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Managing Informality: Local government practices and approaches towards the informal economy – Learning examples from five African countries

Susanne David
Oliver Ulrich
Serge Zelezeck
Nachi Majoe
Institutional Sponsor: 
Local Economic Development Network of Africa (LEDNA)
Publication date: 
Thursday, December 13, 2012

imageThe publication, developed in partnership with the SA LED Network, is a continuation of LEDNA's effort in high-profiling the informal economy as an important component of local economies deserving more consideration than is currently the case.  The publication is the result of over two-year efforts in identifying and documenting innovative practices and approaches of African local governments towards the informal economy. The publication is part of a series of LEDNA publications focusing on the informal economy and whose objective is to provide local governments and practitioners with an effective toolkit as well as examples on how to include the informal economy into local economic development processes. 

The publication presents six case studies from across different African countries – including Kenya, Mali, Rwanda, South Africa and Tanzania – featuring local governments’ utilisation of varied approaches to better manage the informal economy or sector thereof in their localities. The cases cover a wide range of topics and innovative approaches: 

  • The Kenyan case examines the Muthurwa market in Nairobi, a USD 9 million project anticipated to be the largest market in East and Central Africa at the time of its construction. The case assesses the potentials and challenges of what appears to be a quick-fix approach of constructing markets as a solution for the hawkers ‘problem’.
  • In West Africa where a long established tradition of markets exists, the Mali case presents the experiment of one of the municipalities of Bamako in delegating the management of markets to the informal traders themselves. The positive outcomes of this approach include increased tax collection and better maintenance and upgrading of market infrastructure spearheaded by the informal traders themselves.
  • The Rwandan case zooms into a telling example of what appears as the Rwandese preferred approach of dealing with informality; namely transforming informal traders into cooperatives. The case features Gasabo, one of the three of Kigali City’s administrative districts, and presents how the Gasabo local government succeeded in organising a large group of informal traders into a cooperative able to raise several million dollars from establishment financial institutions for investment in a 500 shop commercial complex.
  • Two cases are presented from South Africa. The first case documents and reflects back on SALGA’s journey in developing model guidelines for assisting local governments in developing municipal by-laws that are more accommodative to the informal economy. The second case focuses on eThekwini (the broader Durban metropolitan area) which has been at the vanguard of establishing a friendly policy environment for the informal economy and whose pro-informal economy interventions have been emulated by other local governments in the country and serves as catalyst for a broader national reflection on local government and informality in South Africa.
  • The Tanzanian case focuses on Arusha, a semi-arid municipality that has been able to constructively harness the potentials of informal economy activities to support its conservation and reforestation effort, creating thousand of new and secured jobs in the process.