The urban informal sector in sub-Saharan Africa: from bad to good (and back again?)

Abstract

Conceptualisations of the informal sector in terms of economic dualism have a long history, as have effective challenges to those conceptualisations. These are discussed in this paper, which then examines shifts in attitudes towards the role of the urban informal sector in sub-Saharan Africa over recent decades, with reference to these theoretical conceptualisations and other approaches. The paper then discusses the dynamics of the sector and the changing role of the African state in promoting or discouraging it and identifies an increasingly negative trend in this respect. Finally, the paper offers a comparative perspective, from north of the Limpopo, on current debates and policy pronouncements about the ‘second economy’ in South Africa.

1. INTRODUCTION

[T]he standard dualist framework … has been the bane of informal economy research since its inception. (Meagher, 2001:154)

The concept of dualism has a long pedigree but so, too, have critiques of the concept. In understandings of the informal sector, dualism has swung in and out of fashion, and now seems to be in the ascendancy again. These shifts are not merely of academic importance: in the field of ‘development’, such shifts often have major implications for millions of people. Dualistic interpretations of the informal sector are now being revisited in South Africa, and possibly elsewhere in Africa, and they have significant policy implications. Since such interpretations have been robustly and adequately countered over the decades, one might assume it is no longer necessary to address the dangers inherent in them. However, the current resurgence is often couched in terms that suggest the history and debates are either forgotten or dismissed. They also make little, if any, reference to the decades of shifting policy on ‘informality’ in Africa and elsewhere, and the lessons that might be learnt from this history. In this light, reviewing some of the debates about dualism seems timely, and this paper begins with such a review. It then focuses on how a dualistic conceptualisation of the urban informal sector in Africa has affected policy responses from the state and other development ‘agents’, and how these views and responses have changed over time. The paper concludes with a discussion of how these trends elsewhere in Africa compare with, and might inform, current debates on marginality in South Africa.

The idea that less developed areas of the world could be conceptualised in terms of dualism – economically or socially, or both – is associated with works by authors such as Boeke (1942, 1961) and Furnivall (1939, 1941) in their studies of southeast Asia, and the economist Lewis (1954). This idea differed in some ways from the then dominant neoclassical economic models, although Lewis, for example, was avowedly of that tradition (Binns, 2002). The essence of dualist views was that less developed countries were characterised by two different sectors, or societies. One was typified as capitalist in its mode of production – ‘modernising’, dynamic, progressive, perhaps capital intensive. The other, the ‘subsistence’, or ‘peasant’ sector in societies dominated by agriculture (or, in later terminology, and ominously, the ‘marginal’ sector), was characterised by pre-capitalist modes of production, often depending on family labour, was unsophisticated in its operations and production patterns, used low technology and had low levels of productivity. These sectors were seen as separate. The trick of economic ‘development’, according to Lewis, was for the latter sector to disappear gradually as it was absorbed by the former or transformed itself to take on the former's characteristics. Boeke invented the idea of ‘social dualism’, and his standpoint was rooted in more radical traditions than Lewis's. His ideas related to the clash of imported social systems (e.g. high capitalism or, theoretically, socialism) with indigenous social systems but went beyond merely describing two economic sectors (rich and poor), as his ideas incorporated social values and patterns.1 He was pessimistic about the chances of the two separate societies embodied in the theories mixing successfully or positively, and suggested that governments instead needed separate policies for them. Boeke's views were similar to those of Furnivall (1939), also working in Southeast Asia, who had developed the concept of ‘plural societies’.

The key ‘problem’ with these dualistic conceptualisations of less developed (and colonised) economies and societies was that it was easy to show that they rested on a fallacious or exaggerated sense of the ‘disconnection’ between the two sectors. Merely exhibiting different characteristics did not necessarily mean the two did not experience the same underlying economic forces. Nor did it mean there was no relationship of dependency involved, with the associated implications of subordination and the idea that the less ‘modern’ sector's growth and development was conditioned by the growth and development of the other. Thus the potential for ‘transformation’2 in the ‘backward’ sector was often constrained by a restrictive, and possibly institutionalised, framework imposed by the colonisers and the ‘modern’ society. An example of great significance for southern African societies was the massive alienation of the key factor of production – land – from indigenous people and the subsequent imposition of certain restrictions on commercial agricultural production by them, while settler farmers were subsidised by the state (Palmer & Parsons, 1977). Another is that it often suited colonial administrations to maintain some type of ‘traditional’ legal institutions and authority through which to rule, as ‘transformation’ to a more ‘modern’ alternative might be costly in terms of both financial outlay and unforeseen and undesirable outcomes (for the colonisers), such as demands for greater democracy. Indigenous pressures for ‘modernisation’ in these respects were often actively discouraged or prohibited. A further example is that colonial investment in non-extractive economic sectors was often minimal, no matter where the economics of ‘comparative advantage’ lay, because employment and productivity at ‘home’ were the key imperatives of the colonial state. A final example of particular importance for urban developments in Africa was that, here, long-term or permanent urbanisation was discouraged as it was perceived to be both politically and economically disadvantageous for the colonial state – leading to restrictive housing and labour policies that reached their zenith in South Africa, and colonial Namibia and Rhodesia. Many other examples could be given of the analytical problems of the early concept of dualism. Essentially the concept has descriptive value but is dangerously misleading if translated into policy that is founded on an idea that the sectors are functionally separate.

Dualist ideas segued into modernisation theory, which dominated development theories for decades. The policy was to ‘transform’ the traditional, pre-capitalist sector by stimulating it to become ‘modern’, and government intervention to hasten this outcome was usually assumed to be necessary and positive. The critiques of the theory and its policies from both the left and, more recently, the neoliberal right have been exhaustive (see, for example, Frank, 1966; World Bank, 1981; Ferguson, 1999). In relation to current debates about the ‘informal’ sector in Africa, the following points are pertinent. The theory has been much condemned for assuming a unilinear pattern of economic development in which twentieth-century less-developed countries would, inevitably, follow the path of capitalist and industrial development ‘enjoyed’ by the industrialised, wealthy nations. This took no account of history and the fact that the global economic and political circumstances facing post-war Africa, Asia and Latin America were profoundly different from those experienced by industrialising Europe and North America. In addition, global power relations remained powerfully skewed in favour of the already ‘modern’ countries. On the left, the dependista school was particularly powerful for a while, positing that the dependent relations set up by colonisation and capitalist penetration of the less developed countries (LDCs) in the nineteenth and twentieth centuries would prevent their ‘modernisation’ along classic, capitalist lines – thus they would remain economically subordinate as their development was still conditioned. This pessimistic outlook had some resonance with the earlier views of Boeke, although a key difference was that early dualists felt the penetration of capitalism into ‘traditional’ society was likely to be negative, while dependistas held that such societies had already been (adversely) incorporated.

When it comes to the assumptions of linearity embedded in modernisation, Zambia's experience in the late twentieth century provides a particularly telling challenge (Ferguson, 1999; Potts, 2005). This country experienced serious economic decline from the mid-1970s. A combination of extremely negative terms of trade and being landlocked in a region where the death-throes of white settlerdom and the subsequent destabilisation of black-ruled southern African countries imposed huge restrictions and costs on its transport for decades did indeed ‘transform’ its economy, but in a quite different direction from that supposed under ‘modernisation’. The outcomes of the Zambian case, albeit extreme, are relevant to the analysis of ‘informality’ in African cities. Its urban economy informalised, poverty deepened, and the balance of economic forces between urban and rural areas shifted so dramatically that Zambia has been de-urbanising for 20 years (Potts, 2005). Thus the share of national population in towns has been falling. Furthermore, the relationship between the formal and informal sectors in the cities has been complex and decidedly not one of disconnection.

2. AFRICAN CITIES AND URBAN INFORMALITY: SHIFTING POLICY PERSPECTIVES

A very common feature of most LDCs is an urban informal sector3 that provides livelihoods for millions. The existence of such a sector does not mean that future paths of development will not see it shrink or change (or grow further) because, as noted in the introduction, many different ‘development’ paths have been, and are, experienced in the world. In South Africa, for example, by the standards of many LDCs, including some with currently strong Gross Domestic Product growth, the urban informal sector is new and relatively undeveloped. This is also true for Namibia and was true for Zimbabwe in the first decade after independence, the reason being that the restrictive segregationist and apartheid legislation surrounding African urbanisation, housing and employment affected rates of in-migration and the types of work possible, and strongly discouraged self-employment in this sector. It is certain that, in the absence of this, the scale of the sector in the cities and towns of ‘white’ South Africa would have been far greater than that inherited in 1994, and it would be larger today, although it has grown rapidly since. While acknowledging that there were elements of an informal sector before then (see, for example, Rogerson & Da Silva, 1988; Beavon & Rogerson, 1990; Rogerson, 1990; Horn, 1993), it is nonetheless notable that the first academic collection on the sector in South Africa was that of Preston-Whyte and Rogerson (1991), by which time the nature and role of the urban informal sector elsewhere in Africa, Asia and Latin America had already gone through at least three cycles of academic analyses and interpretations, some of which now appear to be being replicated in South Africa.

The ‘informal sector’ was well established in many African cities by the 1960s, although the actual term came later, invented by Hart (1973) in reference to the situation in Ghana's towns. This type of employment is not new: its key characteristics have long been part and parcel of pre-capitalist cities throughout the world (O'Connor, 1983). But its scale and importance as a source of livelihoods has changed because of the sheer numbers involved. Also, in many poor countries of the world, rapid urbanisation occurred without the significant growth in formal sector manufacturing jobs that characterised Europe and North America in their early stages of very fast urban population growth. The differences between Europe and North America's experience of the industrial revolution and the LDCs' experience of rapid urbanisation are manifold. The economic control Britain then exercised and global economic conditions were the products of a very specific historical moment and bear little resemblance to the situation faced by sub-Saharan Africa as it struggled (and still struggles) to industrialise and develop. Analysis of the urban informal sector at this stage was couched very much in terms of dualism. The language used to describe the characteristics of the sector reproduced the language of ‘dualism’ of colonial societies and economies. The policy implications were almost identical too.

The informal sector was thus denoted as backward, traditional, with low productivity (with many people producing what one person could in the formal sector), low technology, low incomes, low capital use and low levels of investment. The policy perception was that developing cities needed to get rid of these types of activities since development required modernisation and a shift to higher productivity, more sophisticated technology, and more capital intensive types of production and employment. Importantly, the sector was also typified as including unregistered, unrecorded employment and production that did not feature in government statistics. Strictly speaking, according to the letter of the laws (mainly inherited from colonial times), this made most of the informal sector ‘illegal’ – and, as will be shown, left it vulnerable to shifts in government attitudes and policy. Moreover, some typified the sector as a breeding ground for criminals and possible political instability. Although not purely related to informal working practices, there was also the idea, propounded in Latin America, that there was a self-reinforcing ‘culture of poverty’, with negative implications. including placing the blame for urban poverty squarely on the poor themselves.

However, these viewpoints shifted by the 1970s. The informal sector had continued to grow apace, and the development ‘industry’ was increasingly concerned about urban poverty and unemployment. Revisionist, some would say neo-populist, analyses of the sector were gaining the upper hand, typified by a series of International Labour Office (ILO) reports on countries like Kenya (ILO, 1972). The sector was now seen as a solution to poverty and unemployment. Many of the characteristics previously deemed negative were now redefined as positive. Concomitantly, the new policy approach was to encourage the sector.

Thus the sector's low productivity was, at the same time, one of the reasons for its creating so much employment. The potential for ‘involution’, whereby many people produced and traded items that could be ‘efficiently’ produced and distributed by far fewer in the formal sector, became a positive feature (Armstrong & McGee, 1968). The products were sometimes cheaper than formal sector ones, because labour was cheap or because the products were of a lower quality or used recycled materials, and even if they were more expensive the fact that there was a market for them meant that the producers and sellers were fulfilling a need – classic examples being the subdivision of luxury items into units that poor people could sometimes afford (half a loaf, one cigarette) – or were bringing goods (such as groceries from wholesale formal outlets) to locations where the formal sector could not or would not reach, probably because profits would be too low or formal outlets were not facilitated by the state in these locations.

Low technology, formerly criticised, now became seen as an advantage, as it usually meant more jobs for each thing produced, such as school uniforms produced by local tailors with treadle machines rather than mass produced. Low investment could also be turned on its head: this meant a high labour/capital ratio and more jobs for each dollar invested. It was pointed out by the ILO that the informal sector usually used indigenous resources – meaning domestic capital – and that this was also positive given that there was so often a shortage of foreign exchange and investment.

Other negative conceptualisations of the urban informal sector were also reconsidered. All typologies of the sector agree that the majority of workers in the sector are self-employed or family labour. With the ILO reports and the new emphasis on positive features of the sector, such workers were now more likely to be typified as hardworking, entrepreneurial and even politically quite conservative.

Inevitably these new approaches elicited their own critiques. Evidently the revision took little note of class issues or modes of production. A much used volume of the time was a collection by Bromley and Gerry (1979), which preferred to view the informal sector as petty commodity producers. There was concern that the new views were too convenient. They could be used by the state and policy-makers to enable the government to evade its responsibilities to the urban poor, such as striving to create more formal sector jobs. The views were noted still to be essentially dualist, ignoring the many connections between the formal and informal sectors such as work being subcontracted to the sector to cheapen costs or formal sector waste products being recycled. The fact that wage costs were reduced by many of the low-cost products supplied by the sector, from food to clothes to housing, was seen as a form of hidden subsidy from of the rich by the poor.

The 1970s thus saw a major shift in how the sector was characterised and analysed, which led to more favourable policy recommendations. However, the next decade ushered in the current era of neoliberalism and the dominance of the market, rather than government policies and action, in determining the allocation of resources and subsequent employment patterns in most countries in the world. In sub-Saharan African countries, rounds of structural adjustment policies (SAPs) dramatically altered their economies and economic policies. These included currency devaluation; price, wage and trade liberalisation; reductions in government spending; and a shift from the policies of ‘modernisation’ to a focus on export-oriented production determined by the theoretical concept of comparative advantage. Although the urban formal labour force was very much a target, being seen as an over-favoured ‘labour aristocracy’ (for critiques, see Amis, 1989; Jamal & Weeks, 1994), the fate and trajectory of the sector were not central policy issues. From a theoretical viewpoint, at least, prices here were often competitive and the sector was entrepreneurial – characteristics favoured by the neoliberal project.

Yet by the turn of the century there appeared to be increasing evidence from a number of countries that urban informality – both in employment and low-income housing – was again being regarded negatively. The negative terminology of the earlier period seemed to be becoming common again, not that it had ever disappeared. Was the informal sector once again being perceived primarily as dirty, dangerous, criminal, unproductive: in other words, ‘unmodern’?

3. THE DYNAMICS OF THE URBAN INFORMAL SECTOR IN SUB-SAHARAN AFRICA

The growth of the informal sector in African towns and cities has been well documented (see, for example, Meagher, 1995; Rogerson, 1997; ILO, 2002; Hansen & Vaa, 2004; Bryceson, 2006). Briefly, in the 1960s there was often strong growth in urban-based employment backed by government investment in the productive and service sectors but also very rapid urban population growth, the main component of which was rural–urban migration. By the 1970s there was a significant gap between formal sector job opportunities and the urban labour force seeking jobs, and the sector had grown considerably. However, as Table 1 shows, the sector was already strongly apparent in many countries in the 1960s, particularly among women and in West Africa (where independent female involvement in trade, particularly of food, is very significant, has a long history and is embedded in most cultures).

Table 1  Employment and self-employment^a in selected African cities in the 1960s and 1970s

	Employees (hundreds)	Self-employed (hundreds)	Self-employed (%)
			Total	Male	Female
Freetown 1963	256	130	34	22	69
Accra 1960	787	646	45	26	84
Kumasi 1960	323	488	60	43	91
Douala 1976	686	279	26	20	61
Yaounde 1976	555	159	22	20	34
Brazzaville 1974	334	205	37	27	73
Dar es Salaam 1967	792	159	17	16	23
Blantyre 1977	590	124	17	13	40
Lusaka (Africans) 1969	367	35	10	10	14
^aThese two categories are approximate surrogates for ‘formal’ and ‘informal’ employment.
Source: O'Connor (1983, Table 11). Data are derived from census reports.

The economic decline accompanying the oil crises of the 1970s saw further informal sector growth, but the era of SAPs from the 1980s brought a massive surge. The impacts of economic globalisation have been very diverse across LDCs. Unfortunately, in sub-Saharan Africa, and its urban areas in particular, they have on balance been extremely negative (Bryceson & Potts, 2006). The effects on economic activities and employment varied from country to country, as did precise timing, but the combination of sharply reduced government expenditure and opening up to global competition led to significant retrenchments in both public and private sectors. Some countries de-industrialised with startling speed: the manufacturing industry in Zimbabwe had accounted for 25–27 per cent of Gross Domestic Product in the 1980s (Hawkins, 2001) but, after SAPs began in 1991, was reduced to 17 per cent by 1998 (Stoneman, 2004). The thousands who lost their jobs mainly had to find work in the sector, or to leave town for rural areas or another country (frequently South Africa). Before SAPs, the formal sector was not keeping pace with the demand for urban jobs but it was usually still growing in absolute terms. Now it often shrank in absolute terms as well as relative terms (for Zambia, see Potts, 2005), and as it shrank the informal sector expanded to replace the lost jobs and fill the need for new ones. It had to – for, generally speaking, open unemployment in African towns is a luxury in which few can indulge, as there is no welfare net or social grants and few realistic pensions (Potts, 2000).

The initial falls in formal sector employment in African countries eventually steadied but the growth rate has generally been very slow since then, and thus urban population increase has been accompanied by further substantial growth in informal employment (for further examples, see Potts, 2007b). General observation and many case studies indicate that most workers in African towns today are informal, that it is the dominant form of employment and that the trend is increasing. The downward drift of indices of real minimum, formal, wages may have ended (for Tanzania, see Jamal, 2001), but as the minority now work in the formal sector, such measures have become almost useless as an index of urban living standards.

Fairly obviously, any conceptualisation of informal and formal sectors in terms of duality and some notion of gradual absorption of the former by the latter, with no dynamic interconnection between the two, have to be discarded when considering the evidence presented above. Unilinear development models are meaningless in the face of the informal cities of contemporary Africa. One should reiterate that this does not mean that some African cities will not once again be dominated by formal jobs – the logic of accepting multi-path development is that change can happen in any direction. And the structural interdependence and links between the two sectors cannot be denied – the forces that further unravelled the vitality and employment-creating potential of the public and private formal sector simultaneously and inevitably forced the explosion of the informal sector. Urban people must work – if the formal sector cannot provide, self-employment is the answer; and if city laws and government policy and development agencies deem this ‘informal’ and ‘illegal’, so be it. The sectors are clearly not separate – throughout Africa today, hundreds of thousands, perhaps millions, of people who used to have formal sector jobs are now self-employed informal workers, and many others who still have a formal job are also moonlighting in the sector. Only in exceptional circumstances can the state do much about this by acting against, or directing policy at, the sector. The independent variable in the equation is much more the formal sector – state policy for stimulating employment there is likely to lead to some shrinkage in the sector. And as both sectors are also dependent on global forces, the state's influence is further limited. Nonetheless, African states can and do have powerful effects on the sector, as is discussed next.

4. AFRICAN STATES AND THE URBAN INFORMAL SECTOR

To some extent, the attitudes of African states towards their urban informal sectors and their policies for them have reflected the shifts in theoretical conceptualisations outlined in the sections above. In the early post-independence era, when global and African economies were generally performing well and formal sector employment was expanding, albeit not fast enough to keep pace with the numbers wanting formal jobs, the informal sector was generally seen as an inconvenient reality that would, no doubt, disappear as modernisation spread through the economy. Policies tended to be discouraging, and street traders and small-scale artisans were often harassed by the police. In addition, planning was highly fashionable – from national development plans to regional planning to city zoning. But whatever the perception of the role of the sector at any particular time, urban planners have rarely been in favour of it because, almost by definition, it is unplanned and flouts regulations. The sector's ‘image’ was also problematic. Newly independent governments often wanted their cities, the capital cities in particular, to appear ‘modern’ and ‘planned’. Downtown traders in particular undermined that image and were thus discouraged.

The 1960s and 1970s were decades of far greater control by governments over all facets of economic activity in Africa. This included the prices and marketing of many products, including (and often especially) staple foods. These conditions imposed constraints on informal production and distribution, although they certainly did not prevent informal sector activities expanding very significantly. The 1970s also saw, as discussed above, a major shift driven by the ILO towards a more positive view of the sector's potential economic role. This was not just about addressing the shortfall in formal employment, although the employment-creating aspects of the sector were stressed. Additionally, ILO advice to governments was that many entrepreneurial activities within the sector could expand and become more productive and contribute more strongly to the economy if only certain restrictive laws and practices were abolished or relaxed. Furthermore, proactive government investment in informal businesses (supplying them with legal sites, training and credit facilities) was recommended. This was the beginning of the small, medium and micro-enterprise policies that are still around today, although the terminology was different then.

Such policy recommendations helped to provide a less repressive regime for informal sector work. Many African governments embarked on projects to promote specific elements of the sector, including, for example, the development of small business sites for informal entrepreneurs. However, these were often in peripheral locations that imposed costs and disadvantages that could quickly render marginally profitable businesses unviable. Once ensconced in a planned site and registered, the businesses were probably no longer ‘informal sector’. This was, of course, part of the objective.

That the sector could provide a profitable livelihood for thousands was shown clearly by Nelson's (1997) work in Mathare Valley in Nairobi, starting in the 1970s. In particular, buzaa (maize beer; Swahili) brewing could provide a reasonable livelihood and although it was illegal enforcement levels and fines were low, and bearable. In African cities at this time, as in Mathare, a complicated mix of illegality, low-level harassment by the state, and yet simultaneously a degree of tolerance (albeit backed by bribes), was typical of the relationship between the state and the sector. The era of SAPs and neoliberalism had conflicting effects on the sector. On the one hand, rolling back the state did allow a good deal of new trading and productive activities in a far less regulated set of markets. On the other, SAPs also stimulated the sector in the negative sense of forcing the retrenched and new job seekers into self-employment in order to survive, so the expansion was driven more by necessity than new opportunity in most cases.

The forces of trade liberalisation and related government policies can, however, also have very negative influences on the sector, and the evidence is increasing that this has become the dominant experience. In Mathare Valley, buzaa brewing livelihoods were destroyed in the 1980s by competition from the South African mass-produced Chibuku beer that came into Kenya in 1982. Much stricter enforcement of existing legislation, backed by the President, was enough to destroy the local brewers' activities. In Zambia, the neoliberal era saw massive informal sector growth but, as in Kenya, escalating antagonism towards it has undermined the livelihoods of many. The chronology of this developing antagonism involved two phases, with distinctions between the response of local and national arms of the ‘state’ as they have not always operated in tandem. As Hansen (2004) describes, Kenneth Kaunda's ‘Second Republic’ response to the sector was typical of much of Africa – a low-level, long-standing harassment that, however, lacked rigour or true commitment. In 1991 Kaunda was replaced by Chiluba and the ‘Third Republic’. Two years later the Lusaka City Council undertook a major sweep of street vendors, yet Chiluba weighed in on the vendors' side, leading to an upsurge of downtown street vending (swiftly nicknamed the ‘Office of the President’). Yet the President's championing of the sector fell away by the end of the 1990s. In 1997 concerted efforts were made to shift informal sector traders into a new set of covered market stalls, in Lusaka's long-established Old Soweto Market. The vendors found the fees unaffordable and the locational disadvantages impossible (Hansen, 2004; Porter et al., 2004) and many resisted. However, in 1999 the Lusaka City Council, now with central government support, embarked on a rigorous and thorough clearance of street traders. This stance has been maintained over the longer term and spread to the Copperbelt and other towns. The commitment and resources involved in this new policy were quite different from the on–off harassment of the past and many vendors did then move to official markets. Another major sweep took place in 2002. Hansen's (2004:70) analysis of this shift in the state's policy towards the sector emphasises that ‘above all … issues linked with economic liberalisation efforts, with introducing “free market practices”, were at the heart of the exercise to remove vendors from public space’. The profitability and viability of foreign investment in new modern shopping malls, and the development of new ‘legal’ markets funded by, for example, Chinese capital and the European Union, were undermined by the previous scale and nature of the sector.

Here it should be clear – referring again to the dualist conceptualisation of the informal sector – that these examples present strong challenges to any notion that the formal and informal are separate. They also put paid to the idea that benign forces from the formal sector and ‘trickle-down’ will help the sector to transform into modernity and improved livelihoods. The examples fall squarely into an analytical framework that regards the sectors as interdependent, with the informal sector subordinate and conditioned by changing priorities in the formal sector, and with both sectors affected by broader global forces. In Zambia the local, and then also the central, state's favouring of formal trading activities led to restrictions on the sector. The outcomes have been increased poverty for many in the sector who are faced with insufficient legal market spaces and cost and location constraints that further reduce or negate their profitability.

Malawi and Zimbabwe have also experienced recent state intervention in the urban informal sector that has strongly disadvantaged the livelihoods of the poor. In April 2006, the Malawian government imposed a ‘clean-up’ campaign in its towns, moving vendors off the street into formal markets, which led to problems similar to those discussed above for Zambia. As in Zambia, the first multi-party President, Bakili Muluzi, supported the sector but the subsequent President from 2004, Bingu wa Mutharika, supported the removals.

The last example considered here is the notorious Operation Murambatsvina, ‘Clear out the trash/Restore order’, in Zimbabwe in mid-2005. The scale and breadth of this operation against informality in all its forms, and the impact on poor urban people, surpassed all other campaigns, with an estimated 2.4 million people affected – about 20 per cent of the national population (Tibaijuka, 2005). In Zimbabwe, however, the primary target was informal housing, and not just informal street traders. At least 92 460 dwellings were demolished, and 570 000 people lost their homes. In addition, there was a concerted effort to make displaced urban dwellers move to rural areas (for further analysis of these issues see Potts, 2006, 2007a). There were clear similarities between the language and sentiments expressed by the city authorities during this operation and some of the rhetoric that accompanied the campaigns in Zambia and Malawi. There was an emphasis on the informal sector's ‘illegality’, its ‘untidiness’ and its impact on the city image. The brutality, thoroughness, and long-term impacts of this Operation, and the peculiarities of the political context and economic crisis in Zimbabwe, must be acknowledged, for facile comparisons may be dangerous. However, there is another parallel with the central government's switching position over the sector. In the 1990s some flexibility had crept in among some in the central government, and certain informal sector practices, including some street vending and the operation of informal sector activities from formal low-income housing stands, were increasingly tolerated, often against the wishes of the municipal authorities, particularly in Bulawayo. A threat to backyard shacks and informal shops (tuck shops) in 2001 by the government-appointed Commission running Harare was blocked by the ruling party (Potts, 2007a). Yet, as in the other examples, the central government then changed its tune.

There have thus been really significant shifts in African state attitudes towards and policies for the informal sector since independence. After initial disdain, attitudes improved when donors became more encouraging about the sector's potential. The introduction of free market ideology also brought about some lifting of constraints on informal workers and trading. Unfortunately, the same ideology generally had such a negative impact on formal employment that the positive potential identified in the 1970s was largely swamped as millions were forced into informal sector activities, causing such intense competition that profit margins were frequently squeezed to survival levels. Now far too many informal sector jobs are typified as coping strategies (for example, Rakodi, 1995), rather than as routes to some accumulation and improved life chances.

Further, after a brief period of some government sympathy for the urban poor and recognition of the underlying causes of their moves into the informal sector, a more negative trend in state policy may now be emerging. The evidence and analysis above suggests that one cause is the influence of neoliberalism and an alliance between ruling parties and foreign capital that is encouraging governments to undermine elements of the sector deemed to be in competition with or adversely affecting the ‘image’ of the city and the elites' enjoyment of specific spaces within it. Another factor is probably electoral politics. Governments were seemingly more interested in their poor urban constituents (who form the majority in towns) in the 1990s, and less so or not at all by the 2000s. The first multi-party elections often delivered a strong vote to the winning (but until then, opposition) party, including the vote from the towns. Yet there is often a strong anti-ruling-party sentiment evident in the towns in the election geography of Africa now, which may help to explain further the state's cynicism and antagonism towards the sector in the towns today.

5. THE INFORMAL SECTOR IN SOUTH AFRICA: DUALISM REVISITED?

The paper now turns to South Africa's recent experience of informal sector dynamics and policy perspectives, drawing on the preceding analysis for a comparative viewpoint. South Africa's urban informal sector has a different history from much of sub-Saharan Africa's, as already discussed. Also, although South Africa has adopted a policy path that is broadly neoliberal in character, it has a larger and more mature economy than other African countries and has not been forced to adopt all the tenets of the Washington consensus – it retains and has made use of some room for manoeuvre. Its population is also mainly urban, rather than rural. It has sufficient resources and government commitment to have some element of social grants that provide a limited safety net for the very poorest and the aged. These are significant differences for an analysis of the role of the sector in livelihoods and related government policies.

As noted in the introduction, recent policy statements on ‘the second economy’ in South Africa have caused concern, as they contain within them apparently dualist conceptualisations, potentially carrying the seeds of misunderstandings and misdirected policies. The Presidential letter of 2003, which drew attention to the government's current understandings of the sector and policies for dealing with it, included phrases such as the ‘two nations’ divide; ‘problems posed by the “third world economy” that exists side by side with the modern “first world economy”’; that the two economies are ‘set apart’ and ‘structurally disconnected’, and that ‘interventions … with regard to [the first world economy] … do not necessarily impact on … the “third world economy”’; that it is necessary to ‘devise and implement a strategy to intervene in the “third world economy” and not assume that the interventions that we make with regard to the “first world economy” are necessarily relevant to the former’; and that millions suffer ‘entrapment in a marginalised and underdeveloped “third world economy”’ (Mbeki, 2003). It would be difficult to come up with a greater litany of dualist concepts. The idea that there is a structural disconnection between South Africa's informal sector and formal sectors is cause for concern. In 2006, a media briefing by Vice-President Mlambo-Ngcuka (2006) talked about ‘eliminating the second economy’ – fearsome words given the examples above of African governments' campaigns against their informal sectors and the many livelihoods thus destroyed. However, further examination of the statement yields a more benign set of policy suggestions, some of which might well assist some informal sector entrepreneurs. The terminology contains none of the highly negative rhetoric evident in the latest phase of attacks on the sector further north in Africa, nor any hint of sweeping traders from the streets. In relation to the phases in global policy views on the sector outlined in this paper, many of the South African policies remind one of classic ILO recommendations of the 1970s when attitudes towards the sector were probably at their most benign and often really positive – such as offering training to small, medium and micro-enterprises and appropriate credit.

On the other hand, the media briefing did appear mainly to view the ‘second economy’ as separate and the focus is on interventions within it, with very little said about the inter-relationships with the ‘first economy’. One sentence stands out: that the government needs to ‘ensure that the environment and opportunities for more labour-absorbing economic activities is considerably improved’. This is positive. However, it is unclear whether these are assumed to be formal or informal, or both, or whether it recognises the global, structural forces that constrain South African performance in this respect. There are limitations to the new policies in broader terms that are not within the remit of this paper to address, although they will affect the capacity to generate the employment that is recognised as necessary – and this is of significance for the informal sector. A trenchant set of criticisms is to be found in Frye (2006). The trends in the sector elsewhere in Africa show that, on a broad scale, there is an inverse relationship between the expansion of formal sector employment and informal sector employment. Yet it is not a simple relationship and, as shown, neoliberal forces favouring the private, formal sector can have devastating consequences for informal sector livelihoods.

Informal sector perspectives from countries north of the Limpopo prompt some further comparative comments on contemporary South African experience and debates. One distinction is that South Africa has the advantage of better national employment data. According to these, excluding agriculture, informal sector employment increased from 0.97 million to 1.83 million between 1997 and 2004, expanding strongly up to around 2000 and then levelling off, although there was an odd one-off surge recorded in 2001 due to a methodological change in enumeration; and formal employment increased from 6.4 million to 7.8 million (Devey et al., 2006). Thus, while there has been formal job growth since 1994, despite some assertions to the contrary, it was ‘grossly insufficient to generate employment for all work-seekers in the economy’ (Bhorat, 2006:299). This is precisely the situation that caused the expansion of the sector in other African countries, so South Africa has proved to be no different there. Unskilled formal jobs, in particular, performed badly. Employment trends further show that official unemployment rose from 2.5 million to 4.6 million from 1997 to 2004 (Devey et al., 2006). Yet Bhorat (2006) argues that a broader definition of unemployment, including so-called ‘discouraged job seekers’, yields 7.3 million for 2002. This definitional debate on unemployment, plus the methodologically induced surge in informal sector workers mentioned, suggests that, while South African data are better than those of many other African countries, they still require cautious use.

The unemployment debate also suggests a difference between South Africa and much of the rest of Africa, where being ‘discouraged’ from seeking work might well mean your family starves. Thus, most adults with dependants do work, no matter how low the resultant income. Real unemployment in most African urban areas is therefore probably far lower than in South Africa, and labour participation rates higher, driven largely by need as absolute poverty is also higher.

The problematic of defining ‘work’ and ‘jobs’ also drives contestations over the constitution of the informal sector (Potts, 2000). The multivariate nature of the classical ILO definition has always lent itself to academic critique, and current definitional debates in South Africa indicate some noteworthy conceptual differences between this country and the rest of sub-Saharan Africa. An International Conference for Labour Statistics' definition of the sector rests on whether activities are registered, possibly combined with small size of workforce; the ILO (2002) definition also emphasises very strongly the ‘legality issue’; and, similarly, Castells and Portes (1989, cited in Devey et al., 2006) believe the sector is best treated as a ‘common sense’ notion, where small scale combines with eluding ‘certain government requirements’. In general, such conceptualisations work well for much of urban sub-Saharan Africa. However, Devey et al. (2006) argue that South Africa might be better served by a definition focusing on the characteristics of the worker (rather than the work or enterprise), such as access to benefits and being unionised. This would hardly be relevant elsewhere in Africa, as issues such as pensions and health benefits are not the key characteristics currently separating the formal from the informal in most African towns. Indeed, swathes of formal employment in Europe and North America do not have these conditions, and the debate in South Africa is thus probably seguing into a rather different set of issues about contemporary capitalism (and thereby the ‘second economy’ as understood in the South African literature) that are vital but detract from a focus on the reality of the informal sector per se. In Africa, even regular pay is far from guaranteed in the formal sector, particularly in the public sector, let alone any meaningful benefits. Pensions, if offered, are frequently hard to obtain and insufficient to allow real retirement (for Zambia, see Ferguson, 1999).

For sub-Saharan Africa, then, the nature of the enterprise remains central to meaningful analyses of the informal sector, and South Africa may have something to learn from this comparative perspective as it helps to remember what makes the sector so vulnerable to negative state action. All the examples in this paper about such interference in informal sector livelihoods, with all the resultant distress and deepening poverty, rest on illegality (although this should not be confused with ‘criminality’ if a logical path of analysis about the current state of the sector is to be followed). The issue of non-registration, of not complying with regulations, has been at the heart of the attacks on the sector, and separates it from the ‘safe’ formal sector, making it extremely vulnerable to state action. Zimbabwe did not knock down formal dwellings in the townships; they remained, forlorn, in the midst of the rubble of their surrounding backyard shacks. Zambia has not stopped traders operating from the legal stalls and spaces of Soweto market in Lusaka (the city would starve if they did), but has swept away illegal street traders when it suits.

Another definitional difference that emerges from the debates in Devey et al. (2006) is the treatment of domestics, gardeners and security guards. In many African cities these are important elements of the formal sector, albeit distressingly low paid. They are enumerated in employment statistics, are often covered by minimum pay agreements, are not regarded as illegal and are not swept up in anti-informal-sector campaigns. Yet Devey et al. assign nearly all of them, in South Africa, to the informal sector. Finally, these authors also argue that, ‘Increasingly, informal activities are the result of formal firms “informalising”’(Devey et al., 2006:310), referring to the negative aspects of subcontracting and outsourcing – practices ubiquitous across the globe, including the developed world. However, caution needs to be exercised before assuming that such tactics for cheapening labour are necessarily ‘informalising’, rather than, say, ‘casualising’, especially if the jobs are still registered. It is also worth noting, first, that pro-informal-sector policy relating to assisting small, medium and micro-enterprises often regards subcontracting links with the formal sector as positive, in terms of spreading opportunity, and the idea has been around since the 1970s, and second that the perspective from other parts of sub-Saharan Africa is again rather different, with much attention being given to the formalisation of the informal, and its attendant pros and cons (for example, Tripp, 1997).

6. CONCLUSION

This paper has reviewed the roots of conceptualisations of dualism and the attendant problems that arise from such frameworks, especially if they are used by policy-makers. It has also provided some insights into the changing attitudes of African states beyond South Africa and their policies towards the urban informal sector. There are some worrying trends in this respect. Recent policy pronouncements on South Africa's informal sector that use strongly dualistic terms have also been reviewed. While the terminology undoubtedly obscures the underlying structural forces that affect both the informal and the formal sector in South Africa and their interconnections, and is thus problematic for effective policy to address the crisis of decent employment opportunities, as yet there is little evidence that the current government discourse is comparable with those that have led to draconian action against informal sector livelihoods in countries such as Zimbabwe, Malawi and Zambia. Finally, a comparative perspective has been offered on some variations in measurement practices and debates about the scale of employment, unemployment and the informal sector.

The ILO, reporting on the informal sector in Kenya over 30 years ago, said ‘we identify the main problem as one of employment rather than unemployment’. It said ‘the analysis of inequality is fundamental to the explanations of employment problems’ and stated that ‘Rapid [economic] growth is needed … but economic growth on a pattern which can be sustained in the future, and which generates wider and more productive employment opportunities in the process’ (ILO, 1972:8–9). There are lessons to be learnt here for current South African policy.

Notes

¹The importance of culture and social factors for understanding livelihoods and the issue of the nature of incorporation into the dominant economy is strongly exemplified in this special issue by McAllister's paper on rural South Africa.

²Transformations can, of course, have both positive and negative effects.

³Informality also exists in rural areas, but this paper refers only to urban areas.