Africa: Informal Sector in Africa Tackling Covid-19

25 January 2022

Informal traders these are the street vendors and market vendors who are most preferred by many in Africa as they sale goods at very cheap prices , thus making it possible for the less privileged to be able to wear and eat better. They are also the highest employers as many countries in Africa are sustained by the informal market and business.

In 2019, a majority of African economies which are sustained by the informal market faced a big challenge of being driven to the depths of poverty by the rise of a new pandemic which was labelled COVID-19.The disease brought with it a new dawn, a new way of living which would mean disaster for informal traders and the economic sector at large. After the coming in of the Covid 19 pandemic, African governments feared that they could not be able to fight the pandemic if it decided to carry out a full scale attack on their countries, thus they decided to prevent rather than cure. As a result, African leaders imposed strict restrictions to combat the disease, and prevent a full scale man slaughter. The restrictions included restrictions on movement, transport, total city and trade place shutdown and closure of boarders. As the African countries thought that they had prevented a manslaughter by the disease they had in turn caused an economic massacre as they had unknowingly crippled their economies and brought poverty to its level high as it is estimated that 80% of workers in the sub Saharan Africa are employed in the informal sector.

The restrictions on movement had effects in that most families in Africa are now female headed as a result of the HIV & Aids pandemic which left a number of households being headed by single parents and children, thus many of them rely on cross boarder trading were they go and by cheaper goods and come and resell them in their home countries i.e. in Zimbabwe women go and purchase goods such as blankets, kitchen ware and clothes from Zambia, Malawi and south Africa and then they resell them. Thus the closure of boarders meant that no more cross boarder trading and thus resulting in a sharp rise in poverty within the house hold and a decrease in revenue through boarders. The informal market faced a huge blow in terms of prohibition of movement as they were restricted to move they could not sale their wares as some sale whilst moving from one place to the other, the lack of movement meant that there was reduced sales and thus reduced revenue for the state as this meant that if they do not sale much the amount of electronic money that is in movement will be reduced and the state gets less tax from transactions. Some would radicle this fact by saying that during the Covid era people would send money through electronic platforms thus government would get the required revenue but this can be counter argued in that if many of the people in urban Africa depend on informal trade and thus their inability to conduct business as usual due to the Covid 19 restrictions would reduce the amount the amount of surplus available for them to send as it was challenging at the time to accumulate a decent income to cater for basic house hold needs needed for the immediate beneficiaries they are stuck at home how would they get surplus to send yet they fail to get a decent income. The government, as a result lost millions in revenue from, transactions. In a bid to survive the informal traders came up with initiatives so as to find a way to sell their products and get revenue to sustain them and their families, the strategies introduced by the informal sector included increased social media marketing and selling , consequently one would purchase a good and it would be delivered to them in the shortest time frame , but this had it disadvantages as this meant the trader had to increase their prices so as to cover the cost of transport as a result many customers began to shun the traders and go to local supermarkets as the prices were close to those of the informal trader or lesser than those of the informal traders. The informal traders to counter the movement and market ban began to sell their products in their local areas, which they did whilst in the comfort of their homes, the business was not brisk as that of in the market place but it in turn helped them get revenue to sustain their families.

Accordingly even though during these tough times the informal sector remained vigilant and able to with stand the Covid 19 storm. In light of this African governments for the future should be prepared, as they gave out loans and rescue packages this only applied to big companies rather than the informal sector which holds 80% of African economies. The question that then comes to mind is how? This can be made possible by governments through the relevant ministries which helped facilitate the swift registration of informal traders at a limited cost or at no cost so as to enable then to access proper documentation and clearance for travel during these times, thus ensuring that the informal sector was kept afloat and the government would be able to collect and account for all tax from traders. The registration will also help the small and medium enterprises to get loans much quickly so as to resuscitate their business when they encounter such challenges. In some countries the Covid 19 restrictions resulted in demonstrations which left a lot of informal traders at a loss after their goods were burnt and destroyed, thus governments should partner or have an insurance to safeguard the informal traders in times of disaster. Thus the Covid 19 era has put the informal sector to test and the sector in Africa has managed to with stand the test as proved by its continues existence and expansion over the period of Covid -19.

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