By Tebogo Mokwena
Lawmakers must pass legislation that solely focuses on the informal economy and its needs, according to Informal Economy Development Forum (IEDF) secretary general Paul Bester. He told Vutivi News that an informal economy act would empower informal traders to be able to trade without dealing with the multiple bylaws that differed depending on what municipality they operated in.
Bester was speaking following Deputy President David Mabuza telling an Informal Sector Symposium that there were legislative stumbling blocks when dealing with the informal economy. He said municipal bylaws were at times obstructive and prevented informal traders and entrepreneurs from trading without hindrances. Mabuza also said that labour market and industrial policy choices had not lived up to the expectations of the majority, which had left the country with an unhealthy concentration of income, wealth, power, and opportunities in the hands of the already privileged few.
“Adversely, this results in a steady rise in chronic levels of basic social and economic insecurity for those already on the margins of our society, most of whom survive through the informal economy and are cut off from global value chains of mainstream economic activities,” he said. Bester told Vutivi News every municipality implementing different bylaws for informal traders made it difficult for those who wanted to operate in more than one area.
“This is certainly not conducive because it means that an informal entrepreneur would not be able to trade in different parts of the country due to this stumbling block.” Bester slammed municipal lawmakers for not taking the needs of informal traders into consideration when drafting the municipal bylaws. “Those that trade as informal entrepreneurs should be able to play a key role in determining what laws are needed to govern them,” he said.
Bester also said that an informal economy act, which the IEDF was advocating for, would also provide a governing structure which covered every sector of the informal economy. “Currently there is no real structure on how things are done in the informal economy, and we believe that this economy has the power to change the economic situation of the country,” he said.
“We firmly believe that if informal businesses are assisted with formalisation, Unemployment Insurance Fund (UIF) and tax registration, this will enable them to create more jobs and to slash the unemployment rate.” The informal economy consists of artisans, bakers, salon owners, spaza shop owners and food producers, and many of them do not have access to funding, which Bester believes legislation can help address. “… many of them may not be funding ready, but they are certainly ready to be registered and to create jobs,” he said.
“If we had a specific act that catered for the informal economy, it would be able to enforce this need, as well as provide one voice for the informal sector.” According to a quarterly informal economy survey by World Economics last year, the size of South Africa’s informal economy is estimated to be 28.8% which represents approximately $325 billion at GDP PPP (gross domestic product converted to international dollars using purchasing power parity rates) levels. The informal economy is the part of any economy that is neither taxed nor monitored by any form of government.