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Informal Economies  

Ernest Aryeetey

The expressions, “informal economy,” “informal sector,” and “informal employment” reflect statistical terms and definitions used to describe various aspects of informality. They are the result of several decades of work to develop a framework that adequately represents the multifaceted nature of informality as it applies not only to developing countries, but also to other transition and developed economies. The informal sector is generally viewed as the set of activities of small unregistered enterprises, while informal employment refers to employment within the formal or informal sector that lacks any form of protection, whether legal or social.1 The informal economy is a broader concept that encompasses all of these elements in their different forms, including their outputs and outcomes. The many different views about the drivers and composition of the informal economy in Africa have influenced various prescriptions and policy responses. On the one hand, some have viewed informality as being inimical to investment and growth, given that the activities undertaken usually fall outside of official regulation and control. The policy response has, therefore, often been to clamp down on or formalize the activities and relationships within the informal economy. On the other hand, informality is sometimes viewed as critical for growth and poverty reduction, given that the informal economy is inextricably linked to the formal economy while also serving as an important source of livelihood for millions of people. As a result of this, some effort has recently gone into providing a more supportive environment to enhance productivity within the informal economy and minimize its inherent vulnerabilities in the last decade. In the face of increasing globalization and access to new technologies that will drive the future of work, there is concern about the future of informal economic activities. Whether new technologies lead to a decline or upscaling of the informal economy in Africa will depend on several elements. Technology will not only shape how informality in Africa is viewed, but will influence the kind of activities undertaken, its links with the formal economy, and ultimately, the public policy response, which will itself be shaped by advances in technology.

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The Minibus-Taxi Industry in South Africa  

Timothy Gibbs and Ofentse Mokwena

South Africa’s barely regulated, murderously competitive, contemporary minibus-taxi industry dates to the turn of the 1980s. It is synonymous with the sixteen-seat (latterly twenty-two- and thirty-two-seat) minibuses, which forced their way onto bus routes and soon displaced government-subsidized public transport services. Nonetheless, the minibus-taxi industry traces its roots to the Black-owned informal transportation sector that first developed on the fringes of South Africa’s segregated cities in the early decades of the 20th century. Heroic stories of these pioneering guerrilla entrepreneurs—who successfully ran unlicensed “pirate” transport operations, while dodging the heavy hand of state regulation and White racism—remain potent memories in parts of South Africa. Academics might pay more attention to the tangled relationship between patterns of urban change, racial segregation, political economy, and public-transport provision. In one sense, South Africa’s minibus-taxi sector shares striking parallels to Kenya’s matatus and Tanzania’s daladalas. At the same time, the distinctive history of South Africa’s minibus-taxi sector is perhaps best understood when placed into the longue durée of urban segregation and transport apartheid, which shares many similarities with the more tightly planned, racially segregated cities of the Americas.