Is informality being disallowed by government?

By Andrew Charman on 15 December 2012 Economy, Employment, Governance, Informality, Policy |

Cape Town, South Africa

South Africa’s economic policymakers have to confront the challenge of creating jobs to absorb the
unemployed. The 2011 census reveals an unemployment rate of 40%, with over 8.7 million South
Africans registered as unemployed. One of the main strategies to address this challenge is focused on
stimulating labour absorption by enhancing the education and skills of the unemployed (or those who
are not economically active, such as students). This strategy looks to established, formalised, businesses
to provide employment. The emphasis on the formal sector is understandable, given that formal
businesses account for about 75% of the 13 million South Africans in employment.

Yet many economically active South Africans do not work in formal businesses. The census records that
about 3 million South Africans are employed in the informal sector and private households. The informal
sector not only provides work, as the census data confirms, but a range of livelihood opportunities for
both those classified as employed and those classified as not economically active. For example, it
provides opportunities for those in employment to earn extra income by running micro-enterprises after
hours or over the weekend. The significance of the informal economy to South Africa’s economic growth
path has been understated in policy debates and indeed overlooked in the National Development Plan.

The informal economy as a ‘problem’?

Among many of the micro-entrepreneurs who are active in the informal economy, the question of what
policies government should pursue to stimulate job creation and economic opportunities might seem
presumptuous. These businesses are not an outcome of government intervention, but have emerged in
spite of policy objectives, and operate outside legal and institutional frameworks. To many of our policy
gurus, as well as the politically naive, informal enterprises are conceptualised as an economic ‘problem’
rather than an economic ‘solution’.

As a problem, this situation is not likely to disappear, though, because the growth of the informal
economy in the developing world has become a defining feature of modernisation. Its growth in South
Africa is guaranteed because the poor cannot live on welfare transfers alone: the sums do not add up;
and they have to supplement their livelihoods through engaging actively in informal economic activities.

Government regulation as a threat to informal employment and self-employment

Their survival brings them (the poor) into contact with economic development policies, not in
theoretical terms, but in the actions of the state to impose order and exert control, using a tool kit of
regulation, licensing, land-use planning and the interpretation of law afforded to various authorities.

For the informal businesses that experience the sharp end of these policy objectives, the foremost
question in their thinking about the state and its role in the economy is not about what government
ought to do, but why government finds it necessary to disallow informality.

The apologists for clamping down on small informal businesses preach of the chaos and the harm that
would befall society, were the state not to maintain order. The image of street traders encroaching on
public land and illegal shebeens creating noise and nuisance is often evoked to popularise the argument.
Their success in this respect has been in convincing their target audiences (principally, middle classes
across the colour spectrum) that the state is in control, or – if it is not in control – could and should be in
control by refining its policies.

This argument is of concern for two reasons. First, the motivation for control elevates political agendas
above considerations of the economic rationality which underpins informal activities. Street traders
conduct business on streets and at particular localities because that is where their market exists; shifted
off the street, the market will not follow them. Secondly, the argument that better control would
discourage informality and entice the poor to fulfil their livelihoods through other, usually unspecified
means, brings us back to our initial point about unemployment. Amongst the poor, informality is a
function of marginalisation and poverty.
The implication is that the poor have no option other than to pursue informal activities with the skills
they have and markets at their disposal, despite the risks of state interference. Our research shows that,
in the case of shebeens, increased law enforcement does not influence the scale of engagement in
informal liquor retail. It merely encourages shebeeners to minimize the risks of being prosecuted by
changing the way they conduct business. A common response, certainly the least complex for micro-
enterprises, is to pay a bribe.

Restrictions from all three tiers of government

A further point about the politics of controlling informality is warranted. There appears to be political
support in all three tiers of government and across parties to strengthen policies that would restrict the
informal businesses of the poor. In local government, where policy decision making is less encumbered
by economic debates, proponents have succeeded in maintaining (and even strengthening) the
apartheid-era measures that made it difficult for people to operate informal businesses in townships.
This certainly is the case in the City of Cape Town (and other major cities) where municipal by-laws
restrict the place and times in which informal businesses may operate.

An important tool at their disposal is land-use planning. In accordance with the policy objectives defined
in the city’s spatial development framework, the city utilises land-use planning to determine the specific
geographic localities in which businesses may operate, specifying particular enterprise restrictions on
businesses operating in areas that are zoned as residential. As townships principally comprise residential
land, the spatial development plan provides a neat opportunity for controlling informality. At least this is
what politicians hope and their supporters are pleased to hear. In one manifestation of this aim, the
Western Cape Premier has advocated the establishment of township ‘high street’ commercial zones
(situated away from residential areas) where all particularly ‘problematic’ micro-enterprises such as
shebeens and panel beaters can be concentrated and placed under firm control. But will such plans
succeed? And what, if successful, would be the implication for informal enterprises and informal self-
employment?

Land use planning and the informal economy: a case study

We sought to answer these questions through a detailed case investigation.* Our research focused on
the township of Philippi, which is located about 20km from the city centre in Cape Town. The research
entailed a census of all economic activities within a specified geographical area, wherein we recorded
basic data on each identified micro-enterprise and conducted in-depth interviews with all businesses in
four predominant sectors (spaza shops, liquor traders, education services, health services). The area of
study comprises a settlement of mixed typologies: informal, formal and middle class. There are 14 604
households in this area, sustaining a population of about 60 000 persons. The overwhelming majority of
the residents are black South Africans.
Our research identified 1 601 micro-enterprises, providing goods and services across a range of sectors
from retail trade to transport. The top five most frequent enterprise activities were, in order of
magnitude, informal liquor sellers (286), house shops (213), spaza shops (135), hair salons (132) and
businesses selling fast-food, operating on the street or from tuck-shops.

We then mapped the spatial distribution of these micro-enterprises. The results show that the great
majority of informal businesses are evenly distributed across the site, operating within markets defined
by their geographic proximity to s

urrounding houses. This spatial pattern reveals that Philippi residents support businesses situated close
to their homes, with the spaza shop, the shebeen, the green grocer, the hairdresser, and the house shop
(selling chips, sweets and cigarettes) situated within walking distance. The residential areas of Philippi
also accommodate mechanics, panel beaters, appliance repair businesses, welders and micro-
manufacturers, all operating from home. The high street, by contrast, has evolved to serve the needs of
commuters for food and snacks (and hair care), though it also accommodates specialist businesses such
as traditional healers, micro-finance services and street traders selling home ware. Spaza shops and
shebeens are rarely found on the high street.

In order to comprehend the potential scale of state restrictions on informal economic activities, we
examined the status of each micro-enterprise in terms of three criteria: i) the legality of the business in
terms of regulatory requirements; ii) land use restrictions and iii) whether or not the business traded
illegal products. Our analysis excludes a consideration of the legality of informal workers in terms of
citizenship and the statutory requirements of labour legislation. We have also excluded the business
contravention of signage by-laws.

In terms of the above considerations, our analysis found that 61% (or 981) of the 1 601 micro-
enterprises in Philippi operate illegally and are subject to closure (or curtailment) if law enforcement
were to be applied effectively. The great majority of these businesses contravene regulatory laws and
land use restrictions whilst they otherwise sell legitimate products and services. Only fifty businesses
sold illegal products.

If the Philippi case is indicative of the broader landscape of the township informal economy, then the
pursuit of order and exercise of control could result in the eradication of 61% of the 1.6 million informal
micro-enterprises identified in the census. This would equate to the loss of nearly 1 million jobs.

Conclusion

Seen from this perspective, we need to ask whether the political objectives of achieving cosmetically
managed human settlements, and an economy of formalised and larger business, should override the
entrepreneurial response of the poor to their predicament of unemployment. Accepting the informal
economy as part of the solution to the problem of unemployment would enable us to take a giant step
towards a more inclusive discussion about the form and function that informal micro-enterprises should
constitute.

The lesson of South Africa’s informal economy of the poor is that survival necessitates an
entrepreneurial response. The vibrancy of this response is being tapered by the constant need to resist
state control.

References

* Charman, A., Petersen, L. & Piper, L. (2012). Informality disallowed? State restrictions on informal
traders and micro-enterprises. Paper presented at the Towards Carnegie 3 Conference, Cape Town,
September.

Andrew Charman is a director and researcher of the Sustainable Livelihoods Foundation.

His article can be viewed online on Econ3x3.

FEATURE

Urban Planning and the Informal Sector in Developing Countries

Rather than seeking to eliminate the presence of the informal sector, urban planning should seek to
accommodate this important component of urban economies.

May 7, 2007, 7am PDT | Deden Rukmana

Deden RukmanaUrban planning in developing countries -- particularly in cities with rapid urbanization --
is facing a problem with the informal sector. The businesses that comprise the informal sector, typically
operating on streets and in other public places, are often seen as eye-sores and undesirable activities.
Thus, conflicts arise between urban authorities trying to keep their cities clean and the urban informal
sector operators who need space for their activities.

In many cases, authorities forcibly evict informal sector activities in the name of urban order and
cleanliness. Yet, such eviction does not address the problem with the informal sector. It only relocates
the problem and even exaggerates the conflicts between urban authorities and the informal sectors.
Often many operators return to their places a few days after being evicted by the urban authorities.
Should urban planning accommodate the informal sector? Prior to the 1970s, there was no attention
paid to economic activities carried out outside the formal economy. However, a few studies of
developing countries began to explore the role of the informal sector, and the concept gained attention
after a report by the International Labor Organization in the early 1970s.

Almost 40 years later, it's difficult to ignore the importance of the informal sector in many cities,
particularly in developing countries.

In many developing countries in Latin America, Sub-Saharan Africa, Middle East and Asia, the informal
sector accounts for most of the total employment. For example, the informal sector in Indonesia in 2004
accounted for 64 per cent of the total employment. The proportion of informal sector employment in
urban areas was even higher during the economic crisis in the late 1990s when the closure of many
manufacturing and service corporations pushed the newly unemployed into informal sector.

Vendors line a street in Vietnam (Photo: Kent Goldman)

The growth of the urban informal sector is also nourished by the influx of migrants from rural regions
surrounding urban agglomerations in search of work. With the formal sector unable to accommodate
such large numbers of workers, the informal sector becomes the primary source of employment.
Without the economic opportunities generated by such activities, the poor would certainly become a
larger burden for the urban authorities.
It's also important to note that the informal sector is not only the domain of the urban poor. Many
middle-class people in urban areas in developing countries greatly benefit from economic activities
carried out outside the formal sectors.

The continuing study of urban informality has also revealed the important role of the informal sector in
the process of urbanization. By linking various economic activities and urban spaces, the informal sector
serves as a mode for urban transformation for many places. These findings seem to point to a need for
new urban theories that can fully explain the phenomenon of urban informality in cities -- something
mostly absent from urban theories such the urban ecology of the Chicago School and post-modern
urbanism of the Los Angeles School, which are both rooted from cities in developed countries.

Yet, understanding the positive impact of the informal sector, many planners and officials still worry
about the resulting urban blight. However, from urban environmental perspective, many of the
problems associated with the informal sector are not attributes inherent to the informal sector but
manifestations of unresponsive urban planning itself. The provision of spaces to informal sectors is an
effective measure to reduce the environmental problems associated with such activities.

Accommodating – maybe even welcoming - the informal sectors in urban spaces will not only reduce the
conflict between urban authorities and the informal sector, but also reduce the environmental problems
associated, and eventually accelerate urban transformation and increase the quality of life in many
developing urban areas.

Deden Rukmana, PhD is an assistant professor of Urban Studies at Savannah State University.
The Urban Informal Economy: Towards
more Cities that are inclusive
 

The urban informal economy @GIZ

The Urban Informal Economy: Towards more inclusive Cities

By Marty Chen|August 16th 2016|decent work, green & smart development, developing
countries, economic development, urban poverty

By Marty Chen

INTRODUCTION
The majority of urban workers in developing countries earn their livelihoods in the informal economy.
Therefore, understanding urban informal employment is critical to promoting inclusive cities and
reducing urban poverty. But, many cities around the world are actively undermining or destroying urban
informal livelihoods. Practices that exclude informal workers from participating in cities are the norm in
many parts of the world: there are daily reports of slum and street vendor evictions and unreported
harassment of informal workers by local authorities, including bribes and confiscation of goods, on a
daily basis.
 In response, organizations of urban informal workers are gaining in numbers, strength and solidarity;
and are demanding more inclusive urban policies and practices in support of their livelihoods. Over the
past year or more, with support from the WIEGO Network, some of these organizations have jointly
sought to integrate a focus on informal livelihoods in the policy discussions before and at the Habitat III
summit and in the New Urban Agenda document which will be adopted at that summit.

From exclusionary to inclusive cities

Home-based producers, street vendors, and waste pickers are all age-old occupations in which large
numbers of urban workers around the world are still employed, especially in developing countries. Few
have secure work; most have low and erratic earnings and few are protected against loss of work and
income. Most operate outside the reach of government regulations and protection; yet many are
harassed or repressed by the police or other local authorities and excluded from economic
opportunities. In the following, we provide promising examples of inclusionary urban plans and policies
for these three worker groups.

Basic Infrastructure Services for Home-based Workers

Delivery of basic services – shelter, water, sanitation and electricity – is critical for most informal
workers but particularly so for home-based workers whose home is their workplace. Although there has
been progress in basic service delivery, the majority of informal workers live in slums or squatter
settlements which tend to be underserved. Even for the fortunate minority who receive basic
infrastructure, too frequently insufficient attention is paid to how the location, mode of delivery and
design of new housing projects impacts on livelihoods.

Another worrisome trend is the intensification of forced evictions driven by, among other factors, large-
scale urban renewal projects, the hosting of mega events, and the recent global recession. When slum
communities are evicted or relocated, home-based producers in those communities temporarily lose
both their home and their workplace. They are often relocated to housing with fewer basic services and
to locations at a greater distance from markets for raw materials and finished goods or from the
contractors who sub-contract work to them. Before her slum community was relocated, a home-based
garment worker in Ahmedabad, India lived within walking distance from the contractor who sub-
contracts work to her – now she spends over 40 per cent of her meager daily earnings on transport to
take raw materials from and return finished goods to the contractor (Davidson 2012).1

In many countries in South and South East Asia−including India, Laos, Nepal, Pakistan, and the
Philippines−organizations of home-based workers have negotiated housing and basic infrastructure
services (water, sewage, electricity) for their members. Most notably, in several cities of India through
its Mahila (Women’s) Housing Trust, the Self-Employed Women’s Association (SEWA) has negotiated
public-private partnerships for slum upgrading and otherwise provided basic infrastructure services
(water, sanitation, electricity, and roads) to large numbers of home-based workers and other informal
workers (see Rusling, 2010).

In one such partnership in Ahmedabad City, the municipal corporation partnered with SEWA and
community organizations in managing solid waste collection and in maintaining and repairing
infrastructure. As part of the agreement, the Ahmedabad Municipal Corporation promised not to evict
residents of the participating slums for ten years (Ibid.)
 Urban Planning & Land Allocation for Street Vendors
Street trade is a consistent feature of urban retail systems in cities worldwide. Street vendors offer a
wide range of goods and services in convenient and accessible locations, and contribute an essential
service to the poor by offering low-cost goods in small quantities.

But, an on-line analysis over a year of the news coverage of street vending issues found that, on
average, there is one case of a violent eviction of street traders somewhere in the world every day
(http://wiego.org/news-events). For example in September 2011, more than 7,000 street vendors were
forcibly evicted from the streets of Kampala in Uganda with bulldozers razing their stalls. In Nigeria,
state governments have authorized their own specialized law enforcement units (such as the Lagos State
‘Kick Against Indiscipline’ squad and the Abuja Environmental Protection Board) to carry out violent
evictions of street traders.

More common than these large-scale evictions, however, are various types of low-level harassment of
street traders that stems in part from uncertain policy and legal environments. This type of everyday
harassment typically requires vendors who do not have licenses or permits to pay bribes to local
authorities and subjects them to confiscation of merchandise. But many cities have not issued licenses
to street vendors in recent years. Also, where licences are issued (as is the case in a number of cities in
Asia) the number of vendors considerably exceeds the number of licences.2 In many countries there is a
hostile legislative environment. There is a recent trend on the African continent, for example, for not
only banning street vending but also treating purchasing from street vendors as a criminal offence (e.g.
in Malawi, Nigeria and Zambia). While in China questions have been raised about the ongoing
harassment of street vendors by urban management officers called chengguan. There are however also
encouraging trends particularly in India and South Africa of street vendors negotiating with cities to find
solutions for inclusive and effective management of street trade.

India is one of very few countries to have developed a national policy on street vending. Adopted in
2004, the objective of the National Policy on Urban Street Vendors is to promote a supportive
environment for street vendors to earn their livelihoods, while reducing congestion and maintaining
sanitary conditions in public spaces. Sinha and Roever (2011) outline the role played by the National
Association of Street Vendors of India (NASVI) and SEWA in securing this policy. They also show that,
although there are challenges with implementation, the policy has played an important role in
advocating for street vendors rights in numerous Indian cities. In September 2012, again thanks to the
advocacy of NASVI, SEWA, and other organizations, a draft street vending law, the Protection of
Livelihood and Regulation of Street Vending Bill, 2012, was presented to the Parliament of India. The law
holds the potential of giving the national policy legal standing and could impact positively on the
estimated 10 million street vendors operating in India. (See Chen et al. 2013 for further details.)

Building on the recommendations of the national policy, the city of Bhubaneshwar in India developed a
public, private and community partnership model for street vending after years of conflict between
street traders and local authorities. This has entailed dedicated and legally sanctioned vending zones in
public space, as well as attractive fixed kiosks, partially funded by formal businesses. There was an
inclusive planning process, from joint planning of the conceptual model to the realization of 54 vending
zones. (See Kumar 2012 for further details.)

Municipal Solid Waste Management & Waste Pickers

Millions of people worldwide−a large number of them women−make a living collecting, sorting,
recycling, and selling valuable materials that someone else has thrown away. Waste pickers constitute
about 1 per cent of urban employment in many countries (Vanek et al. 2014). They contribute to public
health and lower the costs of solid waste management borne by municipalities (UN Habitat 2010;
Scheinberg 2012). Further recycling is one of the cheapest, fastest ways to reduce greenhouse gas
emissions and use fewer virgin resources (Tellus Institute 2008).

Despite progress made in highlighting the contribution of waste pickers to recycling and climate change
mitigation, waste pickers in many contexts work in deplorable conditions, receiving little or no support
from local authorities and facing continual threats. Waste pickers are often subject to arbitrary pricing
by middlemen and to harassment on the streets. Further there is a global trend of privatizing the
collection, transport, and disposal of waste and recyclables. At a meeting of waste pickers from 34
countries held in Pune, India in April 2012, privatization (usually leading to waste-to-energy schemes)
was highlighted as the greatest threat to livelihoods. There are however also encouraging trends
particularly in Latin America and India of waste collectors forming themselves into co-operatives. This
places them in a stronger position to secure better prices from middle men, negotiate with local
authorities for access to waste and appropriate facilities but also defend their rights.

Peru and Brazil have both passed progressive national laws that support the formalization of waste
picking and encourage cooperatives. In Peru, Law 29.419 which regulates the activity of waste pickers
was passed in 2010. This law, which was developed through a participatory process involving
representatives of the waste pickers’ movements, encourages formalization via incentives to waste
pickers’ cooperatives (reduction of taxes; capacity building programmes) and promotes integration of
cooperatives into municipal recycling schemes. Brazil has a whole set of laws at the local, federal and
national levels that mandate the inclusion of waste picker cooperatives/associations in solid waste
management (see Dias, 2011a for further details). For example, a 2006 Presidential Decree commits
state institutions to segregation of waste at source and donation of the waste to waste picker
cooperatives and/or associations; and 2007 national guidelines for basic sanitation include a provision
that gives preference to hiring waste picker associations or cooperatives.

An association of waste pickers in Bogotá, Columbia – the Asociación de Recicladores de Bogotá (ARB) –
has filed numerous legal cases to preserve their occupation in response to the city government’s
attempts to privatize solid waste management. ARB achieved a landmark victory in 2003 when the
Constitutional Court ruled that the municipal government’s tendering process for sanitation services had
violated the basic rights of the waste-picking community. Subsequent cases have appealed to
constitutional provisions, to argue that cooperatives of waste pickers – and not only corporations – can
compete in waste recycling markets. A December 2011 ruling halted a scheme to award US$1.7 billion
worth of contracts over eight years to private companies. The court mandated that the cooperatives of
waste pickers had a right to compete for the city tenders. In March 2012, the ARB submitted its bid to
the city. (See Chen et al. 2013 for full details.) It took the municipal government a year to review the
bid, reconcile differences of opinion within the government, placate vested interests, and come up with
a policy for integrating waste pickers into solid waste management in Bogotá City. In March 2013, the
waste pickers began to be paid by the city for collecting and transporting waste.

What are the core common lessons from these examples of inclusive urban planning and practices? One
is that there are powerful vested interests – property developers, large retailers, private waste
management companies – competing for urban land, urban services, urban customers, and city
contracts. Another is that informal workers need to be organized in order to compete with these vested
interests and to demand from the city their fair share of urban land, urban services, and city contracts;
and representatives of these informal worker organizations need to be integrally involved in urban
planning processes.

WAY FORWARD
Given the sheer size and significant contributions of the informal economy and that most of the urban
working poor, especially women, are engaged in the informal economy, more attention needs to be paid
to urban informal livelihoods in efforts to make cities more inclusive and to reduce urban poverty.

Future Urban Statistics & Research

Improved statistics on urban informal employment are important: as data have power. Policy makers
like data, more than other kinds of information. Not only does informal employment continue to be an
important part of the urban labour force but improvements in data collection are also possible. What,
then, is needed going forward. First, it is important that informed users of urban statistics encourage
national statistical services and the international statistical community to further develop statistical
concepts and methods to better measure the urban informal economy and to identify separately all
categories of urban informal workers. Second, it is also important that informed users of official
statistics make the data and related data analyses readily accessible to researchers, policymakers and
advocates in user-friendly formats.

Further, more grounded research on the working conditions of the urban informal workforce and how
they are impacted by government plans, policies and practices is needed. Finally, detailed
documentation is needed of cases where informal workers have been included into urban plans, with
particular attention being paid to how private sector interests have been confronted, and the
implications of these cases for activists and the practises of urban professionals (with a particular focus
on planners, architects, urban designers and engineers).

Recommendation,Future Urban Planning & Policies

As summarized above, inclusive planning and policy approaches to the urban informal economy are
possible, even if difficult. Here are some of the core elements of inclusive urban planning processes and
practices:

 Recognition of where informal workers fit in – and how they contribute to – the urban economy
and into specific value chains or sectors

 Recognition that the common policy stance towards the informal economy should combine
regulation, protection, and promotion – rather than regulation, relocation, and repression

 Recognition that many existing laws, regulations, and rules serve to exclude, rather than, include
the informal economy and need to be reformed to match the reality of informal work

 Recognition that informal workers need to be organized and that their representatives need to
be integrally involved in urban planning and legal reform processes

 Recognition that inclusive planning is planning with rather than for informal workers.
 Finally, there is a need to recognize that inclusive planning will require a fundamental change in
mindsets. As Ela Bhatt, founder of the Self-Employed Women’s Association (SEWA) and founding chair
of the WIEGO network, puts it:

“The challenge is to convince the policy makers to promote and encourage hybrid economies in which
micro-businesses can co-exist alongside small, medium, and large businesses: in which the street
vendors can co-exist alongside the kiosks, retail shops, and large malls. …. Just as the policy makers
encourage bio diversity, they should encourage economic diversity. Also, they should try to promote
a level playing field in which all sizes of businesses and all categories of workers can compete on equal
and fair terms.”

Future Organization & Collective Voice of Urban Informal Workers

Urban informal workers have begun to come together to demand more inclusive, rather than
exclusionary or punitive, urban plans, policies and practices. Their organizations have given collective
voice to some of the world’s most impoverished informal workers, such as home-based workers, street
vendors, and waste pickers, and achieved important victories. The legal and policy victories in
Ahmedabad,Bhubaneshwar, Bogotá and Pune would not have been put into place without the informed
and sustained policy efforts of membership-based organizations of informal workers and their allies.

Despite these gains, many of the organizations of urban informal workers are still in their early stages.
Thus, building and strengthening organizations of urban informal workers is both an end in itself – as
informal workers achieve a sense of empowerment and are able to support each other – and a means to
leveraging wider impact at the local, national and international levels. Organizing can begin to address
the vulnerability, insecurity and dependence commonly experienced by the working poor in the urban
informal economy whose lives are controlled by powerful economic and political forces.

But organizing alone is not enough to bring about needed changes. Workers need representative voice
in those institutions and processes that set policies and the ‘rules of the (economic) game’. Ensuring a
voice for informal workers in relevant urban planning, policy making, and rule-setting processes requires
supporting the growth of their organizations, and building capacity for leadership, policy advocacy, and
collective bargaining.

1 For the complete story, see http://www.street-stories-india.com/impact-of-slum-relocation-on-

womens-freedoms/
2 See Bhowmik’s 2005 review of evidence from 10 Asian cities and Itikawa’s 2010 study of Sao Paulo,
Brazil in which she finds the number of legal trading posts covers only 10-20% of all the workers
occupying public spaces.

About WIEGO

WIEGO (Women in Informal Employment: Globalizing and Organizing) is a global research-policy-action

network that seeks to improve the status of the working poor, especially women, in the informal
economy. WIEGO pursues its objectives by helping to build and strengthen networks of informal worker
organizations; undertaking policy analysis, statistical research and data analysis on the informal
economy; providing policy advice and convening policy dialogues on the informal economy; and
 documenting and disseminating good practice in support of the informal workforce. For more
information visit: www.wiego.org.

WIEGO has developed an extensive knowledge base on how inclusive urban planning can protect
informal livelihoods and make them more productive, thus enriching cities. WIEGO’s Inclusive Cities and
the Urban Informal Economy showcases this knowledge base and offers a range of tools, research
findings and recommendations. You can find more informations here: http://wiego.org/cities

The urban informal economy @GIZ

The Urban Informal Economy: Towards more inclusive Cities

By Marty Chen|August 16th 2016|decent work, green & smart development, developing
countries, economic development, urban poverty

By Marty Chen
 INTRODUCTION
the majority of urban workers in developing countries earn their livelihoods in the informal economy.
Therefore, understanding urban informal employment is critical to promoting inclusive cities and
reducing urban poverty. However, many cities around the world are actively undermining or destroying
urban informal livelihoods. Practices that exclude informal workers from participating in cities are the
norm in many parts of the world: there are daily reports of slum and street vendor evictions and
unreported harassment of informal workers by local authorities, including bribes and confiscation of
goods, on a daily basis.

In response, organizations of urban informal workers are gaining in numbers, strength and solidarity;
and are demanding more inclusive urban policies and practices in support of their livelihoods. Over the
past year or more, with support from the WIEGO Network, some of these organizations have jointly
sought to integrate a focus on informal livelihoods in the policy discussions before and at the Habitat III
summit and in the New Urban Agenda document which will be adopted at that summit.

From exclusionary to inclusive cities

Home-based producers, street vendors, and waste pickers are all age-old occupations in which large
numbers of urban workers around the world are still employed, especially in developing countries. Few
have secure work; most have low and erratic earnings and few are protected against loss of work and
income. Most operate outside the reach of government regulations and protection; yet many are
harassed or repressed by the police or other local authorities and excluded from economic
opportunities. In the following, we provide promising examples of inclusionary urban plans and policies
for these three worker groups.

Basic Infrastructure Services for Home-based Workers

Delivery of basic services – shelter, water, sanitation and electricity – is critical for most informal
workers but particularly so for home-based workers whose home is their workplace. Although there has
been progress in basic service delivery, the majority of informal workers live in slums or squatter
settlements which tend to be underserved. Even for the fortunate minority who receive basic
infrastructure, too frequently insufficient attention is paid to how the location, mode of delivery and
design of new housing projects impacts on livelihoods.

Another worrisome trend is the intensification of forced evictions driven by, among other factors, large-
scale urban renewal projects, the hosting of mega events, and the recent global recession. When slum
communities are evicted or relocated, home-based producers in those communities temporarily lose
both their home and their workplace. They are often relocated to housing with fewer basic services and
to locations at a greater distance from markets for raw materials and finished goods or from the
contractors who sub-contract work to them. Before her slum community was relocated, a home-based
garment worker in Ahmedabad, India lived within walking distance from the contractor who sub-
contracts work to her – now she spends over 40 per cent of her meager daily earnings on transport to
take raw materials from and return finished goods to the contractor (Davidson 2012).1

In many countries in South and South East Asia−including India, Laos, Nepal, Pakistan, and the
Philippines−organizations of home-based workers have negotiated housing and basic infrastructure
services (water, sewage, electricity) for their members. Most notably, in several cities of India through
its Mahila (Women’s) Housing Trust, the Self-Employed Women’s Association (SEWA) has negotiated
public-private partnerships for slum upgrading and otherwise provided basic infrastructure services
 (water, sanitation, electricity, and roads) to large numbers of home-based workers and other informal
workers (see Rusling, 2010).

In one such partnership in Ahmedabad City, the municipal corporation partnered with SEWA and
community organizations in managing solid waste collection and in maintaining and repairing
infrastructure. As part of the agreement, the Ahmedabad Municipal Corporation promised not to evict
residents of the participating slums for ten years (Ibid.)

Urban Planning & Land Allocation for Street Vendors

Street trade is a consistent feature of urban retail systems in cities worldwide. Street vendors offer a
wide range of goods and services in convenient and accessible locations, and contribute an essential
service to the poor by offering low-cost goods in small quantities.

But, an on-line analysis over a year of the news coverage of street vending issues found that, on
average, there is one case of a violent eviction of street traders somewhere in the world every day
(http://wiego.org/news-events). For example in September 2011, more than 7,000 street vendors were
forcibly evicted from the streets of Kampala in Uganda with bulldozers razing their stalls. In Nigeria,
state governments have authorized their own specialized law enforcement units (such as the Lagos State
‘Kick Against Indiscipline’ squad and the Abuja Environmental Protection Board) to carry out violent
evictions of street traders.

More common than these large-scale evictions, however, are various types of low-level harassment of
street traders that stems in part from uncertain policy and legal environments. This type of everyday
harassment typically requires vendors who do not have licenses or permits to pay bribes to local
authorities and subjects them to confiscation of merchandise. But many cities have not issued licenses
to street vendors in recent years. Also, where licences are issued (as is the case in a number of cities in
Asia) the number of vendors considerably exceeds the number of licences.2 In many countries there is a
hostile legislative environment. There is a recent trend on the African continent, for example, for not
only banning street vending but also treating purchasing from street vendors as a criminal offence (e.g.
in Malawi, Nigeria and Zambia). While in China questions have been raised about the ongoing
harassment of street vendors by urban management officers called chengguan. There are however also
encouraging trends particularly in India and South Africa of street vendors negotiating with cities to find
solutions for inclusive and effective management of street trade.

India is one of very few countries to have developed a national policy on street vending. Adopted in
2004, the objective of the National Policy on Urban Street Vendors is to promote a supportive
environment for street vendors to earn their livelihoods, while reducing congestion and maintaining
sanitary conditions in public spaces. Sinha and Roever (2011) outline the role played by the National
Association of Street Vendors of India (NASVI) and SEWA in securing this policy. They also show that,
although there are challenges with implementation, the policy has played an important role in
advocating for street vendors rights in numerous Indian cities. In September 2012, again thanks to the
advocacy of NASVI, SEWA, and other organizations, a draft street vending law, the Protection of
Livelihood and Regulation of Street Vending Bill, 2012, was presented to the Parliament of India. The law
holds the potential of giving the national policy legal standing and could impact positively on the
estimated 10 million street vendors operating in India. (See Chen et al. 2013 for further details.)
Building on the recommendations of the national policy, the city of Bhubaneshwar in India developed a
public, private and community partnership model for street vending after years of conflict between
street traders and local authorities. This has entailed dedicated and legally sanctioned vending zones in
public space, as well as attractive fixed kiosks, partially funded by formal businesses. There was an
inclusive planning process, from joint planning of the conceptual model to the realization of 54 vending
zones. (See Kumar 2012 for further details.)

Municipal Solid Waste Management & Waste Pickers

Millions of people worldwide−a large number of them women−make a living collecting, sorting,
recycling, and selling valuable materials that someone else has thrown away. Waste pickers constitute
about 1 per cent of urban employment in many countries (Vanek et al. 2014). They contribute to public
health and lower the costs of solid waste management borne by municipalities (UN Habitat 2010;
Scheinberg 2012). Further recycling is one of the cheapest, fastest ways to reduce greenhouse gas
emissions and use fewer virgin resources (Tellus Institute 2008).

Despite progress made in highlighting the contribution of waste pickers to recycling and climate change
mitigation, waste pickers in many contexts work in deplorable conditions, receiving little or no support
from local authorities and facing continual threats. Waste pickers are often subject to arbitrary pricing
by middlemen and to harassment on the streets. Further there is a global trend of privatizing the
collection, transport, and disposal of waste and recyclables. At a meeting of waste pickers from 34
countries held in Pune, India in April 2012, privatization (usually leading to waste-to-energy schemes)
was highlighted as the greatest threat to livelihoods. There are however also encouraging trends
particularly in Latin America and India of waste collectors forming themselves into co-operatives. This
places them in a stronger position to secure better prices from middle men, negotiate with local
authorities for access to waste and appropriate facilities but also defend their rights.

Peru and Brazil have both passed progressive national laws that support the formalization of waste
picking and encourage cooperatives. In Peru, Law 29.419 which regulates the activity of waste pickers
was passed in 2010. This law, which was developed through a participatory process involving
representatives of the waste pickers’ movements, encourages formalization via incentives to waste
pickers’ cooperatives (reduction of taxes; capacity building programmes) and promotes integration of
cooperatives into municipal recycling schemes. Brazil has a whole set of laws at the local, federal and
national levels that mandate the inclusion of waste picker cooperatives/associations in solid waste
management (see Dias, 2011a for further details). For example, a 2006 Presidential Decree commits
state institutions to segregation of waste at source and donation of the waste to waste picker
cooperatives and/or associations; and 2007 national guidelines for basic sanitation include a provision
that gives preference to hiring waste picker associations or cooperatives.

An association of waste pickers in Bogotá, Columbia – the Asociación de Recicladores de Bogotá (ARB) –
has filed numerous legal cases to preserve their occupation in response to the city government’s
attempts to privatize solid waste management. ARB achieved a landmark victory in 2003 when the
Constitutional Court ruled that the municipal government’s tendering process for sanitation services had
violated the basic rights of the waste-picking community. Subsequent cases have appealed to
constitutional provisions, to argue that cooperatives of waste pickers – and not only corporations – can
compete in waste recycling markets. A December 2011 ruling halted a scheme to award US$1.7 billion
worth of contracts over eight years to private companies. The court mandated that the cooperatives of
 waste pickers had a right to compete for the city tenders. In March 2012, the ARB submitted its bid to
the city. (See Chen et al. 2013 for full details.) It took the municipal government a year to review the
bid, reconcile differences of opinion within the government, placate vested interests, and come up with
a policy for integrating waste pickers into solid waste management in Bogotá City. In March 2013, the
waste pickers began to be paid by the city for collecting and transporting waste.

What are the core common lessons from these examples of inclusive urban planning and practices? One
is that there are powerful vested interests – property developers, large retailers, private waste
management companies – competing for urban land, urban services, urban customers, and city
contracts. Another is that informal workers need to be organized in order to compete with these vested
interests and to demand from the city their fair share of urban land, urban services, and city contracts;
and representatives of these informal worker organizations need to be integrally involved in urban
planning processes.

WAY FORWARD
Given the sheer size and significant contributions of the informal economy and that most of the urban
working poor, especially women, are engaged in the informal economy, more attention needs to be paid
to urban informal livelihoods in efforts to make cities more inclusive and to reduce urban poverty.

Future Urban Statistics & Research

Improved statistics on urban informal employment are important: as data have power. Policy makers
like data, more than other kinds of information. Not only does informal employment continue to be an
important part of the urban labour force but improvements in data collection are also possible. What,
then, is needed going forward. First, it is important that informed users of urban statistics encourage
national statistical services and the international statistical community to further develop statistical
concepts and methods to better measure the urban informal economy and to identify separately all
categories of urban informal workers. Second, it is also important that informed users of official
statistics make the data and related data analyses readily accessible to researchers, policymakers and
advocates in user-friendly formats.

Further, more grounded research on the working conditions of the urban informal workforce and how
they are impacted by government plans, policies and practices is needed. Finally, detailed
documentation is needed of cases where informal workers have been included into urban plans, with
particular attention being paid to how private sector interests have been confronted, and the
implications of these cases for activists and the practises of urban professionals (with a particular focus
on planners, architects, urban designers and engineers).

Future Urban Planning & Policies

As summarized above, inclusive planning and policy approaches to the urban informal economy are
possible, even if difficult. Here are some of the core elements of inclusive urban planning processes and
practices:

 Recognition of where informal workers fit in – and how they contribute to – the urban economy
and into specific value chains or sectors

 Recognition that the common policy stance towards the informal economy should combine
regulation, protection, and promotion – rather than regulation, relocation, and repression
  Recognition that many existing laws, regulations, and rules serve to exclude, rather than, include
the informal economy and need to be reformed to match the reality of informal work

 Recognition that informal workers need to be organized and that their representatives need to
be integrally involved in urban planning and legal reform processes

 Recognition that inclusive planning is planning with rather than for informal workers.

Finally, there is a need to recognize that inclusive planning will require a fundamental change in
mindsets. As Ela Bhatt, founder of the Self-Employed Women’s Association (SEWA) and founding chair
of the WIEGO network, puts it:

“The challenge is to convince the policy makers to promote and encourage hybrid economies in which
micro-businesses can co-exist alongside small, medium, and large businesses: in which the street
vendors can co-exist alongside the kiosks, retail shops, and large malls. …. Just as the policy makers
encourage bio diversity, they should encourage economic diversity. Also, they should try to promote
a level playing field in which all sizes of businesses and all categories of workers can compete on equal
and fair terms.”

Future Organization & Collective Voice of Urban Informal Workers

Urban informal workers have begun to come together to demand more inclusive, rather than
exclusionary or punitive, urban plans, policies and practices. Their organizations have given collective
voice to some of the world’s most impoverished informal workers, such as home-based workers, street
vendors, and waste pickers, and achieved important victories. The legal and policy victories in
Ahmedabad,Bhubaneshwar, Bogotá and Pune would not have been put into place without the informed
and sustained policy efforts of membership-based organizations of informal workers and their allies.

Despite these gains, many of the organizations of urban informal workers are still in their early stages.
Thus, building and strengthening organizations of urban informal workers is both an end in itself – as
informal workers achieve a sense of empowerment and are able to support each other – and a means to
leveraging wider impact at the local, national and international levels. Organizing can begin to address
the vulnerability, insecurity and dependence commonly experienced by the working poor in the urban
informal economy whose lives are controlled by powerful economic and political forces.

But organizing alone is not enough to bring about needed changes. Workers need representative voice
in those institutions and processes that set policies and the ‘rules of the (economic) game’. Ensuring a
voice for informal workers in relevant urban planning, policy making, and rule-setting processes requires
supporting the growth of their organizations, and building capacity for leadership, policy advocacy, and
collective bargaining.

1 For the complete story, see http://www.street-stories-india.com/impact-of-slum-relocation-on-

womens-freedoms/
2 See Bhowmik’s 2005 review of evidence from 10 Asian cities and Itikawa’s 2010 study of Sao Paulo,
Brazil in which she finds the number of legal trading posts covers only 10-20% of all the workers
occupying public spaces.

About WIEGO
WIEGO (Women in Informal Employment: Globalizing and Organizing) is a global research-policy-action
network that seeks to improve the status of the working poor, especially women, in the informal
economy. WIEGO pursues its objectives by helping to build and strengthen networks of informal worker
organizations; undertaking policy analysis, statistical research and data analysis on the informal
economy; providing policy advice and convening policy dialogues on the informal economy; and
documenting and disseminating good practice in support of the informal workforce. For more
information visit: www.wiego.org.

WIEGO has developed an extensive knowledge base on how inclusive urban planning can protect
informal livelihoods and make them more productive, thus enriching cities. WIEGO’s Inclusive Cities and
the Urban Informal Economy showcases this knowledge base and offers a range of tools, research
findings and recommendations. You can find more informations here: http://wiego.org/cities