What do Central African Republic, New Zealand, Panama, Mauritania and Kuwait have in common? They all have populations between 4-million and 4,9-million people.
So, what, you may ask? The Institute for Economic Justice wrote in a policy brief called Informal Economy/ Sector in August 2018: “Statistics South Africa’s non-agricultural labour force data show that 4.5-million people are in informal employment. Four hundred thousand of these workers are employed in the formal economy but under precarious conditions, another 1.3 million as domestic workers, and 2.8 million in the informal sector. Further interrogation of informal sector data shows that it is largely constituted by own account workers – street and spaza shop traders, taxi drivers, construction workers, educare providers, waste recyclers, tailors, shoe repairers, bush mechanics, among others.”
Our informal sector is as big as the total population of Mauritania. That’s a lot of people, and yet despite this, it is seldom that one sees this sector being zoned in on as a potential solution to South Africa’s high unemployment rate and poverty. Enough with complaining and sloganeering – let’s look at what we have, and what to do with it.
Of course, the goal would be to see businesses in the informal economy make their way into the formal economy. The motivation for this is multifaceted. The country’s reserves would do well to have a larger pool to tax, which would benefit many, yet many would argue that the spectre of this would be enough to keep informal traders under the radar, and that a friendlier tax regime for entrepreneurs and small businesses would help the transition.
On the other hand, businesses that transition to the formal sector will find a host of other benefits, not least in the form of financial services but also protection – for employees and also for the owners’ access to support and grants.
That’s the big picture. The long game. If that were achieved, imagine the possibilities in terms of job creation and economic growth. This doesn’t mean the informal sector will cease to exist – on the contrary, small-scale traders and side-hustles will continue to be born. But, if they are born into a system where there’s potential to “graduate” from informality to formal inclusion in the economy of this country, would we not be some way towards finally sharing the spoils of our democracy more broadly?
There are corporates and organisations that do focus on the sector, with a variety of initiatives, and they deserve to be celebrated. But we need more. We need practical steps to change our world.
Next time you walk down the street, or stop at an intersection, look around at the dozens of people “hustling” to make a living. These people are doing what we are always told to encourage: they are displaying entrepreneurial thinking.
Next time you browse Facebook and see a community member selling home-made samoosas, koeksisters or biscuits, another advertising a web-design or a digital marketing service, another offering a mobile mechanic service, waterproofing or handyman services, stop and acknowledge that while these may be tiny, untested, side hustles, these people are displaying entrepreneurial nous. The more of us that support them, the better their chances of growing, and the better their chances of growing, the more likely they’ll get access to bigger markets and opportunities… and who knows, one day they may hire our children.
We call on all stakeholders in this country to take a moment and consider: what can I do, or who can I encourage, to motivate, support, or invest in an informal business today? What if this triggers a knock-on effect that turns a side hustle into a business that eventually provides jobs and contributes to our shared prosperity? It would mean we’ve changed our world.
