By:Lavinia Shawapala
Many rural Namibians do not have access to education or training, making it difficult for them to get formal jobs or establish formal businesses.
United Nations Resident Coordinator Hopolang Phororo said this during a multi-stakeholder workshop titled,”Setting the Stage for a Namibian Diagnostic of Informality in Namibia.”
The two-day workshop, co-hosted by the Ministry of Trade and Industrialisation , the Ministry of Labour, Industrial Relations and Employment Creation and the Bank of Namibia, was aimed at improving Namibia’s understanding of informal economy diversity and recognising that Namibia’s high level of informal employment has a significant impact on people, businesses, and the country’s economy and social development.
Despite difficult working circumstances, the informal economy contributes considerably to Namibia’s GDP, according to Phororo.
In 2016 the Namibia Statistical Agencyestimated that the informal sector accounts for around 16.2% of the country’s GDP, while a 2016 World Bank report estimated that 41% of Namibia’s urban population lives in informal settlements.
These communities, she said, are informality hotspots with limited access to essential amenities, poor infrastructure, and formal employment possibilities.
Phororo said the spatial concentration of informal settlements indicates the prevalence of informality as well as the lack of access to formal work alternatives.
“In urban areas such as Windhoek and Walvis Bay, the concentration of informal economic activities, such as informal markets and street vendors, presents opportunities for sustainable growth and financial inclusion.”
The UN representative observed that nations frequently lack relevant data, resources, and instruments to analyse their informality processes.
As a result, she said they operate in an unpredictable environment, allocating money to projects and activities based on criteria that are not completely based on a data-driven evaluation of needs.
The workshop brought together stakeholders from academia, government, civil society, and the commercial sector to collaboratively examine, analyse, and comprehend the complexities of informality in Namibia.
Speaking at the same occasion, Labour Minister Utoni Nujoma stated that informality is not a monolithic term, but rather a complicated and diverse issue that needs a holistic solution.
“We aim to lay the foundation for informed policies and practical strategies that can improve the lives and livelihoods of those engaged in the informal economy,” Nujomastated.
Namibia has been identified as a pathfinder country under the UN Global Accelerator on Jobs and Social Protection for Just Transitions, as well as a pilot country for the International Labour Organisation’s initiative to minimise disparities in the workplace.
Nujoma noted that a national roadmap for the Global Accelerator in Namibia is being developed.
Trade Minister Lucia Iipumbu emphasised the importance of segmenting suitable policy solutions based on the informal and formal economies, as well as micro, small and large businesses.
Iipumbu indicated that many policies relevant to economic incentives, foreign direct investment, formal micro, small, and medium firms, and newer initiatives have emerged around the formal enterprise development arena.
“Yet in policy pronouncements such as the MSME National Policy the intent to ensure a standalone policy for the Informal Economy is evidence of our commitment,”she stated.
According to worldwide estimates, the informal sector accounts for over 50% of global GDP, more than 60% of the labour force, and up to 90% of MSMEs.
According to Iipumbu, Namibia is no exception to global trends, with the informal economy accounting for 24% of GDP and employing around 56% of the labour force.
As a result, she believes that the informal sector is a critical lever for providing sustainable livelihoods, inventive and dynamic business, particularly for those who are disadvantaged or less educated.
“Despite the recognised benefits of the informal economy, it is also prudent to recognise the negative externalities present in its growth and development,”the Minister added.
Iipumbu said the fragility of employment in the informal market may also contribute to salary differences between the formal and informal economies, resulting in economic inequality.
The another common trait is the lack of formalisation and the narrative of tax evasion or the impression of it, she added.
“Finally, it is common to observe the exclusion of informal economy entrepreneurs from sector value chain development as they do not operate within the legal framework and therefore are not able to access procurement opportunities or be part of supplier development programsm,” she lamented.
The Bank of Namibia Governor Johannes!Gawaxab stated that tackling the issue of informality is critical to attaining long-term economic growth.
He said the advent of the Covid-19 epidemic has not only increased the incidence of informal economic activities, but has also highlighted the need to pay greater attention to this sector.
“Therefore it becomes paramount for us to comprehensively understand and support this segment of our economy and find ways to integrate and mainstream it into the formal economy,” he concluded.