Formalising informal business sector vital

THERE has been an appeal to formalise the informal business sector to improve working conditions for those operating in it.

More often than not, when reference is made to the economy, the focus is only placed on the formal economy, overlooking the informal economy and the agricultural subsistence economy.

According to a Namibia Chamber of Commerce and Industry (NCCI) report on the state of the economy focusing on ‘The challenge of unemployment and employment creation strategies particularly for the youth’, the Namibia Informal Sector Organisation (NISO) with other stakeholders are working on raising the informal sector to be formal.

The NCCI report stressed that the challenge in formalising the informal sector is the reduction of extreme regulation or harsh conformity to formal rules considered bureaucratic, hindering decision-making.

“The average company must make 47 annual statutory payments and returns,” the report noted.

Although the formal, informal and the agricultural subsistence economies combined make up the economy as a whole, policymakers (not only in Namibia) tend to focus almost exclusively on the formal economy.

Funding, policies and interventions thus tend to be focused towards the formal economy while the informal economy and the subsistence agriculture are disregarded.

Herbert Jauch, labour researcher and educator once told that local laws apply to both the formal and informal sectors, but it is rather a question of which interventions are needed to strengthen and improve the conditions of those working in the informal economy.

Jauch said the informal businesses experience many problems with municipalities, regulations, affordable premises and so forth, while employees in the informal economy often experience long hours of work, low wages, a lack of benefits and it is for this reason that almost all workers prefer a job in the formal sector.

“Therefore, the informal economy needs support for the business operators there and also far better working conditions for employees. Informal businesses themselves need to identify the kind of support they need, and government programmes need to respond to those needs. Direct linkages between informal and formal businesses could also be useful as was done in some cases,” he said at the time.

A few years ago, Niso and the National Union of Namibian Workers signed a memorandum of understanding as a basis for working with each other to formalise the informal business sector.

Namibia’s second trade union federation, the Trade Union Congress of Namibia, also had plans to strongly focus on the informal economy to improve working conditions for employees.

Moreover, the NCCI report recommended that Namibia needs to enhance the ease of doing business, also to developing various alternative capital market instruments to diversify local investment asset classes.

charmaine@namibian.com.na

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