Informal Trading in Johannesburg

Amy Meyer | Mar 17, 2015
Informal Trading has always been a part of South Africa's economy, 30% of which occurs in Gauteng. With an unemployment rate of 25.2%, Informal Trade is, for many South Africans, the "alternative to unemployment", and should be viewed as a way to "address unemployment" and "reduce vulnerability"


Informal Trading has always been a part of South Africa’s economy, 30% of which occurs in Gauteng (1). With an unemployment rate of 25.2%, Informal Trade is, for many South Africans, the “alternative to unemployment” (2). Statistics South Africa found that there were 1 517 000 Informal Businesses in 2013 (3). With this in mind, Informal Traders should, according to the South African Local Government Association (SALGA), be viewed as an “important part of government’s strategies to address unemployment, support livelihood creation and reduce vulnerability” (4). 

Regulating Informal Traders

Local Government has the authority to create by-laws relating to Informal Trading (5) and, Municipalities are empowered to regulate street vendors, pedlars and hawkers (6). The City of Johannesburg Metropolitan Municipality’s Informal Trading By-Laws (7) currently regulates Informal Trading in Johannesburg.
Some of these regulations are explained, briefly, below:
1. Informal Trading may include any of the following forms of trading - street trading, which comprises the selling of goods or supply of services for reward in a public road; selling of goods in a designated area; sale of goods or services in a public place; mobile trading such as from caravans, and light motor vehicles; selling of goods in stalls or kiosks; and selling of goods at special events.  SALGA further defines the informal sector as operation of an informal, unregistered, small business from one’s place of living (8). This includes any road-side shops, ‘spaza’ shops, newspaper and other vendors, wind-screen washers, hawkers and any goods or services traders, operating outside of a formal, privately owned, registered space (9).
2. The Municipality may set apart any and demarcate stands or areas for the purposes of Informal Trading.  To trade on these sites requires the possession of a lease agreement with the Municipality. There is no time-line on how long this process should take and, the Municipal Council may refuse this application (10).
3. The Council may declare any place in its area of jurisdiction to be an area in which Informal Trading is restricted or prohibited (11).
4. There are general prohibitions and restrictions on Informal Trading. The prohibitions describe places where Informal Trading may not be carried on.  The restrictions prohibit a range of activities, ranging from a prohibition on sleeping overnight at the place of trading to regulation of the disposition of the trader’s property.
5. An authorised official may remove and impound any property of an Informal Trader which (a) he or she reasonably suspects is being used or which is intended to be used or has been used for or in connection with Informal Trading; and (b) is found at a place where Informal Trading is restricted or prohibited. Such an official must issue a receipt to the Informal Trader.
6. Anyone not complying with these regulations can be charged a fine of up to R 500, or with a prison sentence of no more than three months.     
Are the Rights of Informal Traders Being Infringed by these By-Laws?
According to the African Cooperative for Hawkers and Informal Business (ACHIB), many Informal Traders have been forced away from their livelihoods by the Metropolitan Authority.  Those applying for leases are not permitted to trade until they are granted, and wait months for permission to trade legally. The Council may also change prohibited areas and existing traders may be removed as a consequence.
The lists of prohibitions and restrictions on Informal Trading are long and sometimes ill-defined and difficult to comply with.  For instance, traders are not permitted to create smoke, fumes, odours, noise or pollution of any kind (12), and may not conduct their trade in a way that creates a nuisance (13). Where Informal Trade is being restricted due to its creating a ‘nuisance’, it poses questions of how we are balancing the subjective nature of creating a nuisance with job creation that attempts to alleviate the vulnerability of the poor.
Were Informal Trading pushed out of business, South Africa’s unemployment rate, already very high, would rise by approximately 20 percent (14). The Informal Economy (economy created by Informal Trade) is important to a developing country, trying to grow employment, especially where there is limited employment in and insufficient skills for the Formal Sector. Equally as important is the Informal Economy’s symbiotic relationship with the Formal Economy (15). It “is an important source of business for many companies in the Formal Sector in terms of trading and selling goods” (16), formal businesses often benefit from the foot traffic that Informal Traders bring (17) and the income earned by Informal Traders is often spent on consumption within the Formal Economy (18). This reflects the importance of the Informal Economy to the people using it as a means to survive and to members of both Formal and Informal Economies that benefit from the existence of the Informal Economy. For these reasons, the Informal Economy should not be rendered illegal.  Nor can it be, as many have suggested, simply incorporated into the Formal Economy (19). Instead, Informal Traders should be encouraged and aided. 
The Gauteng Informal Business Sector Strategy of 2014 (20) suggests that some factors hindering and sabotaging Informal Trade are: lack of finance, inconsistent enforcement, insufficient business infrastructure, and a dearth of relevant policy. The Strategy suggests a planned, funded and sufficient incorporation of the Informal Sector into the townships (21). This will create more money and more jobs in areas where there are high unemployment rates and lack of formal skills and education. It will further help to secure thriving and developing townships, and increase the skills that move over from the Informal to the Formal Economy (22). However, the Informal Economy should not be confined to townships. By doing this, we fall into the trap of racializing the Informal Economy, setting it, once again, outside of the borders of urban areas. Traders should be permitted and encouraged to continue trading in cities.
Accordingly, municipalities need “more developmental Informal Trade policies and by-laws” (23) that create a “balance between the need to regulate the Informal Economy and the need to support livelihoods… (24)” Simply, we must view South Africa’s Informal Economy as a product of a developing state, keeping in mind its political and social background (25) and celebrate it as a way to redress past economic alienation.
Clean-up campaigns are an example of sporadic and disruptive enforcement of by-laws.  The February evictions of traders, pamphlet distributors and beggars, known as Operation Ke Molao, hurt the development of the socially inclusive, job creating space that South Africa has promised to be. The operation sent its ghost squads to target road intersections housing such “undesirables” as window washers, ‘illegal traders’, beggars, and smash-and-grabbers (26). Theft and destruction of property being crimes, smash-and-grabbers must certainly be found and justice must be served. However, the rest of the ‘undesirables’ on the list, are part of a large group of poor South Africans, who have been economically excluded and are trying to find their own ways to be able to eat and support families. Human rights lawyers have said that operation Ke Molao could be “punishing people just for being poor” (27) . 
Instead of punishing and forcibly removing individuals who are struggling to escape the worst ravages of poverty, South Africa should be taking steps to create an open space for the development of a thriving Informal Economy. 
Amy Meyer
Helen Suzman Foundation
1. Statistics South Africa (Informal Business Sector) 2013
2. Tracy van der Heijden in: SALGA: Guidelines for Munisipalities in Respect of Adopting a More Developmental Approach Towards the Informal Economy. (2012): pg 12
3. Statistics South Africa (2013)
4. SALGA: Guidelines for Municipalities (2012): pg. 2
5. Local Government Municipal Systems Act. Chapter 3 (23 of 2000)
6. The Business Act (1999) Section 6A
7. City of Johannesburg Metropolitan Municipality Informal Trading By-Laws: Local Authority Notice 328. Provincial Gazette (2012)
8. SALGA: Guidelines for Municipalities (2012) pg. 15
9. By-laws (2012)
10. By-laws (2012) pg. 8 
11. By-laws (2012) pg. 12
12. By-laws (2012) pg. 10
13. By-laws (2012) pg. 14
14. SALGA Guidelines for Municipalities (2012) pg 7
15. SALGA Guidelines for Municipalities (2012) pg. 8
16. SALGA Guidelines for Municipalities (2012) pg. 8
17. SALGA Guidelines for Municipalities (2012) pg. 9
18. SALGA Guidelines for Municipalities (2012) pg. 9
19. SALGA Guidelines for Municipalities (2012) pg. 10
20. Gauteng Informal Business Sector Strategy: eThekwini Municipality (2013) pg. 3
21. Gauteng Informal Business Sector Strategy (2014) pg. 5 
22. Gauteng Informal Business Sector Srategy (2014) pg. 13
23. SALGA Guidelines for Municipalities (2012) pg. 2
24. SALGA Guidelines for Municipalities (2012) pg. 3
25. SALGA Guidelines for Municipalities (2012) pg. 4
26. Timeslive 'Cop Ghost Squad to 'Clean Up' City Streets (Feb 2012).
27. Timeslive (2012)