Plate 9.5: Gas Welders Working along Madzindadzi Road
2.2 Theoretical Perspectives on Urban Informality
2.2.1 Informal Sector Theories
The debate on urban informality has a long pedigree, dating some decades back (Hart, 1973;
Despres, 1988; Meagher, 2007). Evident in literature is the mounting recognition that there is controversy and general lack of consensus on issues surrounding informality, especially from a theoretical viewpoint (Despres, 1988; Chen, 2012; Ntlhola, 2010). The controversy is firmly rooted in several dichotomies and paradoxes dominating informal sector theories.
Metamorphosed over time, so the argument in this sub−section goes, informal sector theories have passed through a sequence of stages. Discussed in forthcoming paragraphs are three hypothetical stages of informal sector theories dubbed as appearance, competition and dominance.
This first appearance of informality in economic debates gained precedence in the 70s (Hart, 1973). Then, the trending belief was that informality is temporary and will fade away with economic advancement since informality is only a reflection of a malfunctioning economy (Hart, 1973; Despres, 1988; Onoshchenko, 2012). This belief is explained well by the Duality School of Thought (DST) which argues that formal and informal sectors are inversely related.
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As the formal sector collapses, the informal sector increases in size and as the economy gradually moves from recession to boom, the informal sector fades away. It can be reasoned that as an economy grows, business activities have a tendency to become more formal. The relational set−up of formal and informal sectors is best illustrated by a trade−off relationship summarised in Figure 2.1.
Figure 2.1: Trade−off relationship between formal and informal sectors (Adapted from Onoshchenko, 2012)
As illustrated in Figure 2.1, as the magnitude of the formal sector drops from 𝐹1 to 𝐹2, the extent of the informal sector increases from 𝐼1 to 𝐼2, and vice versa. Theoretically, this depicts a negative association between the informal and formal sectors because two sectors are plausibly substitute activities (Ntlhola, 2010). In a like manner with this reactionary stance of the informal sector, but from a different dimension, it has been advanced that the growth in the informal sector is a reactionary passage to the growth with inequity of the formal sector’s static and inflexible character (Silverman, 1992).
Some scholars who subscribe to the DST explained the temporariness of the informal sector
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using the type of employment (Despres, 1988; La Porta and Shleifer, 2008; Luebker, 2008a).
The informal sector has been called a temporary absorber of labour set in motion by rapid urbanisation (Despres, 1988). This suggests that the longevity and stability of the informal sector is theoretically questionable (Despres, 1988, Ntlhola, 2010; Onoshchenko, 2012). In as much as the informal sector is providing jobs, it is posited that these jobs are not decent (Luebker, 2008a). Decent work has been described as an engagement that enables one to consume and save (Luebker, 2008b).
The substitutability of the informal and formal sectors propounded by the DST received heavy criticism, especially from scholars and policy makers who consider the two sectors were mutually related. Growing empirical evidence has shown that instead of fading away as explained by dualism, the current trend shows informality as a growing phenomenon (ILO, 2007; Villamizar−Duarte, 2015). The growth in informality has made the sector complement and in instances, compete with the formal sector.
Contrary to dualism, structuralism hinges on the view that formal and informal sectors co−exist and are mutually related. The conjoined set up of the two sectors is such that they are co−dependent rather than liberated from each other. Conforming to the Structural School of Thought (SST), the dynamics in economic systems make it problematic to label an economy as purely informal or formal, but rather as a multifaceted mix of the two (Inter−American Development Bank (IADB, 2006; Kanbur, 2009; Yiftachel, 2009; Keen and Kanbur, 2015).
For instance, numerous informal businesses conduct production relationships with formal sector businesses, providing input, finished goods and services either through direct transactions or via subcontract provisions. The same argument resonated by one scholar explained the vertical and horizontal business linkages between the formal and informal sectors
16 in Zimbabwe (Muponda, 2012).
It is collectively advanced that that the two sectors are complementary, synergic, and exhibit counteracting effects (Lund and Srinivas, 2000; Granstrom, 2009; Bairagya, 2010; Muponda, 2012). One scholar lamented that informal sector’s exposure to formal sector’s competition intensifies the scope of the informal sector in absolute terms, but the degree of relationship with benefits is dynamic and questionable since the two sectors compete for jobs in some instances (Bairagya, 2010). This dynamic relationship has been conceptualised with suspicion where the informal sector is being used as a convenience, with hidden exploitative attributes mimicking the ‘predator−prey’ relationship (Payne, 2002; Hussmanns, 2004; Musara, 2015).
The formal sector takes advantage of low prices and availability of cheap, desperate labour in the informal sector. The ‘cheap labour’ perception has been criticized for using the informal sector as a reserve army of labour for the formal sector (IADB, 2006).
Regardless the miniature operations in the informal sector, the informal sector plays a central role in absorbing labour force that could not be employed in the formal sector. Sources concur that over half of the populace in the developing world is employed in the informal sector (ILO, 2007; IMF, 2007; Schneider et al. 2010; IMF, 2013). This commendable role of the informal sector has seen a noteworthy number of people migrating to Assam in India in search of employment in informal manufacturing (Majumdar and Borbora, 2012). It is argued that employment describes a scenario where one engages in an economic activity that provides at minimum a single United States of America dollar (US$1) in any given week (Luebker, 2008a).
Framing the informal sector through the dualism ideology has received mass criticism, especially from a crop of structuralism scholars. Using selected case studies, some scholars
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have provided evidence on how the DST has lost taste in explaining urban informality due to passage of time (Lund and Srinivas, 2000; Hussmanns, 2004; Granstrom, 2009; Bairagya, 2010). In similar fashion structuralism superseded dualism, contemporary theoretical literature provides that post−colonial theoretical views have superseded structural views. The contemporary view is that informality is now dominating economic systems in developing countries.
Following continuous increase in size, informality has been considered, in modern years, as a subject of renewed attention with resurgence of attentiveness to areas such as urban management (Varley, 2013). It is noted that informality has become order of the period in developing economies (Villamizar−Duarte, 2015). Post−colonial theorists are pushing for policy recognition of informality as a practical identity of developing countries’ cities (Varley, 2013; Miraftab, 2009; Yiftachel, 2009; Villamizar−Duarte, 2015). In as much as authorities work tirelessly to contain the informal sector through eviction and other means, the informal sector hibernates and within a short space of time resurfaces wearing a different or modified face.
Contrary to this background, informal activities are now outweighing formal activities. One scholar has described pathways to the dominance of the informal trade as twofold; invited spaces and conceived spaces (Miraftab, 2009). Invited spaces are used to define channels created and legitimised by governments to cope with socio−economic hardships. For example, in Zimbabwe, this includes the enacting the Indigenisation and Economic Empowerment Act (IEEA) [Chapter 14:33] of 2007. Other channels used by the Government in Zimbabwe include both direct and indirect support given to the informal trade by the Ministry of Small to Medium Scale Enterprises (MSME). Invented spaces are collective and unauthorised actions by the poor
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to cushion themselves against the eating socio−economic upheavals. These include working from undesignated sites such as roadsides, backyards and industrial clusters (Mazongonda and Muromo, 2011).
Being a combination of invited and created spaces, dominance of the informal sector brought with it the understanding that informality is an existing reality. Noted in this sub−section is the fact that the first appearance of informality in economic debates was viewed as temporary, that is, informality is transient. Although informality was predicted to disappear due to passage of time, evidence showed otherwise leading to theoretical acceptance that informality competes with the formal sector. Culminating evidence has brought in a new twist which views informality as dominant when compared with formality and this trend is expected to continue into the foreseeable future. Particular informal activities, especially ones inclined to manufacturing, agglomerate in industrial clusters.