Chapter Two: Literature Review
Developing Nations and the informal sector (and the informal trader)
The economics of the informal sector
Law, Regulations, authorities and the informal sector
Considerations for the informal sector
Research design and Methodology
Chapter Four: Data analysis and informal traders in their pseudonyms
General Account of Warwick Avenue premised on the method of observation
Narrating the observed incidents of law enforcements at Warwick Avenue
The importance of informal trading on the lives of informal traders
Conflict of interest: Municipal laws and the aspirations of informal traders
An ideal version of the laws that can better regulate the informal sector: The perspectives of law officials and informal traders
Chapter Five: Evaluation
Recommendations and Conclusion
The contemporary democratic South Africa that was highly celebrated during its inception in 1994, is now confronted with volumes of criticism due to lack of opportunity and prosperity. South Africa is witnessing protest (peaceful and violent) in various part of the country. The rate of unemployment in the country is increasing and this crisis informs the broader problem of the widening gap between the haves and the have not. In the midst of these problems, the informal sector provides opportunity and hope for millions of South Africans and mitigate the impact of unemployment and inequality. However, the functionality of the informal sector in South Africa is limited by regulations and law enforcements. Therefore, the purpose of this research is to critically discuss the impact of law enforcements on the lives of informal traders.
The concept of law enforcement is commonly understood by many but it is worth defining. Conser, Paynich and Gingerich (2013) mentioned that law enforcement is a way of monitoring human behavior and ensuring that rules and regulations of that society are observed for purposes of achieving stability in society. In addition, Skolnick (2011) defined law enforcement as an action taken by police officials or authorities of a society to ensure that the law of the land is not violated. Concurring with these definitions, law enforcement was defined as, “actions carried out by the authoritative organ of society to ensure that individuals act in accordance with the rule of law” (Breitel, 1960: 427). Acknowledging these various definitions, one can deduce that law enforcement refers to the act of ensuring that law is observed and followed. Therefore, understanding the concept of law enforcement is crucial and fundamental to this research.
Having considered the concept of law enforcement, it is important to proceed by defining and discussing the concept of informal trader. The EThekwini municipality on Informal trading by-law (2014) and the city of Cape Town on informal trading policy (2013) were brief and both defined informal trader as a person who carries on the business of informal trading. To provide a clear understanding on the subject matter, Dewar (2005) defined informal sector as a continuum which resonates with small or survivalist enterprises. The Breede Valley municipality on their informal trading by-law clearly defined informal trader as, “any person who carries on the business of street vendor, pedlar or hawker and includes any employee of such person and for the purposes of this by-law, also includes any person who trades in public space” (Breede municipality, 2010: 1). While all these definitions correctly align with the concept of informal trader, this research paper will define an informal trader as a person who engages with the activities of the informal sector.
It is important to note that the thorough review of the concepts is fundamental to understanding this research paper. South Africa is a democratic country and it is significant to study how local authorities engages with informal traders who are trying to earn a living. It is important to observe that informal traders fight unemployment and food insecurity whilst they get involved in dispute with local authorities. Therefore, this research will critically analyze the impact of law enforcements on the lives of informal traders.
Informal trading in South Africa or simply Durban plays a crucial role on the lives of people. It is way of surviving and the means of providing food for the household. On the contrary, the nature of informal trading is in conflict with the laws of local municipalities. In addition, the actions carried out by authorities, regulations and to some extent, violent evacuations impact negatively on the lives of informal traders. It was mentioned that, “municipal by-laws authorize the act of evicting street traders and confiscating their stock by city authorities” (Sello, 2012: 10). This then impact negatively on the lives of street traders and their households since expected profit will not be gained and their capital which bought the confiscated stock will not be returned. Davis et.al (2018) made an assertion that due to important role that the informal sector has on people, an initiative can be implemented to decriminalize the economic activities of informal traders. Therefore, it can be argued that law enforcements impact negatively on the lives of informal traders.
An important observation can be made that informal traders in Durban originate from townships confronted with unemployment and rural areas confronted with poverty. An interesting fact is that the majority of the informal traders generally have a number of dependencies. Sello (2012) argues that informal traders are people who are trying to survive in the midst of unemployment and poverty crisis. The contemporary relationship between law enforcement and informal traders has little benefit for the families trying to survive.
This research is motivated by the interest in studying and showing the impact law enforcement has on the lives of informal traders.
The aim of this research is to show how law enforcement impact negatively on the lives of informal traders and how this relationship can be improved.
To gain insight on how informal trading assist or betters the lives of traders.
To understand how informal trading reduces the impact of unemployment.
To gain an understanding on the nature of the laws that conflict with the interest of informal traders.
To find out how informal trading can be better regulated without affecting those depending on the informal sector.
How does informal trading better the lives of people?
To what extent is the informal sector reducing the impact or rate of unemployment?
What is the nature of the laws that conflict with the interest of informal traders?
How can the laws be amended to better regulate informal trading?
The nature of contemporary laws on informal traders authorizing evictions and confiscations impact negatively on the lives of informal traders and their households.
This chapter has successfully achieved it purpose. In this chapter, one was able to provide an introduction on the subject matter, clearly defining two significant concept to this research. The background of the study facilitated a broader understanding. It was mentioned that law enforcements impact negatively on the lives of informal traders and their households. The objectives, research questions, aim and problem statement were clearly outlined. Hence, this research seeks to cogently discuss in great depth the impact of law enforcements on the lives of informal traders.
Chapter Two: Literature Review
This section of the research paper seeks to review literature which has previously documented the impact of law enforcement on the lives of informal traders. This will be achieved through thorough document study and by highlighting key ideas relevant to this research. It is important to understand the impact of laws which regulate traders confined in the world of survival entrepreneurship. The focal study area is the city of Durban, Workshop area. This research is based in South Africa, which is a developing nation confronted with high unemployment rate and the issue of poverty.
Developing Nations and the informal sector (and the informal trader)
The countries in the world are understood, interpreted and categorized in various ways. The common notion of categorizing countries as developed, developing and underdeveloped is often a matter of diatribe and debate. Regardless of contestations directed towards this grouping of countries, it is still widely used by various scholars and writers. Hence, it is significant to understand the meaning of these concepts, especially that of a developing country. This will provide fundamental understanding about the nature of informal traders and how there are regulated in the context of South Africa, which is a developing country.
It is important to begin by mentioning that, “the world trade organisation does not apply any established definition of developing nations” (kasteng et. al: 2004), since this concept is a matter of debate. In addition to this statement, Vaggi (2017) observed that, it is difficult to have a standard definition of developing countries because economic and social structures change constantly. To provide clarity on vaggi’s input, economies in developing countries fluctuate in two ways, they fluctuate to improve the lives of people or for the worse, where poverty and unemployment increases. Therefore, Layne (2016) briefly stated that developing countries are a work in progress. Acknowledging this discussion, one can argue that a developing country is that which works towards improving its politics and socio-economic conditions.
Developing countries should be sincerer towards informal traders in terms of laws and regulations. Informal traders are significant in the economies of developing nations. It was clearly stated that, “while it is of global significance (informal sector), it is particularly important in developing world context; marked as they are by deep poverty” (Shabalala, 2014: 4). To be brief, the informal sector is an economy without legal recognition and does not contribute to tax revenues. Hence, the informal sector is fuelled by informal traders trying to survive and sustain their livelihoods. Although developing countries are confronted by economic challenges, there still enforce laws and regulations on the informal sector, impacting negatively on the livelihoods of informal traders.
The informal sector has positive contributions to economies. It helps to reduce unemployment and fight the issue of poverty. To concur with this statement, it was argued cogently that, “the most prominent contributions of the informal sector are in providing income generation activities, employment and cushioning the impact of economic crisis, which is why some consider this sector as a buffer to the formal economy” (Fixy, 2004: 32). To further this argument with a gender perspective, it was mentioned that, “the informal economy has become highly feminised in that increasing numbers of women look to the informal sector as a survivalist economy, one that they rely on in order to sustain their children, communities and households” (Mabilo, 2018: 2). Hence, the informal sector has the potential to support the general economy of a country by reducing the impact of poverty and unemployment, whilst sustaining livelihoods.
In the context of South Africa, the informal sector has positive contributions to the economy, however laws and regulations impact negatively on this sector and its beneficiaries. To highlight this contrast, one must refer to two important statements. The first statement mentions that, “yet in acknowledging the value of the contribution of South African women in households and communities generally, one begins to realise that their labour participation in the informal economy equally holds much significance” (Mabilo, 2018: 4-5). The second statement justifies this contradiction, Valodia (2007) made an observation that unlike other developing countries, the informal sector in South Africa continues to be small. To expand on this observation, an argument stated that, “the debates about why South Africa continues to have a small informal economy with high levels of unemployment is an important consideration for employment policy” (Valodia, 2007: 7). Therefore, the significance of informal sector and informal traders need to be reflected in the South African laws and regulations.
Acknowledging the above discussions, it is evident that informal sector is significant in various ways in developing countries. The informal sector fight poverty and reduce unemployment. However, in the context of South Africa, it is still confronted by the challenges of laws and regulations.
The economics of the informal sector
The economics of the informal sector refers to the in-depth analysis of the informal sector contributions to national economies. It is crucial to understand the informal sector from an economic perspective, because viable and growing economies are important to every country. Therefore, it is important to examine the relationship between the informal sector and national economies, to deduce an understanding as to whether informal sector is good or disadvantageous for a country.
The informal sector is significant for national economies. To concur with this statement, it was argued that, “the informal sector plays an important role in an economy, especially in the developing countries” (Warunsiri, 2011: 450). In addition to this statement, an assertion was made that, “the informal economy is becoming a vital source of employment and income for the poor, providing a seedbed of local entrepreneurship and an effective instrument to combat poverty and social exclusion” (Tshofuti, 2016: 32). It is evident that the informal sector is important to national economies. It can be used as a tool to address the issues of poverty and unemployment. To further this argument, it was stated that, “the informal economy thus provides opportunities for income earning for those that have no other means for survive” (Becker, 2009: 3). Therefore, government should be more rational with their approaches in terms of regulating this sector.
The issue of the informal sector is debated. It does not possess high levels of support from governments, since it does not contribute to tax revenues. Therefore, various governments do not possess a proper understanding about the nature and advantages of the informal sector. This is evident from the legislative frameworks authorising evictions, confiscations and suspensions of informal activities. An important observation was made by Becker (2009) that, many governments are unaware of the contributions made by the informal sector. In addition, it was argued that, “therefore, in order to intervene in the best way to stimulate sustainable growth and job creation, the informal economy needs to be better understood both by governments and donors” (Becker, 2009: 10). Therefore, it is significant for governments and authorities to better understand the contributions of the informal sector. This understanding will provide the logical basis to formulate the appropriate laws to regulate the informal sector.
It is important to configure an understanding about the contributions of the informal sector. A cogent statement mentioned that, “the most prominent contributions of the informal sector are in providing income generation activities, employment and cushioning the impact of economic crisis, which is why some consider this sector as a buffer to the formal economy” (fixy, 2004: 32). To further this argument, “in addition, evidence shows that the majority of new employment, both self-employment and wage employment in developing countries is generated in the informal economy” (Tshofuti, 2016: 32-33). Therefore, the contributions of the informal sector are income generation for the poor and the unemployed. This income will provide informal traders with the purchasing power to obtain their needs and help the national economy.
In accordance with the above discussions, an assertion was made that, “moreover, it is clear that the informal economy has a significant job and income generation potential and that existence of the informal economy also helps to meet the needs of poor consumers by providing accessible and low-priced goods and services” (Becker, 2009: 10). To further this argument, an observation was made that, “although often considered as the economy of the poor, some activities in the informal sector deliver a much better income than some occupations in the formal sector” (Tshofuti, 2016: 32). Hence, it is clear now that the informal sector spectrum varies from low income generation for survival, to high income that improve the standard of living and create the informal-formal linkages.
The informal sector need not be undermined by governments and policy makers. Its economic potential has the ability to absorb surplus labour and reduce levels of unemployment. People benefit from this sector in various ways. This sector is paramount to women headed households and to their children. Sello (2012) noted that some informal traders used their profit to sustain their families, send their children to school and buy groceries. This sector may not contribute towards tax revenues but its assist governments in various ways. It was noted by Sello (2012) that this is a semi-welfare sector since it has a host of people depending on the informal traders. It was stated that, “street trading plays an important role in Cape Town’s local economy and urban landscape” (Horber, 2017: 20). Therefore, the economic potential of the informal sector cannot be ignored and need to be taken into consideration by governments and policy makers.
It is important to note that the economics of the informal sector was cogently discussed. The contributions of the informal sector were made visible, stating income generation, employment and sustaining families. It was noted that governments do not possess a full understanding of the informal sector. Therefore, governments and policy makers need not to undermine the informal sector but to enhance it through supportive laws and regulations.
Law, Regulations, authorities and the informal sector
Law, regulations, authorities and the informal sector is an intriguing relationship that need to be assessed and better understood. The common narrative is that laws and regulations are not supportive of the informal sector. The informal traders in various interviews refer to evictions and stock confiscation as one of the major challenges they confront. In addition, government is noted to have mixed views about the informal sector. This then result in the indecisiveness of policy guidelines regarding the informal sector. Therefore, it is important to understand how laws and regulations are enforced and how they impact on the lives of informal traders.
Governments are uncertain about the issue of informal traders. This is reflected in the statement which noted that, “state responses to informal trade are ambivalent as governments grapple with the question of how to best incorporate street trade into the urban fabric” (Mwasinga, 2013: 19). In addition to this statement, it was noted that, “In South Africa there has been a debate as to whether to try to control and regulate or to promote the informal economy” (Pillay, 2008: 16). This simply means that government support for the informal sector is not justified. Meaning that the informal sector is prone to vulnerabilities as its lacks government support and recognition. Therefore, the uncertainty of governments about the informal sector is the genesis of the challenges and problems confronting this sector.
It is clear that some governments do not appreciate the informal sector. This can be noted when attempts are made to eradicate informal traders. Fixy (2004) made an observation that, most of the governments in the third world countries thought of the existence of the informal sector as a sign of backwardness and embarrassment that required rectification. To further this argument, it was mentioned that, “this was demonstrated by the sudden demolition of informal business structures, including all unregistered but previously tolerated trading bays” (Mwasinga, 2013: 20). Therefore, one can deduce that governments are not enthusiastic about the presence of the informal sector. It is viewed in a narrow pessimistic manner, which manifest itself as the idea which justifies the demolition of informal sector structures.
Law enforcement is a serious issue that is confronting the informal sector. The informal traders have varying experiences with regards to local authorities. It is reported that, “the small business complex (city of cape town) was demolished without a court order and the tenants were not even given time to remove their belongings” (Tshofuti, 2016: 119). In addition to this statement, it was argued that, “the evictions of street food vendors from the sites where they run their business has raised some questions of legality for usually the eviction is conducted in a violent manner” (Fixy, 2004: 55). Hence it is evident that law enforcement is problematic towards the informal sector. The laws permitting evictions and demolitions impacts negatively on informal traders as they experience capital and income generation loss.
The intention of the informal traders is to survive and sustain their livelihoods. Most of them originate from the poor, unemployed segment of the population. The reality is that they have people depending on them and whatever happens to informal traders also impacts on their dependents. Therefore, it is notable from the above discussions that the laws towards informal traders lacks the justice component and emphasizes the components of regulation and governance.
The nature of law enforcement carried out by city officials is questionable. It is often characterised by violent behaviour directed towards the informal traders. To a certain extent, the government representative is aware of the violent approach executed by authorities. A narrative reflective of how the government commend the notion of violence stated that, “the attention from the government was given by sending real officials to chase street vendors away”. In addition, it was mentioned that, “officials were sent to confiscate all their assets and bring them to court, charging them as city offenders” (Fixy, 2004: 117). To further this argument, it was clearly stated that, “consequently, harassment of street vendors has become a common practice in Addis Ababa” (Kebede, 2015: 93). Hence, it is clear that non-government intervention in the informal sector will perpetuate the current trends of violent approach towards the informal traders. This violent approach impact negatively on the lives of informal traders as they lose their investment through fear and violence.
The issue of police harassment is common to most informal traders. It has become the culture of the informal sector. The informal traders are exposed to coercive police officials that exist to enforce laws and regulations. Sello (2012) clearly noted that, from the research conducted the major challenges confronted by informal traders was police harassment and the confiscating of their stock. The capital loss during these experiences is a major issue because the informal traders must take care of their families and cater to the basic needs of the household. Therefore, there are major socio-economic impact associated with the evictions of informal traders that need to be studied and understood in great depth. The government cannot afford to be associated with the victimization of its citizens who are trying to combat poverty and unemployment.
The government policies are the major factor that is restricting and condemning the informal sector. The nature of the informal sector is suppressed, and its survival is due to the informal traders who withstand all the major challenges. It was observed that, Horber (2017) the numerous parameters required from informal traders in South Africa, align with the criteria for restrictive street trading management. This means that the government officials regulating the informal sector create institutional barriers to condemn or restrict the informal sector. It is noted that the majority of informal trader’s lack formal education and these barriers can create a sense of discouragement for people seeking work in the informal sector. In the context of Zimbabwe, it was noted that, “from independence, Zimbabwe’s policy support for the informal economy and street trade had at best been indifferent, but abruptly turned extremely hostile” (Mwasinga, 2013:20). Therefore, one can deduce that the policy environment regarding informal traders is not friendly and it is determined to condemn this sector. The governments of developing countries are biased towards the formal economy as it contributes to tax revenues and despise the informal sector.
It cannot be argued that the nature of law enforcements has major socio-economic impacts. The evictions happening in the urban street affect lives in townships and rural areas. It was argued that, “players in the informal economy are most negatively affected by government decisions” (Tshofuti, 2016: 117). This refers to the decision of non-intervention regarding the support or protection of informal traders. In addition to this statement, in Zimbabwe, “it is estimated that this destruction of street trading activities eliminated the livelihoods of 2 to 3 million people who were dependent on the informal economy” (Mwasinga, 2013: 20). These figures signal the capacity of the informal sector to carry the burden of poverty and unemployment. This sector generate income and provide the means for people to sustain their livelihoods in the capitalist global society. Therefore, law enforcement evictions have major socio-economic impact on the lives of informal traders and justice need to be taken into consideration.
The relationship between laws, regulations and the informal sector is a coercive one that usually disadvantages the informal traders. It was noted that governments and policy makers do not support the informal sector but instead produce condemnation policies. The issue of police harassment, evictions and confiscations is a major issue confronting informal traders. This result in major socio-economic negative impact for the informal traders and their dependents. It is appalling to witness how the informal sector is considered by governments, especially of developing countries, regardless of the informal sector contributions to society.
Considerations for the informal sector
The informal sector may confront challenges and condemnation from government officials but there exists a faction who offer considerations for the future of this sector. The informal sector has its advocate who articulate a better future with conducive laws and regulations. It cannot be argued that the approach of evictions and confiscations is not sustainable since they possess negative socio-economic impact. Therefore, it is important to understand the considerations for the informal sector and their implications moving forward.
The informal sector is not offered support or recognition. Governments are not willing to invest nor contribute towards the growth of this sector. It was argued that, “the informal economy encounters many challenges which require intervention” (Ngundu, 2010: 37). To further this argument, it was stated that, “the current position taken by many stakeholders is that, as the informal sector is here to stay, governments have a responsibility to intervene and correct policy biases that have favoured the formal part of the economy to the detriment of the informal economy” (Becker, 2004: 27). This articulation by Becker simply mobilises governments and policy makers to move away from the current notion of pessimism towards the informal sector. The informal sector deserves recognition because of its contribution to society and livelihoods.
The resistance of informal traders and its supporters against condemnation and eradication resulted in the survival of this sector. It was clearly argued that, “In spite of the fact that governments officials agree on the idea that street traders should be eradicated from the street, street vendors and their customers argue against the idea of government bodies” (Kebede, 2015: 94). To further this argument, it was stated that, “the implementation of certain by-laws was illogical and caused unnecessary strain on traders” (Pillay, 2008: 22). One can deduce that customers are a source of both income and support for the informal traders. It can be argued that customers recognise the value and importance of the informal sector. The informal sector is known for low-cost products and services which match the purchasing power of poor populations. Therefore, the informal sector is considered important by its target market.
- Quote paper
- Sphamandla Mlotshwa (Author), 2018, The impact of law enforcements on the lives of informal traders in South Africa. How can their situation be improved?, Munich, GRIN Verlag, https://www.grin.com/document/456163