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Informal Economy Gets No Respect In Africa. Kenyan Alliance Hopes To Change That

Informal Economy Gets No Respect In Africa. Kenyan Alliance Hopes To Change That

Informal traders are the heartbeat of the economy in sub-Saharan Africa, but they struggle for the right to live and work in the cities, facing evictions, harassment and abuse, according to a blog in the NewInternationalist.

In Kenya, the Kenyan National Alliance of Street Vendors and Informal Traders has successfully lobbied for legislation that recognizes street vendors and informal traders. The alliance is now working on getting legislation implemented at all levels of government, NewInternationalist reports. With the legislation and negotiated agreements in place, informal traders face fewer evictions, less harassment, and they are now taken into account when towns and cities are being planned — at least in theory.

Saranel Benjamin is senior program officer at War on Want, a U.K-based nonprofit that fights against the root causes of poverty and human rights violations.

In sub-Saharan Africa, 70 percent of people — mostly women — are involved in informal work, Benjamin says in a NewInternationalist blog. Informal workers often live in informal shack settlements in and around cities, but despite being the majority, they remain invisible in a constant fight for their right to live and work in the city.

African Development Bank puts those numbers even higher — the informal sector contributes about 80 percent of the labor force and 55 percent of sub-Saharan Africa’s GDP. Nine in 10 rural and urban workers have informal jobs in Africa and most employees are women and youth, according to AfDB.

Self-employed peddlers, hustlers, hawkers and street vendors are resourceful in trying to make ends meet, but they get no help from their governments, Benjamin assets.

Full-time salaried workers get all the respect but they are by far the exception rather than the rule in the developing world, says Benjamin. Theirs is considered a disciplined and organised space, and contributions made by those employed in formal jobs is greatly valued.

In other words, they pay taxes.

Taxing the informal economy is the as-yet unsolved dilemma for most African governments. First, government need to figure out how many people there are in the informal economy.

Tax revenues pay for everything governments do, or hope to do, according to an earlier AFKInsider report. But no politician ever got popular by creating new taxpayers, PublicFinanceInternational reported. Expanding a country’s tax base is treated with some caution.

Gathering data or information on informal business activity is problematic. Informal traders do not want to be reported since they are not paying taxes, according to the Institute For Security Studies. Informal business people fear that the information they provide will alert the tax authorities.

The informal economy, though large, is poorly documented, said Leif Petersen, founding director of the Sustainable Livelihoods Foundation. The South African nonprofit works to eliminate poverty through research, according to an earlier AFKInsider report.

Some estimates put the contribution of the informal economy at about 5 percent of South Africa’s gross domestic product, for example, but Petersen said he believes that figure exceeds 10 percent.

Most informal workers lack security in income, benefits and social protection, says AfDB. So it’s not surprising that informality often overlaps with poverty. In countries where informality is decreasing, the number of working poor is also decreasing and vice versa.

The informal economy is seen as nothing more than a safety net for the unemployed until they find formal employment, according to Benjamin. Framed this way, the informal economy isn’t taken seriously. “Its contribution to national economies is derided, considered negligible, and its existence seen only in relation to the formal economy. Its ‘disorderly’ nature (is) seen simply as a nuisance.”

More people age 20 to 40 are entering the informal economy in sub-Saharan Africa, according to War on Want. They’re staying in the informal economy for more than 10 years. The informal economy is the only viable option for survival for many people.