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Informal Employment to Create More Jobs

street trader, informal trading, entrepreneurship, employment, jobs

We are currently facing a serious unemployment crisis. 1 in 4 South Africans are unemployed, 53% of those are the youth.

However, about 6 million budding street entrepreneurs create new jobs in the informal trading sector.

The youth unemployment rate has recently dropped to 53%. An all time low.

This is according to Reserve Bank Governor, Gill Marcus, during her speech on the repo rate in Pretoria last Thursday.

Entrepreneurship and job creation such as informal trading is one such solution.

Geoffrey Namakonde is an informal trader in one of Johannesburg’s downtown districts.

He runs a fruit stall nearby a local supermarket outlet.

He works six days a week collecting his merchandise from the fresh food market at 6am and closing shop at around 8pm.

Although his income is almost double that of some blue collar casual workers. He has many dependents.

“I have 3 children at home. I have my grandmother who is not working. Then I have my uncle who is not working, also my wife,” he says.

Street trading alliances see the informal trading concept as a good way to reduce a growing dependence on South Africa’s welfare state.

Presently, informal trading is classified under small businesses but street trading interest groups say the government needs to classify, regulate and develop it as an independent entity.

While trading groups push for what has now been branded ‘the peoples economy’ to be embraced by the government and mainstream business bodies.

Traders claim they have been branded as an obstructive and unsightly nuisance.

However, there are some issues. None of Namakonde’s income is taxed or documented. There is also not enough support from local law enforcement.

Namakonde says he is often harassed by police and has to pay huge fines to retrieve merchandise. Only to find it has been destroyed or stolen.

He claims he abides by the City’s zoning rules and is registered as a street vendor.

The government however denies any harassment. It says it is trying to get the informal businesses into tax brackets and formal sector regulation.

Analysts warn that frustrating informal trade could put millions more out of work and spark a revolution similar to that in North Africa last year.

The ruling ANC party unveiled its Infrastructure Development Plan in February which it says should create millions of jobs.

But Finance Minister, Pravin Gordham, says, “the economy needs sustained growth of 7% over a year.” That’s nearly 3 times its current rate to make a dent in unemployment.

Pic Credit: Thulani Guliwe Gauteng Department of Economic Development

See Geoffrey Namakonde and other economic analysts discuss the benefits and pitfalls of the informal trading sector.