• September 29th, 2020

Informal economy’s contribution cannot be underestimated

Inge Neunda

The Forum for Expert on Social Protection recently held a webinar on the ‘Impact of Covid-19 on the Informal Economy in Namibia’. The webinar was aimed to cross-examine how the informal economy survived the complete lockdown of operations and the easing and restrictions of trading hours as a result of Covid-19. The aim was also to engage the informal economy operators and workers to share their experiences and possible long-term effects of Covid-19 and to discuss possible social protection and employment responses during the crisis and business continuousness. 

The results of the 2018 Namibian Labour Force Survey shows that more than half (57%) of the 725 742 employed people in the country are in the informal sector.
If one was to proffer an estimation, it could very well be posed that with progressively increasing growth and activity, the informal sector’s contributions to the 2019/20 GDP would potentially exceed 70% to 80%.

The coronavirus outbreak is the defining global health crisis in recent times, the greatest challenge the globe has faced since World War II. Nations are battling to slow the spread of the virus by testing and treating patients, carrying out contact tracing, restrictive travel, quarantining citizens, and cancelling large gatherings such as sporting events, concerts, and schools.
Covid-19 is a worldwide challenge and its outbreak has wedged on many aspects of livelihoods and social protection systems amongst others. By stressing every one of the countries it touched, it has created devastating social, economic and political crises that will leave deep mutilations. 

According to Veripi Kandenge, the secretary general of Namibia Informal Sector Organisation (NISO): “Although radical action was required to contain the potential damage of Covid-19, acknowledgement of the key role of the informal economy sector’s contribution to the national economy must never be ignored and implementation and enforcement of regulations and bylaws must be done in a spirit of partnership, and not by compromising any lives.”

Kandenge added that Covid-19 has exposed and exacerbated economic and social divides worldwide that are magnifying the spread of the virus. Unyielding measures were employed to curb the spread of the novel Covid-19. One of the most notable measures was the lockdown, compelling the closure of non-essential businesses and services. As much as the lockdown intended to flatten the infection curve, it has brought economic activities almost to a cessation. Hence, the informal economy has suffered a heavy blow as the result of Covid-19 and many informal economy operators and workers have lost their proceeds as they could not trade during the lockdown period and it became difficult for traders to survive as many depended on money earned on a daily basis. At this stage, it is not yet known what will be the exact effects of this unprecedented and multidimensional pandemic in the long run.

The latest International Labour Organisation data on the labour market impact of the Covid-19 pandemic reveals the devastating effect on workers in the informal economy and on hundreds of millions of enterprises worldwide.
As a result of the economic crisis created by the pandemic, almost 1.6 billion informal economy workers (representing the most vulnerable in the labour market), out of a worldwide total of two billion and a global workforce of 3.3 billion, have suffered massive damage to their capacity to earn a living. This is due to lockdown measures and/or because they work in the hardest-hit sectors.
Dr Michael Akuupa, an executive director at the Labour Resource and Research Institute also stated in his presentation that: “One can only speculate the impact of Covid-19 on the informal economy based on observation of what is happening. It will be difficult to quantify the impact in terms of costs. However, it is not clear how stimulus programmes will be rolled out to benefit business owners that operate in the informal economy.”

He added that it is considered that Covid-19 has worsened and existing inequalities, poor living conditions are the comorbidities that may later accelerate the spread among the populations. Meanwhile, in an effort to mitigate the economic and consequently social impacts, government implemented various monetary and fiscal stimulus packages to ease the burden on low-income earners and the informal economy.  
 The significance of the informal economy in Namibia cannot be ignored as it provides livelihoods and incomes for large population of the country, most of them who are self-employed of which more than half are women. The informal economy is the means of survival for many fellow Namibians. 
*Inge Neunda is the Project Manager: Social Protection/Social Policies and Youth Development at the Friedrich Ebert Stiftung


Staff Reporter
2020-06-30 10:56:05 | 2 months ago

Be the first to post a comment...