The National Assembly has adopted a report from the Standing Committee on Economics and Public Administration that urges government to expand social protection systems to safeguard informal traders. 

The report, which stemmed from a motion that was tabled in 2019 by Member of Parliament Agnes Kafula, seeks policy interventions to shield thousands of workers in Namibia’s informal economy from economic vulnerability and systemic harassment.

It suggests that government extends social protection policies to informal traders by developing and implementing policies to cover the informal economy.

It also argues that while social security benefits cover formal workers, the informal economy – which employs a significant portion of Namibia’s workforce – remains largely excluded. Presently, there are two dormant funds

under the Social Security Commission (SSC) – National Pension Fund (NPF) and National Medical Benefit Fund (NMBF) – whose operationalisation could liberate workers from the chains of poverty. 

It remains unclear why these funds are inactive, 31 years later.

The pension fund is an important buffer for Namibian workers in both the informal and formal economy, and an economic stabiliser to improve the welfare of employees. The medical aid fund will primarily benefit previously disadvantaged Namibians who don’t benefit from traditional medical aid schemes. 

However, the funds have been received with consternation and resistance by certain quarters, as they are seen as a threat to private interests. Its proponents submit that the NMBF will ultimately create a level playing field for the haves and have-nots, with the ultimate winner being the public health sector.  

Support

Supporting the recommendation, information minister Emma Theofelus highlighted diverse realities of informal traders, saying while some engage in informal trading as a long-term livelihood, others turn to it temporarily due to a lack of skills, education or employment opportunities.

“It’s very difficult to jump from being an informal trader to a formal trader. There is no regard for business accounts or registered businesses for those operating informally. We need to create a buffer zone [neutrality] to support this transition,” she stated.

Linking the issue to social protections, Theofelus said the SSC and the ministry of labour are key institutions which could help bridge the gap. “I’m wondering how social security, without necessarily creating a completely new policy, can use existing structures to provide protections for informal traders. Just like we’ve extended coverage to domestic and agricultural workers, we should explore ways to include informal traders,” she added.

The minister said many informal traders, including taxi drivers and street vendors, earn daily wages, but lack safety nets for times of illness, pregnancies or family emergencies.

“The moment an informal trader doesn’t show up to work due to illness or a funeral, they lose their income for that day. But imagine if they could contribute a small amount to the SSC, just as formally-employed people do, to receive some form of support when they need it most,” she observed.

Theofelus urged policymakers to ensure that social protections are accessible to informal traders to prevent them from remaining in economic uncertainty indefinitely.

Also supporting the report was another youthful lawmaker Inna Hengari, who stressed the need for a clear framework defining the roles of unions, parliamentary committees and government institutions in protecting informal traders.  “We need to know what each institution’s role is in ensuring that informal traders have a platform to express the issues they face every day,” she stated.

Similarly, deputy works minister Veikko Nekundi raised concerns about the treatment of informal traders by law-enforcement, stating, “You find an informal trader not stealing, not doing anything illegal, yet they are at the receiving end of the security apparatus. Their goods are thrown around, and they are crying for solutions.” 

He urged authorities to ensure that engagement with traders is done respectfully while maintaining order in public spaces.

Risks

Meanwhile, defence minister Frans Kapofi voiced his support for the report, but raised concerns about hygiene and food safety. 

“You find that quite a number of them are doing their business close to the roads, selling food, and I believe our health cooperatives must look into this,” he said. 

“The number of cars that pass around these food stalls, the emissions coming from them – if we just had an instrument to measure the carbon dioxide going into that food, it would be a lot. It will indirectly affect consumers”, he stressed.

Research

The Namibia Informal Sector Case Study (2016/2017), conducted by the ministry of labour in collaboration with the SSC and the Labour Resource and Research Institute, examined the characteristics of the informal economy across eight regions. 

The study found that most informal traders are young women with junior secondary education, with 76% operating in urban areas, and 85% in non-agricultural sectors. 

Despite some having business training, many lack financial literacy and access to credit, often relying on family and friends for start-up capital.

60% of businesses operate from home, and 88.9% remain unregistered with the SSC due to a lack of awareness and accessibility.

The study highlighted the need for government support in financial literacy, credit access and social security reforms, as informal workers currently lack adequate protection, with social security benefits considered a privilege rather than a right.

Stigma

The committee likewise observed stigmatisation, with authorities often viewing informal traders as a nuisance due to their lack of registration. 

The sector commonly being referred to as “the shadow economy,” “the off-the-book economy,” and “the underground economy” is reinforcing the perception that it is unsafe and difficult to regulate, the committee noted.

“Consequently, informal traders struggle to gain recognition and support, despite their economic contributions,” it further reads.

Additionally, the belief that the government’s policy agenda is primarily focused on tax collection is leading to distrust among informal traders.

A survey, published in 2018 by the Namibia Statistics Agency (NSA), reports that the size of Namibia’s informal economy is estimated to be approximately N$8 billion, which represents 24.7% of GDP measured at purchasing power parity (PPP). According to the Namibia Labour Force Survey of 201 8, Namibia had a total number of 725 742 as employed population, of whom 418 674 people are in informal employment, which is 57.7% of total employment in the country. On average, more females were in informal employment than males. 

The agriculture, forestry and fishing industries constitute 35% of this employment.

Since 2018, the proportion of the informal sector’s contribution to employment now stands at 55.8%, meaning that there are more people employed in the informal economy than in the formal economy. – ashikololo@nepc.com.na