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Opinion | The informal sector as a driver of economic growth and job creation

2022-01-28  Staff Reporter

Opinion | The informal sector as a driver of economic growth and job creation
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Josef Kefas Sheehama

The prominence of the informal sector cannot be underemphasized as almost all persons who cannot find placements within the formal sector of the economy find solace in the informal sector. 

The informal sector is very neglected, as it seldom accounts for a pride of place in government planning for the overall economy. This may be due to a myriad of factors such as the unregistered and unregulated nature of most businesses in the informal sector. 

Given the role of the informal sector, in the economy  government should begin to take more than a simple look at the informal sector with a view of enacting policies that will synergise the informal and formal sectors to unleash the vast potentials of the Namibian economy since activities in both sectors of the economy are not mutually exclusive. 

A massive drive to register and have a database of all businesses in the informal sector can also be carried out to ascertain the number and needs of the operators in the informal sector.

The compelling reason why government should pay attention to the informal economy is that this sector provides opportunities to the most vulnerable populations of the poorest mostly women and youth who happen to dominate this sector. At the same time, small-scale entrepreneurs have become less accessible to large mass production opportunities. 

 The informal economy is associated with two major aspects, one is the growth of the economy and the other is related to poverty and inequality. Most people prefer to get into the sector because it became an avenue for their survival. The most informal economy workers in this country are youth, the population majorly affected by our country’s unemployment rate. 

Street vendors, kapana vendors, domestic workers, wood-covers, men on the side of the roads and cattle herders, amongst other things, are the major operators in the informal industry. The Government must address the critical needs of the poorest and most marginalised as a matter of priority. 

In the informal economy, one thing is sure, informality provides critical economic opportunities for the poor and the vulnerable. The key driver of the informal economy, however, is that such businesses in the sector do not need registration with any relevant government agencies. Overall, the informal economy is enduring; but suitable regulations and policies are required to improve the sector and introduce formalisation. The decision for these businesses to formalise depends on the benefits that are derived from formalisation over the risks of remaining in the informal economy. 

Clearly, there is a need for government to embark on a series of measures, interventions, and support to encourage the formalisation of these businesses to sustain economic growth and development. As mentioned earlier, this informal sector is too large and important to be ignored; concerted effort to identify and protect them is crucial for sustainability and economic development. 

The significance of the informal economy in Namibia cannot be ignored as it provides livelihoods and incomes for a large population of the country, most of them who are self-employed of which more than half are women. 

The informal economy is the means of survival for many fellow Namibians. The unemployment situation in Namibia has deteriorated markedly over the years. It should be noted that this very high figure of unemployment probably includes a large part of underemployment in rural areas.

From this perspective, the current figure of mass unemployment in Namibia reflects the lack of alternative labour absorbing sectors and the widespread feeling of the respondents in rural areas to be unemployed as they are underemployed and trapped in subsistence agriculture or low structural problem of the Namibian labour market, which should be at the top of policy priorities.

 It calls also for the development of an appropriate labour market information system to provide information on the situation of the labour market and monitor this situation. 

In my view, the World Bank statistics of 1.6 million that Namibia are living in poverty are done at the most probability and we as Namibian can use this data as a tool to improve the living standard of our people. We cannot dispute but we should implement NDPs and HPPs. 

The governments should do their part of their duties to improve people’s life by creating favourable conditions. The gap between the rich and the poor can be narrowed only in case all parties try to escape poverty.

I am adamant that addressing the stomach and pocket problem of our citizens by creating opportunities for them to place foods into their stomachs and money into their pockets is fundamental.

Therefore, the growth and development of the informal sector can be a panacea and needs to be supported full throttle. It is, therefore, safe to conclude that the informal sector is the only left potential of promoting development in Namibia. 

The informal sector can close the gap of unemployment and can address the problem of poverty. Importantly, the government policies on the sector should focus on investing human capital in the informal sector for this will encourage innovation and thus promote industrialisation and furthering economic growth. 

Investing in the informal sector can be an important strategy for promoting economic development. Policies should, therefore, focus on formalising the informal sector for this will address all the challenges faced by the sector.


2022-01-28  Staff Reporter

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