IMG_0966David_1

The South African GDP shrank by 0.7% on quarter in the three months to June of 2022, as devastating floods in KwaZulu-Natal and intense power rationing had a negative impact on a number of industries. (Statistics South Africa)

 

My Comrades, the failure of both Government and the formal sector to achieve meaningful economic growth is resulting in the continuous rise of unemployment.  This inability to  create sustainable jobs, is having a devastating effect on our youth in particular, and also contributes to an ever increasing informal economy.  Many vulnerable workers are forced to resort to alternate, and many times precarious, means of work to provide a living income for them and their families.  The latest figures having risen from 4.5 million people in informal employment in 2020, to an estimated 7 million people in 2022.

 

This sharp rise is as a result of our ever increasing unemployment figures. Medium and large scale businesses are resorting to implementing ever improving technology and data systems, as a key strategy to increasing productivity and profits. There is not enough focus placed on increasing their permanent labor force as an alternate strategy.  The fourth industrial revolution, which we have been discussing as an event in the future, is here, actively prevalent in our day to day lives.

 

The informal sector is facing extreme challenges of over trading.  Informal businesses are forced to drop selling prices, due to the sudden increase in competition in the same trading areas as a result of the high unemployment rate.   All of these informal businesses competing for a declining pool of clientele, whose disposable income is reducing daily due to increased inflation.

 

Formal businesses, in turn, are negatively affected through this as customers opt to purchase “cheaper” products and services, resulting in job losses in the formal sector. 

We are finding ourselves in a vicious cycle.

 

The good news is, there is Hope.  The solution lies within the Transition from the Informal to the Formal economy.

 

Various processes of transitioning the informal to the formal have been attempted by our Government and other organisations since the induction of Recommendation 204 by the International Labor organization in Geneva in 2015.  Unfortunately these attempts have all hopelessly failed.  I must add though, this is by no means without a lack of trying; and from all the programs and funding having been made available to stimulate this transition from informality to formality, I must applaud our Government and others, for their efforts.  The failure within their implementation strategies was the absence of a “representative” Informal Economy structure representing both informal workers and informal economic units.

 

For the first time in South African history, the largest, recognized and sector specific informal economy member based organisations have unified as one representative Informal Economy structure, the Informal Economy Development Forum (IEDF), which represents both informal economic units and informal workers.

 

In the month of September 2022, the collective efforts of all our leaders and partners have seen a positive shift in the inclusion of the informal economy in the financial services sector, with a specific focus on access to finance.  The launch of the Informal Economy Enterprise and Supplier Development program by the IEDF, have seen us identifying over R2.5 Billion from both Government and Private sector partners, which we have set to fund more than 50’000 informal and micro businesses by December 2023.  Provincial assemblies between informal economy leaders, Government departments and corporates have already been hosted in the Western Cape, Gauteng, Mpumalanga and KZN since June 2022.

 

We are seeing mass mobilization and unification taking place across all 9 Provinces and in all informal sectors within retail, home based workers, green economy, early childhood development, agriculture, construction, arts and culture, mining to name but a few.

 

The introduction of the IEDF as the representative structure of the South African informal economy has resulted in a strong sense of hope for Township and Rural communities, Government departments as well as Corporates. Funding, training and skills development programs, business and employment opportunities are being made available through informal economy stakeholders in a co-ordinated manner, with a means of monitoring, measuring and affecting the greatest impact on informal workers and related economic units.

 

The dream of a representative unified structure for the informal economy in South Africa has begun in 2002, and now, exactly 20 years later, we have arrived at the dawn of the inaugural Informal Economy Presidents’ Dialogue.

 

At the event, the Presidents and National Chairpersons of all the national partner structures of the IEDF across South Africa, will congress to plan our 3 year transition strategy for the informal economy with the objective of eradicating unemployment and poverty. We aim to achieve this by creating 1 million sustainable formal jobs with a primary focus on woman, youth and people with disabilities, over this period.  We will be joined by leading Government departments and corporate executives from the formal sector.

 

The only way to successfully create sustainable formal employment in our beloved country is to create “growing” businesses, not merely businesses.  And this, can only achieved if we work together, in a co-ordinated manner as the Informal Economy (including informal economic units and informal workers), Government and Corporate.

 

The Informal Economy Presidents’ Dialogue will be the launch of the “Transition of South Africa’s Informal to the Formal Economy”. This inclusive strategy between the Informal Economy, Government and Corporate will create employment, economic stability, security and economic growth for all stakeholders.

 

 

Mr. David Venter

Chairperson of the Informal Economy Development Forum