMEMOB (motor-cycle mechanics – 348 members*)

-  SYNEBOPAB (bakery workers – 225 members*)

-  SYNATRASA (sand loaders – 125 members*)

-  UNPB (plumbers – 420 members*)

-  CODEBE (used-car dealers – 217 members*).

* the membership figures as of October 1996.

There is also a market vendors’ union at Danktopa market in Cotonou, with 2400 members

(as of October 1996) known as SYNAMAVAB. This organisation describes itself as a trade

union and not a business association, because it does not focus primarily on business

development, but takes on social projects such as literacy and skills training for its more

disadvantaged members, and has initiated a creche project to provide child care for all its

members. Both market stall owners and their employees belong to the union, which makes its

class-base relatively varied.

The women’s committee of the cement workers’ union SYNTRAUCIB, which was

working in partnership with ICEM, based at Onigbolo near Pobe in the East of Benin, formed a

women’s association to promote the organisation of women in the informal sector. This

association, GBENONKPO, consisted of formal sector women workers from SYNTRAUCIB as

well as groups of women involved in informal economic activities in the villages around

Onigbolo. After five years hard work by the women factory workers at gaining the confidence of

informal sector women in them and their intentions, GBENONKPO had 128 members by 1996,

the majority of whom were in the informal economy. 131

130 Discussions with Basile Gahe-Mahan, General Secretary of Dignité, June 1995 in Geneva, and Nancelle Claire

Kuoassi and Adelaide Clemence Deya, Chairperson and Vice -Chair of women’s department of SYNASEG, and

Rosemary Ossoue of SYNAFSI, November 1996, in Abidjan.

131 Discussions with Emmanuel Zounon and Claire Houessinon, General Secretary and head of women’s department

of SYNTRAUCIB, and Francoise Codjon and Justine Chodaton, International Relations officer and President of

38

In Burkina Faso, according to M. Cisse, the national trade union centre ONSL “has since

its inception included men and women workers from the informal sector among its members”.132

She describes the organisation of market women in Ouagadougou by the ONSL since the 1980s

as well as the formation of the Cissin-Natenga Women’s Association in 1984, which then

affiliated to the ONSL in April 1985. These activities were supported by the Women’s Bureau of

the International Confederation of Free Trade unions (ICF TU) as well as the Belgian trade union

central FGTB.

The Syndicat National des Travailleurs de l’Industrie du Niger, an affiliate of the

International Textile, Garment and Leather Workers’ Federation, is organising workers in the

informal economy.

East Africa

In 1994, the Kenya Women Workers’ Organisation (KEWWO) was formed, initially by

women working in the formal sector belonging to the affiliates of the Kenya national centre,

COTU. KEWWO became an important part of the general struggle for democracy in Kenya

during that time. Women in formal employment in KEWWO decided to reach out to women in

the informal sector, and started organising rural informal sector women.

KEWWO’s founder was the IUF’s African Regional Secretary based in its Nairobi office,

and the organisation enjoyed the support of the IUF internationally. KEWWO is still affiliated to

the International Federation of Workers’ Education Associations (IFWEA). By 1996, KEWWO

had more members in the informal sector than in formal sector employment.133

In Uganda, the second largest affiliate of the National Organisation of Trade Unions

(NOTU), which is the sole national trade union centre of Uganda, is the Uganda Public

Employees Union, with 13,000 members.134 NOTU affiliates have been discussing for some time

now how to increase their declining numbers, and have agreed that they have to do this by

organising workers in the informal sector. For most of them, this means that they have to amend

their constitutions. The Uganda Public Employees Union has amended its constitution in 1999 by

introducing several categories of membership. One of the new categories of membership is

informal workers, whose membership will be by “affiliation through informal sector workers’

associations”.135 In this way the union has devised a creative way of dealing with two of the

difficulties normally faced by informal sector trade unions. The one is a practical means of

collecting the membership subscriptions of its informal members, i.e. through the associations

through which they will be affiliated. The second is representation at the statutory bargaining

forum, which is an automatic right for union members in Uganda. The new mission statement

contained in the amended constitution is “to recruit, inform, train, orga nise and democratically

SYNAVAMAB, in Benin in November 1996 through December 1998, when five GNBENONKPO members made a

follow-up visit to SEWU in South Africa.

132 Cisse, M., 1994, p.1.

133 Address by Kathini Maloba-Caines, General Secretary of KEWWO, to 1996 Annual Conference of the Self-

Employed Women’s Union (SEWU) at Botha’s Hill, Durban, South Africa.

134 NOTU, 1999 (Table 1).

135 UPEU Constitution, Article 7 Clause 7(a) and (b), p.7.

39

represent workers in the public and informal sectors and to negotiate for better conditions in an

acceptable legal framework that allows for the free expression of workers’ rights”.136 The union

started to implement its new organising strategy in the year 2000, and it will be an interesting one

to watch.137

Southern Africa

In 1994, the Self-Employed Women’s Union (SEWU) was launched in Durban, South

Africa, along the lines of the Self-Employed Women’s Association (SEWA) in India. Like

SEWA, SEWU is a trade union of women who work in the informal economy. By 2001, SEWU

had approximately 4,000 members in three provinces in South Africa. “SEWU is organised on

the principles of direct democracy, and the focus is on the empowerment of membership”.138

Lund and Skinner go on to describe and illustrate the democratic constitutional structure of

SEWU. After comparing the organising strategies of SEWU and 7 other informal sector

organisations, they observe “Our study of other organisations convinces us of the extreme

importance of the precedent set by SEWU to date. It is one organisation that has organised

amongst poorer survivalists, that is clearly accountable to its members, and that has a clean track

record.” 139

SEWU is affiliated to UN I (the newly- merged Union Network International) and has

applied to the IUF, ICEM and ITGLWF (International Textile, Garment and Leather Workers’

Federation) for affiliation, after having worked together with them in different ways on the

promotion of orga nisation of workers in the informal sector. SEWU has been integrally involved

in several international campaigns initiated by SEWA for the promotion and protection of

workers in the informal economy. These include (1) the campaign for the adoption of the ILO

Convention on Homework which resulted in the formation of HomeNet, an international alliance

of home-based workers’organisations with an international office in Leeds, UK, and a

Convention and Recommendation being adopted at the International Labour Conference in 1996;

and (2) an international campaign for the legal rights of street vendors which has resulted in the

formation of StreetNet, an international alliance of street vendors, with an international office in

Durban, South Africa.

In 1999, the Congress of South African Trade Unions (COSATU) took a decision to start

organising workers in the informal sector. The South African Clothing and Textile Workers

Union (SACTWU), a COSATU affiliate, took a decision to start organising industrial

homeworkers. COSATU has also received an approach from the African Council of Hawkers

and Informal Businesses (ACHIB), a national association of street vendors with its head office in

Johannesburg, for affiliation or associate membership.140

136 UPEU Constitution.

137 Discussions with Robert Matukhu, General Secretary of the Uganda Public Employees Union, September 2000 in

Kampala.

138 Lund, F. and Skinner, C., 1999, p.30.

139 ibid (p.45).

140 Meeting with Bheki Ntshalintshali, previously Organising Secretary and now Assistant General Secretary of

COSATU, at SEWU office early in 2000, and telephone conference with Ebrahim Patel, General Secretary of

SACTWU, later in 2000.

40

In Mozambique, there are two national trade union centres, OTM and CONSILMO. The

Maputo Provincial Secretary of the Sindicato dos Trabalhadores da Industria Metalurgica

Metalomecanica e Energia (SINTIME), Jose Titus Lipeze Zunguza, also doubles as an organiser

for the OTM, in which capacity he has organised informal sector workers into an association

called Associao dos Operadores e Trabalhadores do Sector Informal (ASSOTSI). At this stage,

ASSOTSI is only organised in the capital city of Maputo, and it is an association affiliated to the

OTM.141

The market vendors in central Mbabane in the small kingdom of Swaziland approached the

Swaziland Federation of Trade Unions (SFTU) in the early 1990s when they were being harassed

by government officials. The SFTU has had a history of active opposition to the Government

throughout the 1990s to the present, demanding that a democratic constitution be adopted by the

king. The SFTU and the market women were able to join hands in their struggles for a time.

Since then, the SFTU has been lo oking for more sustainable ways to organise the market women

along trade union lines.142

The Hawkers and Vendors’ Association of Zimbabwe (HAVAZ) approached the

Zimbabwe Congress of Trade Unions (ZCTU) for affiliation in 1995. The ZCTU seriously

considered the approach as they were keen to develop a working relationship with informal sector

organisations. HAVAZ fragmented while their approach was in the process of being considered

and ZCTU then investigated more viable ways in which to work together with street vendors’

organisations. The head of the Women’s Desk, who has had contact with SEWA (India) and

SEWU (South Africa) assumed responsibility for creating a viable way for informal sector

workers to be organised in Zimbabwe.143

The Zambia Confederation of Trade Unions (also ZCTU) initiated the formation of the

Centre for Informal Sector Employment Promotion (CISEP), in 1998 with the assistance of the

German donor organisation GTZ and the Friedrich Ebert Stiftung (FES) in order to assist

retrenched workers to form trade associations. Further, with the assistance of the Workers’

Education Association (WEA) of the U.K., the ZCTU initiated the formation of the Workers’

Education Association of Zambia (WEAZ) with a national co-ordinator from the trade union

movement. WEAZ undertook grassroots surveys to establish workers’ education needs, and

found that most of the needs expressed related to workers in the informal sector. As a result,

WEAZ has started to meet different informal economy organisations and initiated an informal

economy project involving a workshop on organising in the informal economy, with follow-up

exchange visits between informal sector workers in Zambia, SEWU in South Africa and SEWA

in India. The trade union orientation of WEAZ places it in a unique position to build and enhance

the capacity of informal economy organisations in Zambia along trade union lines.144

141 Discussion with Zunguza and Innocentia Ernesta Tembe, Women’s Co-ordinator fo r SINTIME Maputo City and

Maputo Province, October 2000 in Maputo.

142 Discussions with Jan Sithole, General Secretary of SFTU, 1995 in Geneva, and Zodwa Mkhonta, Vice-President

of SFTU, from 1995 in Durban through 1999 in Turin, Swaziland, South Africa.

143 Discussions with Morgan Tsvangirai, then General Secretary of ZCTU, 1995/6 in Harare, and Muriro Pswarai,

head of Women’s Desk of ZCTU, 1995 in Harare and Durban through 2000.

144 Discussions with Mike Chungu, national co-ordinator of WEAZ, Jan/Feb 2001in Kitwe, and Dave Spooner,

international officer of WEA, April 2000 in Durban through 2001 in Geneva and Kitwe.

41

Conclusions

Organisations of workers in the informal economy survive better when they are

membership-based, their objectives clearly articulated and the members see tangible benefits

from being collectively organised. It also appears that a pattern is emerging in SSA of the African

trade union movement moving seriously into organising workers in the informal economy as the

formal economy continues to shrink, and even going further and finding creative ways of

supporting and linking up with self-organisation in the informal economy.

15. Integrating provision of space and basic services for the informal sector

into urban planning exercises and urban management systems

The Bellagio Declaration formulated in 1995 by the International Alliance of Street

Vendors calls for specific attention to be paid by national and local governments to measures

which would make street vending a compone nt of urban development, promote participation of

vendors in local governance and ensure that often conflicting needs of stakeholders are mutually

satisfied including pedestrians, vendors, health officials and others.145

The two case studies below illustrate examples of best practices attempted in Accra, Ghana

and Durban, South Africa.

145 Skinner, C., 1999.

42

Case Study – Accra, Ghana Working Group on Street Trading and Hawking146

Accra has a population of between 2-3 million, which is just over 10% of Ghana’s population. The city faces a

major strain on its infrastructural resources and about 3% of this population is homeless and seeks shelter under *-

hawking along the streets, in open spaces, pavements, walkways etc., often forcing pedestrians onto the roads and

obstructing the flow of both human and vehicular traffic.

Measures to deal with this problem, including relocation, have been futile and have met with resistance from

the traders. In 1999, the Accra Sustainable Programme (ASP) and the Accra Metropolitan Assembly (AMA)

organised a mini-consultation of all stakeholders to address these problems. Arising from this consultation, a

Working Group on Street Trading and Hawking was inaugurated to develop long-term solutions.

It set out as its objectives the following:

- To develop strategies to address problems associated with street trading;

- To identify and plan demonstration projects for the CBD of Accra; and

- To make inputs into the development of an integrated multi-sectoral action plan and overall development

strategy for Accra.

The working group was comprised of city authorities, market women, traders and hawkers and officials from the

Department of Roads, Ministry of Health, Department of Social Welfare, Police Services and Transport Union.

However, only three of the 15 committee members were women.

To plan its approach, the Working Group reviewed similar studies undertaken in Tanzania and India, undertook

site visits to gather first hand information and undertook discussions with stakeholders to find possible solutions to

various issues. The Working Group met from December 1997 to February 1998, with special provision made to

accommodate traders’ needs.

The Interim Report published by this Working Group made several recommendations, which have been and

continue to be implemented. The recommendations included the following:

- creation of several hawker markets (7 in total) instead of street markets;

- relocation of markets in the CBD with the consensus of traders;

- request for bylaws to be reviewed;.

- trader Associations to play a stronger role in the enforcement of bylaws;

- audit of training needs was developed;

- environmental sanitation needs must be accommodated via provision of toilet facilities; and

- registration of all traders with city officials.

Through this participatory decision-making process, it would appear that long-term sustainable solutions were

found.

146 Accra Municipal Assembly, 1999.

43

Case Study: Durban Metropolitan Local Government (South Africa) developing dedicated policies

for supporting the informal economy

Introduction

In post-apartheid South Africa, local government has been transformed into a third and independent sphere of

government, which is recognized as being closest to citizens, and given important responsibilities for promoting local

economic development and facilitating participatory governance.

The Durban Metro has embraced this dual responsibility with great vigour and innovation as is demonstrated in

the “Informal Economy Policy” adopted in October 2000, something which makes enormous economic sense as the

informal sector makes important contributions to Durban’s economy as indicated below. The informal economy is an

important source of job creation, with estimates of over 20,000 street traders operating in the DMA (Durban

Metropolitan Authority) and an unknown number operating from their homes, a large majority of these traders being

women. In addition, the informal economy generates work along a chain of supply and distribution. The “muthi”

(traditional medicine) industry is one such example which is estimated to generate about 14,000 jobs in Durban.

Considerable monetary resources flow through the informal economy. It is noted that in 1998, black

householders in the DMA area spent more than R 500 million in informal outlets. The informal economy provides

accessible and affordable informal shopping outlets to large numbers of commuters.

Background Context

It is important, before we examine more fully the process and content of this Informal Economy Policy, to

understand the context within which it was developed. The growth of the informal economy in South Africa in

general, and in Durban in particular, has been phenomenal in the 1990s. According to a four-city comparative study

on local governments’ approach to street trading undertaken by Skinner (2000), Durban stood out as the city that was

doing the most to ensure that street traders were incorporated into city planning processes. It did this in a number of

ways including:

- Establishing institutional capacity through the development of a dedicated Department of Informal Trade and

Small Business Opportunities in the 1990s and other specialized services for informal traders, such as the City

Health Department setting up a training programme focusing specifically on hygienic food preparation;

- Provision of resources to improve street trading infrastructure such as shelter, ablution facilities and storage

space, thereby improving the quality of traders’ work environment; and

- Establishment of Consultative Forums, which have led to self-regulation with respect to maintaining health

standards and reducing crime.

It was clear that the narrow focus of providing support to street traders was problematic as the less visible

informal activities engaged in mainly by home-based workers had not benefited much from these initiatives and,

even with the existing approach, there was no over-arching framework - resulting in different departments within

local government developing their own (sometimes conflicting) responses.

Policy Development Process

Hence, in 1999, Durban Metro established a Technical Task Team comprised of representatives from the various

local government departments whose work in some way impacted on the informal economy, to develop proposals for

developing a policy framework to ensure local government support to the informal economy.

The process of developing the policy was just as important as the content. Of critical importance was the fact

that the Council willingly allocated resources for a policy process which involved both primary and secondary datagathering

to build a deeper understanding of the informal economy in Durban, use of various mechanisms for

facilitating information dissemination and consultation between the Council and a wide range of stakeholders

including informal and formal business associations, trade unions, Councillors, development fora and civic

structures. Interviews, workshops, radio announcements and distribution of relevant documents were some of the

tools harnessed for this process.

44

Although it is hardly ever likely that a policy will please all stakeholders, great effort was made to ensure that

concerns of more marginalized stakeholders were heard and compromises were negotiated rather than imposed.

Informal Economy Policy – A paradigm shift

In a case study on Durban’s Informal Economy Policy, Skinner and Valodia (2001) identified five significant

shifts in thinking which this policy has embraced:

- The first is the recognition that the informal economy has a critical role to play in Durban’s economic

development and not merely as a mechanism for alleviating poverty;

- Second, the policy values all kinds of work. Street traders and home-based workers all require support services

and these services need to be developed taking into account their different needs and circumstances;

- A third shift argues for viewing the economy of Durban holistically, with the informal and formal economies

being complementary to each other and dependent on each other rather than as competitors;

- The policy importantly recognizes the value of organizations of workers in the informal economy and sets out

a capacity-building programme to strengthen such organizations and local government officials working alongside

them.

- Finally, the policy has suggested a number of innovative strategies for facilitating the implementation of the

policy framework such as area-based management, introduction of pilot projects to test new ideas and approaches,

and ensuring active stakeholder participation in planning, decision-making and self-regulation. Examples of this

include the involvement of “muthi traders” who previously sold traditional medicine on the pavement and for whom

a dedicated market has been built and the cooperation between Self -Employed Women’s Union (SEWU) and local

government regarding the provision of affordable accommodation for “muthi traders”.

Critical factors contributing to the success in developing the policy

The policy has only been recently developed and implementation has only just begun. Hence it is not possible to

say at this stage how successful the policy is or what impact it is making.

Skinner and Valodia148 have identified two critical factors, which they suggest have made the policy

development process possible. The first is the relatively strong financial position of Durban’s local government both

in terms of monetary and human resources. The second is the extent to which informal sector workers in Durban

have been organized. These points are elaborated on briefly below.

Debt Free Durban

Durban Metro has been proudly holding the flag of a “debt free” local authority when all around it local

authorities have fallen deeply into debt or have completely collapsed. This is attributed to a history of sound financial

planning, a sustained investment strategy and an equally strong and well-skilled human resource pool. Credit for this

human resource pool goes to the fact that Durban Metro is one of the first cities to have a dedicated human-resource

training unit.

Existence of SEWU

The Self-Employed Women’s Union has been in existence since 1993 and is actively involved in organizing

women working in the survivalist sectors of the economy. SEWU’s active lobby with local government has resulted

in tangible improvements for street traders in terms of the provision of shelters, storage facilities, accessible ablution

blocks, child care and overnight accommodation. In this Informal Economy Policy process, SEWU members were

actively involved in making important contributions on the draft policy document during workshops.

Conclusion

In their analysis of Durban’s Informal Economy Policy, Skinner and Valodia (2001) conclude that the

“consultative and innovative local government interventions”, which Durban has committed itself to making, have

assisted in mainstreaming the concerns of those working in the informal sector and facilitated development of a

workable and practical policy. In fact, they go one step further in suggesting that national policy-makers look to the

148 Skinner and Valodia, 2001.

45

Durban model for effective provision of support to the informal economy, with particular reference to the survivalist

sector.

Areas for further research

A rapid appraisal of available data more often than not will draw our attention to the

information gaps. While the list is always enormous, this study clearly points to some urgent

priority studies being undertaken if the data do not already exist. This study was unable to access

data on the following:

· Sectoral breakdown within the informal economy of nature of activity people are involved in.

This study has not been able to provide data on the typical informal activities in each of the

countries;

· In addition, it would appear that the data provided have a strong urban bias. Urban/rural

disaggregation of data is required;

· Data which reflect the extent of women’s involvement in the informal economy and the

nature of their involvement;

· Income levels in the informal economy by type of work done and by gender disaggregation.

Other areas of further research would be:

· Impact of globalisation on the informal sector. What have different stakeholders done to

mitigate negative effects and to reap benefits?. What policy initiatives are working to protect

the vulnerable?

· Nature of linkages between the formal and informal sectors. For example, we know that

across the world, the end -products of millions of home-based workers are processed and sold

through formal sector channels in foreign countries. It would be interesting to know to what

extent this is happening in SSA. This would then also provide more empirical evidence on the

impact of globalisation and liberalisation of markets on the informal economies in SSA

countries; and

· Further improvements on macro-level data, both on the contribution of the informal economy

to the GDP and the number of people working in the informal economy.

Agreement is needed on the ways and means to enhance data collection on the informal

economy through normal statistical systems, whether it is economic contribution to the national

GDP or employment, and its characteristics in SSA countries and internationally.

46

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53

List of Employment Sector Papers

on the Informal Economy*

"Decent Work in the Informal Economy: Abstracts of working papers".

1. "Globalization and the Informal Economy: How Global Trade and Investment Impact on

the Working Poor", by Marilyn Carr and Martha Alter Chen.

2. "Supporting workers in the Informal Economy: A Policy Framework", by Martha Alter

Chen, Renana Jhabvala and Frances Lund.

3. "International Labour Standards and the Informal Sector: Developments and Dilemmas", by

Charlotta Schlyter.

4. "The informal sector in Asia from the decent work perspective", by Nurul Amin.

5. "Towards decent work in the informal sector: The case of Egypt", by Alia El Mahdi

(available in electronic form only) .

6. "Good practice study in Shanghai: Employment services for the informal economy", by

Jude Howell.

7. "Decent work in the informal sector: CEE/CIS region", by Bettina Musiolek (available in

electronic form only).

8. "Federation of trade unions of Macedonia", by Liljana Jankulovska (available in electronic

form only).

9. “A profile of informal employment: The case of Georgia”, by Sabine Bernabé.

10. “The informal sector in Sub -Saharan Africa”, by Pat Horn, Jantije Xaba and Shirin Motala.

* For electronic publications, please see the informal economy website: www.ilo.org/infeco