Informal sector

The informal economy: Is policy based on correct assumptions?

Caroline Skinner, African Centre for Cities, University of Cape Town on 18 February 2019
Reads 5,848

We analyse the emphasis in informal-sector and informal-economy policy, highlighting who runs the risk of being missed. We then interrogate assumptions on which policy objectives are based – notably that the informal sector acts as a ‘shock absorber’ in times of recession and, given the emphasis on the township economy, the spatial dimensions of informal-sector employment. We argue that policy makers should pay attention to harmful regulations, the infrastructure needed and where informal activities fit in value chains.

Creating jobs, reducing poverty V: Is ‘formalising’ the informal sector the answer?

Frederick Fourie, REDI3x3, based at SALDRU, University of Cape Town on 21 August 2018
Reads 6,715

This extract from a new REDI3x3 book proposes a constructive way to approach the possible ‘formalisation’ of the informal sector. A common impulse is to reduce formalisation to regulating and taxing informal enterprises – two blunt instruments that can be destructive. Formalisation must rather be seen as a means to aid the quest for better livelihoods for more people and stronger, more self-standing informal enterprises. Smart formalisation can be pursued with a ‘formalisation menu’.

Creating jobs, reducing poverty IV: What policy approach to enable the informal sector?

Frederick Fourie, REDI3x3, based at SALDRU, University of Cape Town on 14 August 2018
Reads 6,967

This extract from a new REDI3x3 book outlines an appropriate and ‘smart’ policy approach to enable enterprises in the informal sector. Such policies need to be differentiated and nuanced, recognising that both one-person or multi-person enterprises are situated on a developmental spectrum from embryonic to mature states, some ‘survivalist’ and others ‘growth-oriented’, with different aspirations, entrepreneurial aptitudes, degrees of development, complexity and capacity – and different needs and challenges. Factors for good policy design are identified.

Creating jobs, reducing poverty III: Barriers to entry and growth in the informal sector – and business cycle vulnerabilities

Frederick Fourie, REDI3x3, based at SALDRU, University of Cape Town on 6 August 2018
Reads 8,139

In this extract from a new REDI3x3 book, the focus is on the constraints faced by informal enterprises in trying to enter, survive, grow, or increase employment. A lower tier of ‘survivalist’ enterprises and an upper tier of ‘growth-oriented’ enterprises is apparent, with barriers limiting entry into the upper tier. Selling into higher-value or formal-sector markets and value chains encounter significant structural barriers. And the sector is particularly vulnerable to severe cyclical downturns.