At the local level, these factors have subsequently led to unstructured, uneven and uncoordinated efforts, which together have hampered the development of the informal economy. This also includes the need for consistent national, provincial and local government policy and legislative frameworks for the development of the informal economy.
INTRODUCTION
- The Development Conundrum: Rapid Urbanisation and Informality
- Motivation
- Research Questions
- Overview of Structure
These terms can be used interchangeably in this study to refer to this particular sector of the shadow economy. This therefore opens the need for in-depth comparative research of different contexts in connection with the inclusion of the gray economy in urban processes.
LITERATURE REVIEW
- Conceptual Framework: The Political Economy Approach
- The Political Economy of Informality
- The Political Economy of Urban Change
- The Global Challenge
- Informality
- Range of Urban Policies and Strategies
- International Policies and Case-studies
- The South African Dynamics
- The Size of the Informal Economy
- Informality in South African Cities and Towns
- The Broader Policy Environment of the Post-Apartheid Urban Landscape 19
- The Institutional Ramifications
- Existing Municipal Approaches to the Informal Economy
- Conclusion
There are a number of important forces that have led to the expansion of the informal economy worldwide (ILO, 2002 cited in Urban-Econ, 2008). Furthermore, estimates of the contribution of the informal economy vary from 8-12% of GDP (Makho Communications, 2009).
RESEARCH METHODOLOGY
- Research Methodologies
- Case Study Selection
- Process of Data Analysis
- Research Limitations
Observations included additional notes and photographic evidence of urban spatial, management and social dynamics. The two study areas of town and city were subsequently identified because of the proposed history of intervention efforts in the development of the informal economy, which are considered relatively progressive. Pietermaritzburg (Msunduzi Local Municipality) serves as a case study of a secondary city that is not a metropolitan member of the South African Cities Network.
Interviews with respondents and key informants were a cornerstone of the primary data collected from the two case studies. The interviews' primary data were supplemented with secondary data from various sources to give the study a context and framework. These latter participants were carefully selected through snowballing after they have been referred to as influential and active individuals who have had frequent interactions with the local government in the context of managing and/or developing the informal economy.
Moreover, the likert-based questions served as a tool to obtain critical information about the actual practices of the respective municipal units.
COMBINED FINDINGS AND ANALYSIS
Overview and Background of the Case Studies
- Msunduzi Municipality
- Hibiscus Coast Municipality
- Comparative Analysis
As mentioned above, Msunduzi provides just over 59% of total employment in the district and the surrounding rural local municipalities experience high levels of unemployment (Urban-Econ Report, 2008 citing Urban-Econ, 2007). It is located in Port Shepstone and falls under Ugu District Municipality in the KZN Province. In 2005, more than 60% of all economic activity in Ugu took place in the Hibiscus Coast Municipality (Hibiscus Coast Municipality, 2008/9).
This, together with findings about the lack of jobs from the surrounding underdeveloped areas and the presence of informal areas in both contexts, indicates the immigration of people to individual municipalities in search of employment opportunities. Further expansion resulted from the deregulation of trade opportunities that came with the democratic transition, the increasing number of foreigners, and the trend toward informality in the formal sector. This expansion of the informal economy is in both cases consistent with the literature of Todes (2001) and Nel (1997), which emphasizes the migration of people into secondary education.
Similarly, Hibiscus is the source of more than half of the formal employment opportunities in the district, especially for government jobs, as it is the administrative center of the district; followed by jobs in the commercial sector due to the established tourism industry (Ugu District Municipality, 2002).
Institutional Arrangements
- Msunduzi Local Municipality
- Hibiscus Coast Municipality
- Comparative Analysis: Institutional Challenges within LED Units
However, the lack of data on the informal economy in Hibiscus makes it even more difficult to assess its relative size. A widely mentioned institutional structure is the Informal Trade Task Team (ITTT) formed in 2000, which is a sub-committee group that reports to the Economic Development and Executive Committees of the municipality. However, shortly thereafter, the informal economy component was formally transferred to the LED unit.
Similarly in Hibiscus, the lack of financial support for the informal economy was cited as the biggest problem (former LED officer Ex-Chairperson, LED Committee. Others argued that the lack of progress in the development of the informal economy in Hibiscus is attributed to a lack of suitably qualified staff within the LED unit (Former Town Engineers Official CBD Formal Business Representative Chairperson of Isolempilo Traders' Cooperative PA to Director, Health & Community Services Former LED Officer. Furthermore, the lack of clarity in the role of the LED unit for the development of the informal economy was widely raised.
This is symptomatic of the broader lack of conceptual and operational clarity of LED's role in providing services to the informal economy at local, provincial and national levels.
Legislation and Policy Environment
- Msunduzi Local Municipality
- Hibiscus Coast Municipality
- Comparative Analysis
In 2008, the Umgungundlovu District Economic Development Unit developed an informal economic policy as a strategic framework, intended as a coherent and integrated strategy to guide local governments in the management and development of the informal economy, for the benefit of the economy as a whole . The policy emphasizes that the informal economy is a permanent feature of the economy and must play a development role. Msunduzi is relatively advanced on two fronts as he has two comprehensive documents: the Umgungundlovu District Informal Trade Development and Management Plan and the Informal Economy Framework; both of which recognize the importance. of the informal economy and provide administrative and some development strategies.
This is indicative of the lack of coordination in policy development processes between the local, district and province levels. However, in Hibiscus, there is an inconsistent concept of the informal economy, which is either associated with SMEs, cooperatives, loosely encompassed by notions of "sustainable living" or called the "second economy". Furthermore, IDPs from both contexts note programs to formalize the informal economy, which is consistent with policies such as ASGISA and the KZN Growth and Development Strategy as cited in the Urban-Econ Report (2008).
Moreover, there is insufficient information on the operationalization of the aforementioned and there is a lack of conceptual clarity of the informal economy, for example in the scheme of definitions and dynamics of specific sectors.
Institutional and Operational Responses
- The First Phase: 1980s to mid-1990s
- The Second Phase: 1996-2000
- The Last Phase: 2000 and Onwards
In Hibiscus, a traditional medicine practitioner sought development assistance from the local council of the late apartheid Port Shepstone government. As a result, this gained the cooperation of traders in the allocation of trade sites in the city core, the construction of a trade complex completed in 1996 and subsequent trade stands completed in 1998. This aptly describes the changes in urban governance prompted by the problems of the traders' agency during the first phase. restructuring of local administration.
In summary, the above findings resonate with the universal experience of the challenge of rapid urbanization and informality and the resulting urban governance challenges for. This includes resistance to urban change, which threatens this vision by embedding the shadow economy into the urban fabric. Furthermore, a respondent said that the 'golden era' of the Informal Trade Task Force ended after 2000 (Director, Pietermaritzburg Chamber of Commerce.
This demonstrates the reactive nature of policy intervention, much like other intervention responses to the informal economy.
Institutional Challenges in Interventions
- Mixed Political Responses Resulting from Stakeholder Influence
- Lack of Consultation and Communication
- Formalisation of the Informal Economy
- The Lack of Institutional Assessment and Record of Intervention Measures
This again highlights the political economy dimensions of informality and urban change as discussed in the literature review. Furthermore, although not included in the scope of the literature review, these findings affirm some of the discourses on participatory development. In terms of the nature of the consultation, respondents were asked to describe the nature of institutional responses to the informal economy as shown in Chart 3 on page 58 below.
At Hibiscus in particular, an issue raised by some respondents was the lack of a thorough understanding of the shadow economy. Such concerns have been echoed by Kleniewski (1997), Minnery (2007) and Watson (2009) in their explanations of the political economy of urban change. Although not covered in the scope of the literature review, it also resonates with Mitlin (2011) and Baud and Nainan (2008).
The comparative analysis will be summarized in the next section with a conclusion of the study including recommendations.
SUMMARY OF FINDINGS AND CONCLUSION
- Informality
- Institutional Arrangements
- Policy and Legal Environment
- Operational Responses
- Implications for Urban Environments, Policy and Informality
- Conceptual
- Policy Recommendations
- Conclusion
- REFERENCES
- APPENDIX
Nevertheless, based on the evidence of the study, the informal economy has been progressively accommodated within more appropriate institutions of local government. After all, the character and nature of the informal economy places it as a cross-departmental responsibility. Emerging examples have shown that synergistic and multidisciplinary approaches to the informal economy can enable innovative interventions needed to meet the diverse needs of the informal economy.
This is reflected in the standardized responses that fail to meet the diverse needs of the informal economy and therefore remain unused or underutilized by informal traders, and the lack of clarity on future investment decisions. The future of informal economy development is uncertain and will depend on ongoing struggles at local, national and international levels. Collective action for people in the informal economy: the case of the self-employed women's association.
Evolution of political areas and challenges of development of the Port Shepstone area (Kwazulu-Natal, South Africa).
Summary table of institutional structures in MLM and HCM dealing with
Draft KZN Gray Economy Policy (2009): Aimed at providing an integrated economic and regulatory framework that supports the sustainable economic growth of the gray economy, including changes. 2008 LED: 68% of businesses in the informal sector earn less than R1000 per month, with each business supporting approximately 5.68 individuals. Prompt: After presenting the research and reading the informed consent form)… I will start the interview by trying to check your bibliography, followed by questions regarding your views on the informal economy.
For the purpose of this research, while the informal economy can refer to a complex range of activities, I will focus on informal economic activities that occur in public spaces, such as trade and other related services. In your opinion, what place do you think informal economic activities have in urban spaces. Can you describe the nature of the challenges your district/municipality faces in relation to the informal economic activities in the urban spaces.
What was the justification from your municipality for the intervention measures taken (ie what were the motivations, what other alternatives were considered).
