Informal sector contributes 56% to labour force

Namibia’s informal sector has been recorded to be the country’s largest employer and contributes about 24% to the country’s gross domestic product (GDP).

This was revealed by the minister of industrialisation and trade, Lucia Iipumbu, during a workshop late last week to integrate the informal sector into the formal sector.

“The informal economy is a key lever for ensuring sustainable livelihoods, and innovative and dynamic entrepreneurship – especially for those who are vulnerable or less educated, such as segments of women and the youth, who may have inclusivity limitations into the formal economy,” she said.

According to Iipumbu, much of the ministry’s policy work has revolved around the formal enterprise development arena, as evidenced by numerous policies pertaining to economic incentives, foreign direct investment, formal micro, small, and medium enterprises, and newer initiatives such as special economic zones.

Iipumbu said despite the evident benefits of the informal economy it is important to recognise the negative externalities present in its growth and development.

“The informal economy may not offer decent work to the multitudes of workers found in it and thus exacerbate poverty.

Another common feature pertains to the aspect of lack of formalisation and the narrative of tax evasion or the perception thereof,” she said.

Speaking at the workshop, United Nations (UN) resident coordinator Hopolang Phororo said the main goal for the diagnostic of informality is to gain a comprehensive understanding thereof, incorporating social, economic and spatial dimensions.

This includes analysing the situation of informal workers and enterprises in their diversity, as well as introducing spatial perspectives to uncover relevant spatial patterns, hotspots, and urban-rural dynamics.

“Informality is a constitutive feature of labour markets in developing countries.

Despite the country’s commitment to job creation articulated in its macroeconomic policies, the informal economy has gradually expanded to become Namibia’s greatest employer,” said Phororo.

According to him, integrating the informal sector would give those in the sector access to formal structures such as financing from financial institutions, and would also empower Namibians to foster entrepreneurship and lay the foundation for a better economic future for the country.

Utoni Nujoma, the minister of labour, industrial relations and employment creation, said: “The informal economy plays a vital role in the livelihoods of many Namibians. It encompasses a diverse range of activities, from street vending to small-scale agriculture, and it touches the lives of countless individuals and families”.

He said the informal sector is a source of income, employment, and resilience for many, and at the same time presents challenges in terms of labour rights, social protection, and economic stability.

The workshop brought together stakeholders from academia, the government, civil society, and the private sector to collectively explore, analyse, and understand the intricacies of informality in Namibia, with the aim of laying a foundation for informed policies and practical strategies.

Email: shania@namibian.com.na