The informal sector is a versatile and dynamic sector which includes a variety of economic activities. Durban is credited as being the first city in South Africa to develop a policy for street traders. Set against the backdrop of South Africa’s constitutional requirements for local government to provide for the rights of all citizens and for them to benefit equally from services, this CAI paper presents a brief review of Durban city’s policy and regulatory framework, which deals with street traders and trading. Part 1 provides some background information as to what is meant by informal trade and the socio-economic environment which has helped it thrive in South Africa.

The who, what and why of the informal sector: A brief introduction

The term ‘informal sector’ was coined in anthropological work done by Keith Hart (1973) in Accra, Ghana.⁽²⁾ Hart described and analysed the many and varied activities of the urban poor and the important part they played in supplying essential services in Accra. Hart explained the significance of ‘small-scale distribution’ to urban economies. His work led to a view of the people engaged in small scale distribution of goods through street trading as being gainfully employed with informal activities in a way that generated growth in their incomes. Their many economic activities also supplied essential services in Accra. Hart’s work challenged the view that income opportunities exist only in formal employment activities. In Kenya, the International Labour Organisation (ILO) drew attention to the high number of different types of licenses given to street traders (translating to high profits in this sector). This suggested that perhaps because of the high visibility of the street traders, the other informal trade sectors were neglected. The ILO team then made policy recommendations to simplify the licensing system.⁽³⁾ The interest shown by the ILO and  the policy implications of street trade led to much interest and debate about the informal sector, largely about the role of informal trade in the economy and development planning; this includes work by Moser (1978), Bromley (1978), MacEwen-Scott (1979), Castells and Portes (1989), and De Soto (1989).⁽⁴⁾ As such, an “Informal Trader refers to people who conduct informal street trading on a small scale, mostly from street pavements, and who, as a group offer a large variety of products and basic services to prospective clients.”⁽⁵⁾

The majority of street traders in South Africa are black women who trade in a range of goods including sweets, knick knacks, cigarettes, clothing, and (most prominently) in fruit and vegetables (often produced by someone else).  Despite its relatively modest appearance, street trading is one of the largest sectors of the informal economy. A  Labour Force Survey conducted in 2000 estimates that there are 500,000 street traders across South Africa, 70% of whom deal with food items and, according to Africa street traders, found that their age tended to range from 25-49, with women likely to be older than male street traders.⁽⁶⁾ Similarly, a study by Lund found that there are more men than women in the 21-30 years age group and more women than men in the 41-50 age groups.⁽⁷⁾ This suggests that women enter street trading later in life, while men generally enter and leave street trading early in their lives. Furthermore, education levels vary according to age and gender. The street traders are generally poor, unskilled people at the lower end of the socio-economic ladder. Informal trading has become a common feature in all urban areas in both major cities and smaller towns and wherever there is traffic such as at bus stops, train stations, truck stops and, of course, the streets. In major African cities, markets and street vendors were found to be a major source of provision for poor, urban households.⁽⁸⁾ In fact, in Sub-Saharan Africa, the informal sector accounts for up to 60% of the economy.⁽⁹⁾ As such, an important role of informal trading is its ability to absorb unemployed people, young and old.

In South Africa, the unemployment rate has remained between 24% and 30% since 2000.⁽¹⁰⁾ Despite South Africa’s economic expansion,⁽¹¹⁾ growth and redistribution of wealth have not been realised.⁽¹²⁾ A severe shortage of new job opportunities has led many South Africans, who have been unable to enter the formal job market, to look at street trading to generate an income. A survey of four cities, Cape Town, Tshwane (Pretoria), Johannesburg and eThekwini (Durban) revealed that the majority of street traders were male (54%). In eThekwini, the females were in the majority (58%). The same survey revealed that 37% of informal traders had some secondary education, with 29% of them having obtained a senior certificate. In Cape Town, 18% achieved a tertiary education and only 6% had no formal education in the metropolitan areas surveyed.⁽¹³⁾ These significant numbers of people with a formal education in the informal sector underscores the lack of employment opportunities the South African economy offers. Street trading is thus an important indicator of the state of the economy.

Skinner (2008) suggests that research calculates the contribution that street traders make to the economies of cities which is an important step toward changing the perceptions and attitudes of economic development planners.⁽¹⁴⁾ Is street traders’ contribution to the economy taken seriously when planning cities, or does the notion of ‘world class cities’ impose substantial limitations on imagining or planning those cities?⁽¹⁵⁾ The positioning and functioning of the cities in the world economy becomes the dominant factor in urban economic development planning; activities like street vending are seen as undesirable and their contribution to local economies is not recognised.⁽¹⁶⁾ Urban spatial planning in most African cities, especially in South Africa with a history of separate development, has inherited spatial planning that puts the poor at the periphery far away from the rich or middle-class who may buy their products. Street traders consequently live far away from their trading spots and incur transport costs. The latest urban design choices like the width of the streets and pavements may not accommodate street traders if there are no policy initiatives that inform urban design in support of street trading.⁽¹⁷⁾ Transport and land use planning are critical for the success of the street traders. To what extent are street traders accommodated in areas of high congestion like transport nodes and places where middle-class consumers are congested? Facilities created for street traders indicate the extent to which they are incorporated into urban plans.⁽¹⁸⁾ For example, shelter, storage, and ablution facilities.⁽¹⁹⁾ In a report on ‘world class cities’, Johannesburg is the only African city mentioned.⁽²⁰⁾ A study of the city plans to the which provisions, if any, made for street traders, specifically female street traders, is of interest.

The regulatory framework for street traders: A focus on Durban

Section 22 of the Constitution guarantees freedom of trade, occupation and profession,⁽²¹⁾ and those individuals who perceive themselves as having no option other than street trading are protected by the Constitution. The Constitution, through section 152, also empowers local governments to take action to encourage the involvement of local communities and community organisations in matters of local government.⁽²²⁾ Hence, with local government responsibility to promote economic development,⁽²³⁾ relevant and important measures for survivalist traders have been taken by the Durban city.

Regulation of informal trade was under control by local municipalities with by-laws and licences during apartheid. The “Move On” law was enacted to force street traders to move from their site every half hour or face harassment.⁽²⁴⁾ The political changes in the 1980s saw an influx into the cities of populations whose movement was formerly restricted by the Group Areas Act. The result was initiatives by the state to promote Black businesses. For example, the Business Act, enacted in 1991, made enforcement of the “Move On” law an offence.⁽²⁵⁾ The Business Act acknowledged street traders as business people entitled to assistance as they made a contribution to the economy.⁽²⁶⁾ Amendments made to the Act in 1993 gave the municipalities back some powers to regulate street trading, but not prevent it.⁽²⁷⁾ In 1995, provincial governments were empowered to change the Act as they saw fit. Although the National Department of Trade and Industry (DTI) proposed initiatives to support small businesses and acknowledges women to be concentrated in ‘survivalist activities’, there are no proposals for supporting this group.⁽²⁸⁾ Municipalities control street trading with by-laws which are designed to facilitate operation and prevent obstruction of public facilities. Examples of such by-laws are to not obstruct traffic and pedestrian traffic; safety and service vehicle movement; protection of the public from hazardous street trade equipment such as burning stoves; to not obstruct fire hydrants; as well as road signs and cleanliness of the street are to be observed.⁽²⁹⁾

The city of Durban acknowledged the contribution of the informal economy to the city’s economy by quantifying the value of the street trade. For example, the value of the sale of cooked, green mealies (corn) on the street was estimated at a monthly turnover of R1-million (US$ 108,412) and products that cater for African populations who utilise traditional medicine as well as other materials in one market place was valued at more than one R170-million (US$ 18 million) in 1998.⁽³⁰⁾ Further, the informal sector employs many people who would otherwise be unemployed.⁽³¹⁾ Informal Trade Policy would also give the municipality the opportunity to meet some of its obligations to the poor sections of the society. For example, the city would be able to promote social and economic development for its citizens as section 152 of the Constitution requires of local government.⁽³²⁾

After consultations with street traders and other interested parties both within and outside the city council, the new eThekwini Municipal Council Policy of 2001 was adopted in February 2001.⁽³³⁾ The policy recognised the importance of the informal economy for both jobs and income.⁽³⁴⁾ The city, then, views street trading as a part of economic planning and development rather than a poverty alleviation or welfare project,⁽³⁵⁾ and acknowledges the interdependence of formal and informal parts of the economy.⁽³⁶⁾ In line with this, the city then allocated resources for infrastructure development for traders.⁽³⁷⁾ In the late 1990s, the city acknowledged that there was no overall policy guiding informal trade by the city. The by-laws had been made without policies in existence.⁽³⁸⁾ Therefore, policy development was, and remains, important as it helps to standardise the ways in which different officials deal with street traders thereby protecting said traders from maltreatment.⁽³⁹⁾

The Durban policy guidelines include creation of job opportunities, planning for informal street trading space and markets, proper management of existing markets, informal trader registration, rental policy,⁽⁴⁰⁾ commitment to support small enterprises with basic skills training, legal advice, health education, and access to financial services. The policy recommended capacity-building programmes for traders and local government officials as well as area-based management to resolve coordination problems.⁽⁴¹⁾ Also encouraged is promotion of safety and security and in this regard, informal street trader associations and organisations are encouraged.⁽⁴²⁾

Concluding remarks

The above, part 1, has provided a background of the informal trade sector in South Africa by outlining both the historical legislation of the practice but, more importantly, how cities and their policies are now starting to recognise the importance of awarding it more attention. Nonetheless, the informal sector is over represented by female traders who are not given equal social and political leverage from which to discuss their issues. Part 2, gives this more thought by focusing in on the challenges faced by female street traders in Durban and how the Self-Employed Women’s Union is making inroads in the organisation of female informal sector work.

Click here to read Part 2.

Written by Nombulelo Siqwana-Ndulo ⁽¹⁾

NOTES:

(1) Contact Nombulelo Siqwana-Ndulo through Consultancy Africa Intelligence's Gender Issues Unit ( gender.issues@consultancyafrica.com). This CAI discussion paper was developed with the assistance of Claudia Forster- Towne and was edited by Kate Morgan.
(2) Skinner, C., ‘Street trade in Africa: A review’, WIEGO working paper no. 5, October 2008, http://wiego.org.
(3) Ibid.
(4) Ibid.
(5) Willemse, L., 2011. Opportunities and constraints facing informal street traders: Evidence from four South African cities. Centre for Regional and Urban Innovation and Statistical Exploration (CRUISE), 59, pp. 6-15.
(6) Motala, S., ‘Organizing the informal economy: A case study of street trading in South Africa’, International Labour Organisation, 20 February 2003, http://www.ilo.org.
(7) Lund, F., ‘Women street traders in urban South Africa: A synthesis of selected research findings’, CSDS Research Report, 15 September 1998, http://sds.ukzn.ac.za.
(8) The Nordic Africa Institute’s website, http://www.nai.uu.se.
(9) Ibid.
(10) Horn, A., 2011. Who’s out there? A profile of informal traders in four South African city central business districts. Centre for Regional and Urban Innovation and Statistical Exploration (CRUISE), 59, pp. 6-15.
(11) Ibid.
(12) Ibid.
(13) Ibid.
(14) Skinner, C., ‘Street trade in Africa: A review’, WIEGO working paper no. 5, April 2008, http://wiego.org.
(15) Ibid.
(16) Ibid.
(17) Ibid.
(18) Ibid.
(19) Ibid.
(20) Ibid.
(21) ‘The Constitution of the Republic of South Africa’, Act 108 of 1996, Republic of South Africa, http://www.info.gov.za.
(22) Ibid.
(23) Ibid.
(24) Motala, S., ‘Organizing the informal economy: A case study of street trading in South Africa’, International Labour Organisation, 20 February 2003, http://www.ilo.org.
(25) Ibid.
(26) Ibid.
(27) Ibid.
(28) Ibid.
(29) Ibid.
(30) ‘Generic/ informal trade policy framework for metropolitan and local municipalities’, Small Enterprise Development Agency (SEDA), June 2008, http://led.co.za .
(31) Ibid.
(32) ‘The Constitution of the Republic of South Africa’, Act 108 of 1996, Republic of South Africa, http://www.info.gov.za.
(33) ‘Durban/eThekwini, South Africa informal economy policy’, WIEGO, 2012, http://wiego.org.
(34) Ibid.
(35) Ibid.
(36) ‘Organizing the informal economy: A case study of street trading in South Africa’, International Labour Organisation working paper no. 36, 20 February 2003, http://www.ilo.org.
(37) ‘Durban/eThekwini, South Africa informal economy policy’, WIEGO, 2012, http://wiego.org.
(38) Lund, F., Skinner, C. and Nicholson, J., 2000. Street trading. School of Development Studies: Durban.
(39) Ibid.
(40) ) ‘Generic/ informal trade policy framework for metropolitan and local municipalities’, Small Enterprise Development Agency (SEDA), June 2008, http://led.co.za .
(41) Ibid.
(42) Ibid.