For decades, development theorists and African leaders stigmatised informal employment as an unfortunate reality set to disappear as ‘modernisation’ spread. The police often harassed street traders, petty artisans and inhabitants of unauthorised settlements. By the 1990s attitudes were often more tolerant, but is South Africa returning to former prejudice?

A report from the London School of Economics, in the UK, reviews the theory that the informal sector has to make way for a ‘modern’ economy, the resilience of ‘economic dualism’ and changing attitudes about the African informal sector.

In the 1960s, leaders of Africa’s newly independent states shared the colonialists’ conviction that only the formal sector could promote higher productivity. Their assumption of a unilinear pattern of economic development – in which Africa would inevitably follow the path of industrial development – ignored the historical reality that the economic and political circumstances facing Africa were different from those experienced by industrialising Europe and North America.

In the 1980s, structural adjustment policies gave a huge impetus to the informal sector. The combination of sharply reduced government expenditure and opening up to global competition led to significant retrenchments in both the public and private sector. Some countries de-industrialised with startling speed. Those formal sector workers lucky enough to retain their jobs were often now so poorly or irregularly paid that they were forced to take on extra jobs in the informal sector. Workers who lost their jobs were forced into the informal sector, competing with already-established traders.

Recent policy pronouncements in South Africa have stimulated debate about the dual economy. In 2003 President Mbeki expressed regret at the survival of a ‘structurally disconnected’ ‘third world economy’ alongside South Africa’s dominant ‘first world economy’ and called for government measures to rescue those ‘entrapped’ within it. In 2006 the vice-president spoke about ‘eliminating the second economy’. The failure of post-apartheid governments to create unskilled formal sector jobs is destabilising for a country which inherited a legacy of very poor education for the majority.

Simplistic attitudes about the informal sector in South Africa have not, however, led to adverse actions against informal sector livelihoods of the kind which have taken place in recent years in Zimbabwe, Malawi and Zambia. The most ruthless campaign against urban poor people and the informal sector was ‘Operation Murambatsvina’ (meaning ‘Clear out the trash/Restore order’) in Zimbabwe in 2005, which caused around 700,000 people to lose their livelihoods or their homes or both.

African policymakers should realise that:

• Most urban workers are informal: it is the dominant form of employment and the trend is increasing.
• The assumption that the major contributors to the informal urban workforce are migrants from rural areas is wrong: for many years most annual additions to the urban population, its workforce, and the unemployed, have been urban-born.
• Inhabitants of unplanned settlements working in the informal sector are very concerned about the criminal elements living amongst them.
• If the formal sector cannot provide, residents will turn to self-employment regardless of the extent to which municipalities, governments and/or donors try to suppress it.

Source(s):
‘The state and the informal in sub-Saharan African economies: revisiting debates on dualism’, Crisis States Research Center, London School of Economics, CSRC Working Paper no. 18 by Deborah Potts, October 2007 (PDF) Full document.
‘The state and the informal in sub-Saharan African urban economies: revisiting debates on dualism’, Living on the Margins Conference Paper, Stellenbosch University, by Deborah Potts, 2007 Full document.
 ‘The urban informal sector in sub-Saharan Africa: from bad to good (and back again)’, Development Southern Africa: special issue on Living on the Margins, 25(2):151-67, by Deborah Potts, 2008.

Funded by: Nuffield Foundation, School of Oriental and African Studies, UK Department for International Development

id21 Research Highlight: 14 September 2008

Further Information:
Deborah Potts
Department of Geography
King’s College London
Strand
London WC2R 2LS
UK

Tel: +44 20 78481572
Fax: +44 20 78482287
Contact the contributor: debby.potts@kcl.ac.uk

Department of Geography, King’s College, London, UK

Crisis States Research Centre (CSRC)
Development Studies Institute (DESTIN)
London School of Economics
Houghton Street
London WC2A 2AE
UK

Tel: +44 20 78494631
Fax: +44 20 79556421
Contact the contributor: csp@lse.ac.uk

Development Studies Institute (DESTIN), London School of Economics, UK

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