Durban/eThekwini, South Africa Informal Economy Policy

In the 1990s, the city of Durban/eThekwini in South Africa established a department dedicated to street trader management and support and allocated resources to infrastructure development for traders.

The department began integrating street traders into city plans through an urban renewal project in the area surrounding the primary transport node in the city centre, Warwick Junction, which accommodates 6,000 - 8,000 traders. The project provided attractive and appropriately designed trader infrastructure, as well as services like child care facilities and affordable overnight accommodation. These facilities were designed and delivered in consultation with stakeholders. In terms of ongoing management, consultative forums produced an unprecedented level of self-regulation that kept the area relatively clean, attractive and crime free.

In the late 1990s the city acknowledged that, although progress had been made with street trading, there was no overall policy guiding city interventions in the informal economy. Specific problems were identified:

there was no city-wide vision of the place of the informal economy in the emerging overall economic strategy for the city

  • there was a mismatch between the generally progressive approach to informal workers on the one hand, and the organizational culture on the other
  • there were complex and uncoordinated institutions; licensing procedures discouraged registration of informal workers
  • street traders, who were the most visible category of informal workers, had a high and negative public profile
  • there was no coherent policy about planning and building new markets
  • there were no institutionalized and continuous structures for negotiation with traders (eThekwini Unicity 2002)

In November 1999, a task team was formed by the North Central Local Council and the South Central Local Council to formulate an “effective and inclusive” informal economy policy. These central councils were two of the six local councils in the DMA. After an 11 month policy formulation process in which there was substantial consultation with stakeholders both within and outside of the council, the two central councils approved and adopted the policy. The new eThekwini Municipal Council then adopted it as metropolitan-wide policy in February 2001.

The policy reflected important shifts in thinking. The primary point of departure was that the informal economy is critical to economic development. The policy points out that the informal economy creates jobs and incomes for many of Durban’s citizens (eThekwini Unicity 2001). These activities should be conceptualized as part of economic planning and development, rather than being seen as a component of a poverty alleviation or welfare project. The interdependence of the formal and informal parts of the economy is reiterated, as is the interdependence between the core of the city and the periphery.

Innovations

There are other innovations that stand to make a difference to those working in the informal economy in the city. First, the policy committed the city to providing support services to people who work for very small enterprises, thus addressing the gap in national government small business policy. It suggested the provision of basic business skills training, legal advice, health education and assistance in accessing financial services. It compelled the city to take a proactive role in achieving this – for example it is suggested that the city should subsidize training. Second, the policy suggested a sectoral or industry-by-industry approach to assisting those working in the informal economy – in much the same way as is done with global value chain analysis for strategic planning for formal industries. This would entail comprehensive analyses of different sectors with a view to the city designing and implementing coherent and focused interventions. Third, the important role of worker organizations in the informal economy was firmly acknowledged. The policy suggested that a capacity-building programme for both organizations and for local government officials would be needed if organizations were to be strengthened.

Finally, a number of recommendations related to improved management of economic activities which are likely to have a positive impact on informal workers. Area-based management, for example, offers the opportunity to resolve coordination problems and encourage the participation of interest groups in planning and management, and is key to greater self-regulation in the informal economy. This has already happened in the more successful urban renewal initiatives such as the Warwick Junction Project. Decentralized management, combined with a program that assists informal workers’ representatives to articulate their needs, is likely to create a better work environment.

If Durban’s Informal Economy Policy were fully implemented, there is little doubt that the environment for those working in the informal economy in the city would improve. The policy was unanimously accepted by the former central councils, indicating a political commitment at the time to this shift in thinking. It was, however, accepted at a time of institutional transformation as the city became a Unicity, and implementation has thus far been patchy and uneven.

For more details of the urban renewal project in Warwick Junction, see Working in Warwick.