If Cape Town’s informal economy was shut down, it would lead to an additional 170 000 individuals joining the queues of unemployed who desperately seek some form of employment. These were some of the insights from the Informal Economy Summit, taking place at the Cape Town International Convention Centre this week. Read more below:
These numbers should be quite sobering, especially for many residents and some in the formal business sector who are against any informal trading in their areas. Informal traders eke out a living by plying their trade in areas where there is high foot traffic to ensure they can capitalise on the economic opportunities.
‘While Cape Town’s informal sector may be relatively small, especially by emerging country standards, its penetration into the most vulnerable households in the city and its impact in terms of poverty reduction are disproportionately large,’ said the City’s Mayoral Committee Member for Tourism, Events and Economic Development, Councillor Garreth Bloor, during his opening address at the fourth annual Informal Economy Summit yesterday, 13 June 2016.The city’s informal economy is made up of small- and micro-enterprises who are either entrepreneurs running their own businesses or informal traders at public transport interchanges, along roadways and in the vicinity of shopping centres.
The two-day Informal Economy Summit, being held jointly with the South African Local Government Association, is a culmination of 30 growth coalition engagements that were held across the city in the form of round-table discussions and micro-enterprise workshops. The aim of these sessions was to lend a helping hand to the informal sector by listening to their concerns and collectively coming up with solutions.
Yesterday’s programme included plenary sessions, a panel discussion, and break-away sessions. Each speaker not only offered valuable lessons on leadership and growing their business, but also mentioned the importance of support and inclusivity of this crucial sector.
Andre Diederichs from Nedbank spoke about the ‘business jungle’ with leadership lessons from African nature. He said; ‘Entrepreneurs need to be like the African wild dog that is the most resilient and successful hunter. They need to persevere and maintain their resilience to be successful.’
Another speaker at the summit, Associate Professor at the University of the Witwatersrand, Claire Benit-Gbaffou, said ‘The informal sector needs to be united with the formal sector and this needs a commitment by all third-party players such as consultants, non-governmental organisations, academics and formal businesses all working in collaboration with local government to make this possible. We also need to ensure it is fully inclusive by remaining open for others to join in along the way.’
The City of Cape Town remains committed to making this progress together with the informal economy players and the private sector.
The break-away sessions included topics such as innovative trading structures, smart technology available to enhance businesses, and the opportunities and funding models for available for businesses.
Every speaker urged traders and micro-enterprises to seize opportunities that exist and to partner with formal businesses to create all-encompassing economic growth.
‘It is useful to look at the transition rates between the informal sector, formal sector and unemployment, which seem to indicate that the informal sector is probably more likely to absorb people who leave formal sector employment, either voluntarily or involuntarily, rather than to reduce the existing pool of the unemployed.
‘In this respect the two barriers to growth most frequently cited by owners of informal businesses are access to better locations and stifling government regulations – both of which have implications for how the City of Cape Town can best maximise the sector’s potential to help reduce unemployment and poverty. This is a challenge we need to tackle together to make progress possible and help to grow the informal economy exponentially,’ said Councillor Bloor.
The informal economy is represented by a diverse array of economic activities including financial services, healthcare, retail in food and beverages, recycling, maintenance and repair of motor vehicles, and the repair of personal and household goods, to mention just a few.