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POLICIES OF CURBING INFORMAL SECTOR IN ECONOMIC DEVELOPMENT

By George Choongwa | 2018-01-13

Management of the informal sector has taken a dimension of public policy by several countries in Africa.

 

Ademola and Anyankora (2012:222) averts that the need to accommodate and provide for the informal sector has been greatly acknowledged. The United Nations (2002) asserts that the need to organise the informal sector is borne out of present and future challenges to the environmentalists. In the next thirty (30) years the urban population of developing countries is projected to reach four billion by 2030. Therefore, due to its nature, several policies need to have been put in place to address the degrading effects of the informal sector some of which include: Regulation of the informal sector, provision of the financial assistance, construction of modern infrastructural facilities, creation of urban management policies, establishment of educational platforms, and promotion of decentralisation and formation of cooperatives.

 

 

Regulation of the informal sector

 

 

Basak (2014:278) argues that governments need to address issues of regulations such as exploring barriers faced by the informal sector as opposed to the completely fighting it. The understanding of this notion is associated to the ideology that human tendencies were best nurtured rather than natured. Meaning, the existence of the informal sector demonstrates the natural trends of livelihood of the people in the society and government’s role would become to make it more productive and ideal in a more structured manner. This can only be done through cost-effective regulatory approaches by the introduction of what can be termed as awareness and supporting services to the beneficiaries such as  infrastructure development and training services. 

 

 

Provision of financial/ micro loans

 

 

Oladayo et al. (2014:312) argues that providing micro-financing facilities by government and other stakeholders at grass root level would indirectly help the informal sector to become more structural and sustainable because these enterprises would remain resilient and expand to the levels of contributing to the entire Gross Domestic Product of the country (GDP). 

 

 

Construction of modern infrastructure

 

 

Ademola and Anyankora (2012:231) argue that one of the solutions that would promote the existence of a cost-effective informal sector is government’s investment in infrastructure development. This can be done at micro level such as the construction of the markets and designated spaces to enhance and promote the activities of the informal sector.

 

Sparks and Barnett (2010:5) also states that improved basic facilities and amenities as well as infrastructure  is one of the core approaches that can make the informal sector  beneficial to the state. Oladayo et al. (2014:312) averts that infrastructure development would become a benefit to the sector because most of the enterprises in the informal sector especially the petty traders display their goods along the major roads and strategic locations thereby always in conflict with local government officials.  However, the provision of market stalls will heighten and support the activities of the informal economy. A good example is the Soweto Market in Zambia, it was built to accommodate the escalating informal sector, and each occupant pays a monthly sum of money which is some form of revenue collection for the government of Zambia. 

 

 

Creation of the urban Management policies

 

 

Creation of urban management policies is another possible intervention that can be done to address the issues of the informal sector. This is perceived from the notion that since one of the causes of the informal sector is urban migration.

 

 A good example is the United Nations’ initiative of an integrated Urban Management Programme (LUMP) which focuses on the development of urban management frameworks and tools on the issues of land management, municipal finance and administration, as well as infrastructure and urban environment (Ademola and Anyankora, 2012:222). Some of the results of such initiatives is the exposure of socially related opportunities to the informal sector through the engagement in some activities such as the establishment of the Environmental Planning and Management Processes (EPMs).

 

 These aim at achieving environmental sustainability and improve the livelihoods quality of the poor in and around the peri-urban areas (Ademola and Anyankora, 2012).

 

 

Establishment of the educational platforms

 

 

The other act or intervention that governments should consider implementing is the establishment of an educational platform. Ademola  and Anyankora (2012:231) argue that once the informal sector has the relevant information about its nature, it would reduce the manifestation of several social costs both directly and indirectly, some of which include the dangers of environmental degradation, the violation of setback standards and other planning regulations, therefore, forming an organized platform of an organized urban environment. Sparks and Barnett (2010:5) points out that providing proper training and information sharing platforms to entrepreneurs in a manner that their needs were addressed would bring about the transformation and effectiveness of a modern and economic orientated informal sector that has the necessary knowledge and skills to run the businesses and eventually drive a positive economic development platform.

 

 

Promotion of decentralisation and formation of cooperatives

 

 

Promotion of decentralisation and formation of cooperatives is another area that has empirically been seconded as an approach of promoting the modernisation of the informal sector in Africa. Ademola and Anyankora (2012:231) suggest that discouraging the over-concentration of informal activities in already built up areas by decentralising such activities to new growth poles is an effective approach that would bring about the scalability of the enterprise sector at the same time, this can bring about the establishment of the social linkages such as cooperatives for effective functionality of the society. (Oladayo, et al., 2014:312).

 

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