Our informal economy is diverse and vibrant. However, it needs to be formalised as, currently, it is mostly unregulated, unregistered, unprotected and untaxed. This poses a significant risk to the sustainability of informal businesses and severely limits their ability to contribute to job, opportunity and wealth creation as well as value-add to the economy. Informal jobs are an essential source of income for many poor South Africans accounting for approximately 18 percent of workers. Additionally, it has been reported that the informal sector accounts for anywhere between 7 to 18 percent of South Africa’s total GDP. While these numbers are smaller than those of other developing countries, it highlights the importance and potential of informal trade in the economy, especially given our socio-economic challenges such as constrained growth, high unemployment and lack of rural and township development.
Informal business owners need to be upskilled and empowered to become self-reliant and sustainable employers and wealth creators. Support is needed to encourage them to develop and uplift their local communities and positively contribute to the economy through economic activity. The government plays a vital role here by developing and implementing a robust municipal policy to regulate and inspire the informal sector. This includes creating policies and a framework to ensure that infrastructure is created and maintained within the areas in which the informal sector operates as well as that ensuring that laws, by-laws and regulations are adhered to and enforced.
Preserving the concessions required to bolster and formalise the informal economy for inclusive and sustainable economic growth and development and curbing the challenge of unemployment. Policies also need to ensure that there is a regulatory environment and framework as well as basic social protections that stimulate not only job creation but improve and align the incomes and working conditions of workers in the informal economy with those of their counterparts.
In order to formalise and incorporate those businesses and associations in the so-called informal economy within traditional organised business structures, the Durban Chamber has created a new portfolio within our membership framework known as Group Membership. This portfolio will drive the recruitment of business groups such as Stokvels, CTOs, Business Forums, Cooperatives, Spaza Associations and Taxi Associations within our townships.
The aim of incorporating these group organisations within organised business structures is to provide practical business insights, skills and tools that will enable informal business owners to start, build and grow sustainable businesses in order to actively contribute towards empowering themselves, their communities and the economy of our province. This backing should include business support, access to markets, opportunity analysis, access to funding, business strategy, mentorship, and promoting the values and disciplines that individual entrepreneurs and business owners need to succeed.
Organised business also has a critical role to play as the informal business sector services an oft-overlooked and underestimated consumer market in the country’s rural areas, townships and inner cities. Corporates and traditional small businesses can actively engage with and empower these informal businesses and traders to grow and improve their strategies by incorporating them into their respective value chains and supply chains through programmes like the Durban Chamber’s Group Membership initiative. The added benefit for organised business is the fact that by working with informal businesses they remove a barrier to entry as many grassroots businesses fully understand their target market and cater to their likes, dislikes and pain points.
The Durban Chamber also encourages business owners and leaders from established organisations with relevant industry-specific business experience and skills to volunteer to mentor informal business owners on how to actively participate across the value chains of various industries. Equipping them with knowledge and skills will empower them to fulfil their vital role in our economy, especially in terms of job, opportunity and wealth creation. Together, we can build our City, our economy and collaborate to be “in business for a better world”.