(By Damola Adepeju)
“Government inefficiencies, failure of leadership and negative effects of globalisation birthed an unintended consequence that may be a solution to our development challenges. This unintended consequence is the informal economy.“
AFRICA’s development path (in terms of creating sustainable income, ability to live a decent life, general well-being, increased purchasing power parity, having access to basic social amenities) is different from that of Europe, America and Asia. This is because Africa lags behind on development metrics and creativity is required to catch up with others.
Also, Africa is able to avoid the development challenges and phases other nations went through. For instance, countries in Africa jumped from no access to telecommunications to 650 million mobile telephone subscribers. Yet, in spite of available models to adapt to suit our needs, the continent has failed to translate her positive GDP rates to real effects for her citizens.
Government inefficiencies, failure of leadership and negative effects of globalisation birthed an unintended consequence that may be a solution to our development challenges. This unintended consequence is the informal economy.
World Bank reports state that this economy contributes at least 40 per cent of Africa’s GDP. Yet governments alienate its members culturally, socially and economically. Though there is no precise definition of the informal economy because it encapsulates many aspects, the International Labour Organization (ILO) defines it as
“… all economic activities by workers and economic units that are – in law or in practice- not covered or insufficiently covered by formal arrangements. Their activities are not included in the law, which means that they are operating outside the formal reach of the law; or they are not covered in practice, which means that although they are operating within the formal reach of the law, the law is not applied or not enforced; or the law discourages compliance because it is inappropriate, burdensome, or imposes excessive costs”
Therefore, street hawkers, tailors, drivers, carpenters, handymen, kiosk owners, recharge card vendors, mobile and home offices fall into this category. The informal economy exists in most African cities and Lagos, Nigeria’s melting pot has her share of vendors who survive by hawking items from recharge cards, potatoes, shoe racks, mobile phones, accessories, fruits in traffic or curb sides.
In 2003, the Lagos State government set up the KAI (Kick Against Indiscipline) Brigade. “… to keep Lagos Environment Clean: by eliminating indiscriminate dumping of refuse in unauthorized places and eliminating all forms of Street trading and hawking”. This is in line with the government’s Mega city goal. The Brigade carries out its duties faithfully and diligently. The fear of KAI is the beginning of wisdom for most hawkers as their goods (which may not be worth more than N15, 000) are confiscated in addition to other penalties that may be levied by the State. This action by the government is overkill.
Rather than destroy the meager means of livelihood of certain residents, the government should first identify why people hawk.
Some reasons include migration to Lagos for greener pastures, business failure (especially artisans who have learnt a skill but are unable to practice) and the cumbersome and expensive process of setting up a business. Of the three in Nigeria, Lagos ranks 25th in the World Bank’s ease of doing business Rankings. Add to these overheads such as space and electricity. It would take a while for even a shrewd business owner to break even. It is no surprise that even businesses that can afford the legal process do not register their businesses.
Lagos is not the only city faced with the problem of street vending and its attendant effects such as pollution. The arrest and seize approach of KAI has not been successful. Instead, it has alienated the government from the “poor” who now view it as elitist. Hawkers do not make enough to create sustainable income, thus even after they are caught and penalised, they return to the streets.
To address the hawking problem, the State can adapt alternatives used in other cities such as creating mobile stalls for vendors in designated areas and stipulating hours they are allowed to operate or creating multi-shops stores around the city where hawkers are allowed to operate.
For an industry that emerged by accident and was regarded as a passing phase by scholars, the informal economy is here to stay. Governments like Lagos State should proactively harness the potentials of this sector by acknowledging it and creating conducive policies that aid its growth. This would be beneficial for both the members and the government because holding other factors constant (adequate provision of basic services) when players in the sector are able to create sustainable incomes, the government would be able to earn revenue like it does from the formal sector.
• Damola Adepeju lives in Lagos.
“Opinion pieces of this sort published on RISE Networks are those of the original authors and do not in anyway represent the thoughts, beliefs and ideas of RISE Networks.”