THE INFORMAL SECTOR: IS IT A HINDRANCE OR A BLESSING TO AFRICA?

Livelihood simply could be defined as a means of earning money or making a living or could be defined as a means of support or subsistence (education.yahoo, 2013). It could also mean making a living without accepting handouts from foreign donors which may include money, food, and clothing to the needy or poor. There are two facets that can be identified when discussing advocacy: individual advocacy that focuses on changing the situation for an individual and protecting the person’s rights and systems advocacy that conversely, targets efforts to change policy and practice at the local, national or international level, to change the situation for groups or individuals who share similar problems. Ensuring livelihood sustainability has increasingly been the focus of International Development with both international and Local NGOs embracing it. After the Second World War, Institutions and policies arose specifically to not only stem extreme poverty in developing countries but also improve the dire living conditions in previously colonized countries. Today emphasis has shifted from solely giving financial aid to these countries but also providing sustainable long term solutions. Helping developing countries adopt these methodologies (implementing long-term solutions vis a vis short-term solutions) had created the necessary capacity platforms required to provide sustainable solutions to addressing the myriad problems facing developing countries. A key component to addressing these problems facing developing countries is ensuring that governments, stakeholders, academia and natives embrace and emphasize the significant role livelihood sustainability skills/activities play in their societies while acknowledging the co-existence of a balanced Environment (Biodiversity). Further it has also come to the notice of donors and International Development Organizations the critical role the Informal Sector plays in the economies of developing countries even though by its definition it may not be regarded as legal by its nature in industrialized countries. It is becoming apparent from contemporary studies and research in developing countries that though that might be the case, not only does the informal sector create jobs but it represents centers for innovation and indigenous technology. Case in point in Kenya the informal aspiration/sector known to many as Jua Kali has produced clusters of economic activity in African cities and rural market centers with one significant consequence; the sprouting of shops in close proximity by local entrepreneurs, thus attracting competitors, labor, customers and support services such as credit providers and significant manufacturing clusters on the globe. Some of these clusters are Gikomba in Nairobi, Kenya, Kokompe in Accra and Suame Margazine (scidev.net, 2013) all in Ghana. According to the study three elements were critical in making them flourish: the resourcefulness, relationships and reason or knowledge of the entrepreneurs. In terms of what is acceptable in general economic practice two sectors could be defined: the informal sector/economy and the formal sector. According to Wikipedia (2013), the informal sector is not taxed, monitored by any form of government, or included in any gross national product (GNP) unlike its counterpart the formal sector. Matter of fact the informal sector has often been associated with the black market, the shadowy economy, the underground economy and illicit economic activities in general. It is for this reason that most people in academia until now have shunned and disregarded the significant role it plays in the economic development of nations especially in the developing world. The original use of the” informal sector” is attributed to describe the economic development model put forward by Arthur Lewis, used to describe employment or livelihood generation primarily within the developing world (Wikipedia.org, 2013). Further according to World Bank-ECA on the topic “Informal Sector in Transitional Economies” (gdrc.org, 2013) the two types of the informal sector activities can be described as follows:
 Coping strategies (survival activities)-casual jobs, temporary jobs, unpaid jobs, subsistence agriculture, multiple job holding
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 Unofficial earning strategies (illegality in business) – 1. unofficial business activities like tax evasion, avoidance of
labor regulation and other government or institutional regulations, no registration of the company; and 2.
Underground activities encompassing crime, corruption and generally activities not registered by statistical
offices (gdrc.org, 2013). Some people even have likened the informal sector to harmful ritualistic practice
(Daniels, 2013)
Seller in Accra, Ghana in the informal sector
According to Emanuel Botchwey in his book “Transforming the Economies of Developing Countries” A closer look at the
economies of Developed Countries shows the bulk of the labor force, as high as 98 per cent is engaged in the Secondary
and Tertiary Sectors combined while the remainder 2-4 percent is engaged in the Primary Sector. Note that these figures
vary from Developed Economy to Developed Economy. Conversely, in Least Developed and Developing Countries
between 50-80 percent of the labor force is found in the Primary Sector while a much smaller percentage can be found
in the Secondary and Tertiary Sectors (Botchwey, 2012). It is not a secret that farming employs a huge chunk of the
working population not only in Africa but also South East Asia, Latin America and the Caribbean. Since subsistence
farming most often is not regulated, recorded and monitored by government agencies in developing countries it could
be classified informal. Incidentally this group of farmers is often referred to as small holder farmers in contemporary
development and economic literature with the following characteristics:
SMALL HOLDER FARMER
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 They produce relatively small volumes of produce on relatively small plots of land
 They may produce an export commodity as a main livelihood activity or as part of a portfolio of livelihood activities
 They are generally less well-resourced than commercial-scale famers
 They are usually considered to be part of the informal economy (because they may not be registered, tend to be excluded from aspects of labor legislation, lack social protection and have limited records)
 They maybe men or women
 They may depend on family labor, but may hire workers
 They are often vulnerable in supply chains (Wiego.org, 2013)
A second group that falls under the informal sector is mostly small urban businesses and enterprises in African cities and cities in South East Asia, the Caribbean and Latin America. Strangely some of these small businesses could be considered as legal and yet are largely unregistered and unprotected. The latter could comprise a much broader spectrum of activity, from piecing together scrap materials in makeshift workshops to extending credit to loyal customers. According to Daniels (2013) most products are simple goods like furniture and kitchenware but a select group of advanced craftsmen has developed complex agricultural and tooling machines. Informal enterprises/businesses Informal Sector in Kenya-13 January 2011 For a thorough and sustainable transformation to take place in the Informal Sector in developing countries the following conditions should prevail: The co-existence of biodiversity and the informal sector.
Based on my research as illustrated in my recent book “Transforming the Economies of Developing countries” 50-80 percent of the labor force is found in the Primary Sector while a much smaller percentage can be found in the Secondary and Tertiary Sectors (Botchwey, 2012). Further, it has been estimated that half of the world’s population works in agriculture. It has further been estimated that 40% the agricultural workforce (some 440 million workers) are classified as wage employment while the remainder 60% are self –employed as farmers; mainly small holder farmers (Fyfe, 2002). For small holder farmers to reap the full benefit of livelihood activities in farming there is the need for stakeholders, policy holders, governments and academia to recognize the vital role a balance environment plays in farming. According to an article pulled from eoearth.org, 2013 with the title Human Wellbeing and livelihoods in Africa, while human well-being is multidimensional, it is the ability of all people to determine and meet their needs to have a range of choices and opportunities to fulfill their potential. The article suggests that it includes tackling a diverse range of challenges-environment, social and economic-and widening the options available to people to make a living and to participate actively in society. That means the subsistence farmers must shun deforestation, overgrazing, avoiding the usage of potent chemicals like DDT, their obligation to consistently plant trees to replenish the forest cover (forest cover acts as sinks for carbon dioxide, a by-product of the emission of GHG) and generally the need to practice Good Agricultural Practices, the creation of “Windbreaks” in the form of vegetation to prevent the spread of the desert in West Africa, East
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Africa and Central Africa. It will be considered incomplete if farmers and stakeholders do not adopt soil and water conservation methodologies as a means of sustaining these livelihood activities by channeling excess rain water to man-made reservoirs in the rainy season for usage during long dry spells; the need to also practice buried irrigation, spray irrigation, Drip Irrigation and sprinkler irrigation, furrows and ridges agriculture and using treated industrial waste water with the application of technology as showcased by Israel(Botchwey, 2012). It is also expected that those small businesses and enterprises that are under registered in developing countries should also respect the environment especially those engaged in unregistered cottage industries and workshops likely to spew Green House Gases into the atmosphere. Creating awareness of the interdependence of a balanced environment and continued livelihoods is critical in getting the attention of workers in the informal economy. Science and Technology/R&D must embrace the Informal sector Despite the introduction of Science and Technology in Africa especially and other developing Countries, little progress has been made largely because in the case of Africa, the African way of trading has mostly been considered “Informal” resulting in the West not giving it the full recognition it deserves. Clearly to make headway, science and technology must embrace Africa’s informal sector and for that matter other developing countries’ informal spirit of making and trading (Daniels, 2013). Further, entrepreneurs in the Developing World should consistently incorporate R&D as a means of not improving existing products but also increasing their market share on the International market, experience growth in the future, improve and expand operations in the future. Resourcefulness, Relations and reason The informal spirit has generated clusters of economic activity throughout African cities and rural market centers resulting in the creation of some of the largest manufacturing clusters in the World-Gikomba in Nairobi, Kenya, Kokompe in Accra Ghana and Suame Magazine in Kumasi, Ghana. Various studies of these clusters have shown that resourceful engineers in these clusters have made treasure out of trash. Case in point by constructing workable oil lamps from soup cans not to mention grass cutting machines made of scrap sheet metal must be commended and encouraged. Further they have a vibrant recycle scheme whereby at the end of the useful lives of their products, these items are then fed back into the web of production by scrap pickers, ending the cycle- thus ensuring a balanced eco system. One significant thing about these clusters is that they thrive due to three elements: the resourcefulness, relationships and reason (or knowledge) of the entrepreneurs (Daniels, 2013). Leveraging the informal According to Daniels the West can leverage rather than fight the informal sector in developing countries. He believes that the main barrier to innovation and growth for entrepreneurs in developing countries is risk. He believes entrepreneurs should be encouraged to take risks while also ensuring that every investment yields a return. The answer to achieving this objective of reducing risks is by improving access to resources like credit, tools and skills and promoting a culture of innovation and most importantly rewarding those entrepreneurs and innovators that show or demonstrate inventiveness and risk-taking (Daniels, 2013). Bridging the formal
Today, no one denies the fact that there is a correlation existing between the informal sector and the formal sector. Where is this linkage? Case in point factory waste is increasingly becoming raw materials for cottage industries and enterprises across the length and breadth of the developing world, yet vast potential remains to use formal technology
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to empower entrepreneurs in a way that commands decentralization. While the informal sector may not yield prosperity in Africa, Latin America, the Caribbean and South East Asia, technological and scientific interventions that leverage informality will be more likely to succeed (Daniels, 2013). This means the various countries in the developing world need to formalize informal jobs through regulation by the state. Not only will it be wise on the part of the various governments to provide protection to the Jua Kali industry and players involved, but also create several channels for generating microloans with low interest rates and land rights for the landless (Wikipedia, 2013). Capacity Building It is absolutely clear that NGOs benefit tremendously from capacity building in an attempt to achieve their development goals. It is therefore not an understatement to conclude that when capacity building is successful not only does it enhance an NGO’s attempt or effort to achieve its development goals but also enhances non Profit organizations goal and the lasting and crucial impact on communities and lives. Some of the activities of NGO’s may encompass a development succession plan; ability to engage in collaborations with community partners; the identification of communication strategy, the learning of a complex state, federal and regional regulations that may have direct consequence on local or state development; and identifying more efficient uses of technology that may be suitable for a locality, a region or a state. Donors, stakeholders, academia, research institutions and international Relief agencies stand to make major headways by consistently embracing capacity building and taking full advantage of it by mobilizing not only the informal sector but the formal sector (Council of nonprofits.org, 2013). Empowerment Problem solving abilities, improving services and obtaining the right responses from empowered natives have been found to be the centerpiece for sustainable livelihoods in the Informal sector. How is empowerment achieved? This is achieved by forwarding the right literature and information about how to accomplish projects in the most cost effective manner; giving rewards to natives for ingenuity and inventiveness. Case in point Maker Fire Africa-a festival for craftsmen, has sparked a social movement around informal innovation by rewarding those who demonstrate inventiveness and risk-taking (Daniels, 2013). Stakeholders, NGOs, academia, donors and government officials should take note of that and promote it. Further sharing power with natives can be a huge boost which could ultimately lead to taking initiatives and making sound decisions and choices in resolving problems, improving services and performance, and finally a chance to “owning” a segment of the projects involved (Businessdictionary.com, 2013). Professional growth opportunities through credentialing systems, training, networking, and skill-building
Nobody can underestimate the significance of credentialing systems, training, networking and skill building as a necessary catalyst in promoting sustainable livelihood in East Africa, South Africa and West Africa where my recent research for my book was concentrated. While international organizations, Local NGOs, the governments, policymakers and academia are currently doing that today, more is needed to be done to offset the current dire nature of livelihood sustainability in Africa in general. Regarding training and skill building the question then becomes what type of skills and training are the youth and those in the informal sector receiving today? Are these courses, training and skills being taught relevant to economic conditions on the ground? What skills are in high demand vis a vis livelihood sustainability. I believe the answer is no! There is a caveat that has to be acknowledged by stakeholders in Africa and other Developing Countries, and that is the skills to be acquired by those in the informal sector, University graduates and other professionals from Africa and other Developing Countries should be in tune with both contemporary industrial and requisite developmental manpower skill requirements and needs of the country. That is the dynamics in the interplay of demand and supply in the Labor market has to be taken into cognizance in the determination of the quality, quantity, depth and appropriateness of university, professionals, and artisan’s skills/education in Developing Nations (Botchwey, 2012). The implication here therefore is that since the governments, stakeholders, policymakers and academia in Africa
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and the areas I did my study in particular recognize the need for sustainability livelihoods it is imperative for them to concentrate on teaching value addition methodologies and skills geared towards not only commercial farming (as against subsistence farming) but also the need to adding more value to primary produce and other resources and transform them from low tech goods to high tech goods to diversify their economies. This is a “win win situation”. No country will like to keep all its eggs in a single basket as shown by economic literature and my study of GDP of both developing and developed countries (which has been confirmed by my research project and my book) that there is a correlation existing between the Sectoral distribution pattern (of Labor/GDP and overall GDP creation) in the Economy where a slimmer Labor force/smaller GDP in the Primary Sector and the subsequent increase in the Labor force and GDP creation with progression from the Secondary to the Tertiary Sector resulted in phenomenal cumulative GDP growth per nation. The same idea has been reinforced by (Samen, 2008) who posited that “In virtually all regions of the world, the patterns of trade have changed from primary exports to manufactured exports of labor intensive types and subsequently to more resource intensive manufactures, but Africa is one of the rare regions where exports remain predominantly of primary nature” Pertaining to networking, it is not an understatement to say the Information Age has opened so many doors to not only research in academia but also international development. NGO’s can take advantage of this critical phase in International development. Networking stands to help not only NGOs and policymakers but also the informal sector in coming abreast with the latest ideas and technology pertaining to livelihoods. For this to be possible, NGO’s in Kenya, Ghana and South Africa have opened several Libraries and Cyber Cafes as they are known in Africa purposely for the use of the informal sector. Here, they are being taught how to collect, organize, analyze, summarize, disseminate by E-mail, and publish information. Today most aspirants know a lot about file transfers, remote log on, file sharing, electronic mail, information search and retrieval, remote program execution, bibliographic searches, group discussions, the creation of websites for companies and marketing of goods globally, the electronic library which can be accessed for online education and training, and how to queen file system for managing the amount of disk knowledge. This is a breakthrough and its recognition amongst donors, policymakers, NGOs and academia continue to even improve the usage of networking in achieving livelihood goals. Simply put it has opened the world to aspirants in the informal sector who prior to the information age were restricted to local news, indigenous techniques and local politics. It is correct for people to say categorically that this transformation is here to stay and also an opportunity of hope and success for the future in the informal sector (Leslie, 1991). Financial and other resources to allow micro-entrepreneurs to build and grow their enterprises The popular saying that “charity begins at home” is more is applicable by all standards here because even though it may be insignificant in terms of clout the informal sector or Jua Kali has systems in place to offer credit to the informal sector (Daniels, 2013). These credit systems need to be supported, nurtured, encouraged and financed by governments in Africa. Typical example is what is often referred to as Susu in Ghana, West Africa. According to Mark Kwateng (2009) the non-bank financial sector is engaging Ghana’s informal economy by providing micro financing and credit to artisans and other players in the informal market place. By making finance accessible to informal sector operators he believes Ghana is to some extent able to provide the needed fuel and impetus to enhance their means of livelihood and possibility take them out of poverty while at the same time bringing them into the formal setting (Kwateng, 2009). Today savings and loan companies are playing significant economic roles in Ghana’s informal sector such as Midland, First Allied, Unicredit, Women’s World Banking, Pacific and Ghana Building Company whose activities predates Ghana as a nation (Kwateng, 2009). These institutions should be encouraged and embraced by all. In the villages we find village saving and loans clubs pools which are designed to save at the beginning of the year-by effectively purchasing shares in a business and use this capital to lend money to fellow-villages.
Self help groups often combine savings with other forms of community support and as a result of this uplifting, participation accounts are mostly maintained at the end of the year. According to Ernest Aryeetey, in his article titled “Informal Finance for Private Sector Development in Africa” (1996), the major financiers range from small to huge companies. These include Banks, through trade credits, Suppliers Credit, clients and family members Equity, Internal sources, local money lenders, Savings and Credit Associations/Cooperatives, and savings collectors (Susu). These
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informal finance companies have not only improved the market share of the informal operators but have helped create jobs and reduce unemployment in the local economies. The government of the day should make efforts to include the informal sector in the Social Security Schemes, occupational pension funds, mandatory individual accounts, Voluntary supplementary provision for the informal sector, facilitated additional provision and formalize and acknowledge unsupported informal provision which covers what is today known as the informal sector Strengthening financial security through disability insurance to retirement savings plans or wage protection Three financial institutions have signed a tripartite agreement to help develop the informal sector by providing people with credit facilities in addition to helping informal sector workers to be part of a social security scheme. The three institutions made up of the SSNIT Informal Sector Fund, HFC Bank Ghana Limited and Boafo Micro finance Services have a common goal of strengthening the economic security of people in the informal sector. Such Institutions should be included not only in governments plans and promptly implemented since history has shown they play significant roles in livelihoods sustainability. Jua Kali artisan Creating enabling environment conditions through temporary housing, safe transportation, childcare options and access to information It should be noted that this growing problem is not only confined to Developing Countries but also developed countries like the United States, the UK, Japan and Russia. However it should be noted that it is more pronounced in developing countries in Nigeria, South Africa and major metropolis across Africa. Most people affected in this setting are in the informal sector. This problem has been surmised by the UN United Nations Centre for Human Settlements (UN-Habitat). It has been stated in its Global Report on Human Settlements in 1995: “Homelessness is a problem in developed as well as in developing countries. In London, for example, life expectancy among homeless people is more than 25 years lower than the national average. Poor urban housing conditions are a global problem, but conditions are worst in developing countries. Habitat says that today 600 million people live in life- and health-threatening homes in Asia, Africa and Latin America. The threat of mass
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homelessness is greatest in those regions because that is where population is growing fastest (UN, 1995). It has been incumbent on governments, stakeholders, donors, local and international NGOs to ensure not only creating enabling environment conditions through temporary housing, safe transportation, childcare options and access information in the informal sector where the problem is dire and out of control. The government of the day should earmark funds towards the creation of enabling environment conditions via temporary housing, affordable and safe transportation, and childcare options for the families in the informal sector and access to information. This is an endemic problem and can be resolved by governments setting aside funds from GDP to cover the construction of shelters, temporary homes and finding the roots causes of homelessness and fixing the problem once and for all. This means safe transportation should be assured at all times (24/7) and child care facilities should be extended to those in the informal sector who may not have homes of their own. Donors should also play key roles by proving funds and supporting these institutions in developing countries. Tools for advocacy and mobilization efforts to give voices to previously marginalized workers Simply put advocacy means the act of pleading or arguing in favor of something, such as a cause, idea, or policy; active support (education.yahoo.com, 2013). Advocacy also implies influencing policies, systems and people with the main aim of bringing change with particular reference to those in power to act in more equitable way. It can also be expressed by those directly affected by injustice or on their behalf or by a combination of both. Advocacy work may encompass different activities such as lobbying, mobilization, education, demonstrating for a cause, giving speeches, research, prayer, Legal Reforms, HR reporting at the workplace, whistle blowing, Community Education, propagating and creating awareness of the truth and implications and networking. Most advocacy roles are geared towards development especially to alleviate poverty and suffering, fighting oppression, challenging injustice or supporting long-term sustainable development. Unlike advocacy, development work alone is often inadequate to effectively tackle the root or deeper causes of the myriad problems facing international development. With this in mind a proactive and effective advocacy role is suppose to have the following components:  Tacking root causes of poverty and injustice and bringing long-term change  Seeing people as agents of change in their own environs  Helps generate more resources for other development work  Has the ability to transform power structures and systems of injustice  Ability to resolve challenges that are normally a consequence of an advocacy role
Benefits are generated My studies on advocacy have showcased several challenges which include:  The temptation to corrupt or compromise due to the involvement with power structures in Africa and elsewhere  Diversion of resources and energy from other development activities  Possibility of disempowerment of groups by speaking to them without consultation or agreement  The possible threat of loss of property, or personal safety by playing the role of an advocate
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Given these challenges and obstacles which advocacy tools really work in West Africa, East Africa and South Africa?  Doing advocacy in a respectful way  Serving others with humility as showcased by the servant leadership role in management studies  Determining the opportunity cost or Cost Benefit analysis of an advocacy role  Benefits outweighing negative aspects of advocacy impact/activity  Knowing about potential pitfalls, obstacles and problems associated with advocacy roles at the start and ability to making a realistic assessment for the next advocacy action/role to be taken (tolz.yrstgimf.org, 2013)  The need for a broader discussion, recognizing the possible interplay between strategic and practical needs as it pertains to gender based violence  Being consistently aware of other actors, players and institutions that may play significant roles in combating violence against women  Need for strategizing, coalition building, information gathering followed by prompt action  The need to investigate or research the scope of a problem  Need for an effective strategy to be undertaken  Evaluating selected activities for potential risk  Creating and nourishing alliances and coalitions  Adopting both people-centered advocacy and traditional approaches to advocacy to ensuring success  Having a public education plan  Having a comprehensive advocacy strategy that seeks to target a variety of actors and institutions  Using a combination of Systems advocacy and Individual advocacy ensures great success  Finally undertaking an earmarked activity/advocacy task (Umn.educ, 2013)
Advocacy Tips worth noting and ensuring success to advocates  Advocacy is a daily activity  Gathering policy and political information before commencement for advocacy role  Assessing risks  Developing specific goals  Cultivating strategic relationship  Identifying and building key champions  Being media savvy  Highlighting benefits and cost of inaction  Maintaining your focus on issues  Keeping track of issues  Being ever ready to tell your story on short notice (Slideshare.net, 2013)
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Ensuring workplace safety to reduce injuries and improve long-term health outcomes Ensuring workplace safety to reducing injuries and improving long-term health outcomes has increasingly been the focus of both International organizations such as the United Nations, ILO, International and local NGOs and governments in the developing world. Drawing on experience from Durban, South Africa, Lund et al (2006) successfully argued there is ample opportunity for simple and affordable interventions that make for securer working environments for those in the informal sector:
o Understanding the needs of the informal economy and acknowledging its different facets
o Determining types of injuries facing operators in the informal sector and creating awareness of these hazards while at the same time offering lasting solutions and funding for the informal sector
o Working together with the informal economy
o Creating a favorable policy environment
o Creating a favorable policy regulatory environment
o Flexible taxes and rates
o Access to infrastructure and basic services
o Access to markets
o Providing easier access to long-term health care facilities for operators in the informal sector
Other critical success factors were: Acknowledging the importance and presence of the informal economy; dealing with the complexity and diversity within the informal economy; bridging the relationship and communication gap between local government and the informal economy; including informal sector issues into local government policies; developing local economic development (LED) friendly policies and by-law guidelines for the informal economy; actively engaging the informal economy in LED and involving national departments in supporting the efforts of local government to develop and implement a more developmental approach towards the informal economy (Led.co.za, 2013).
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The informal sector-South Africa Improved Infrastructure and reducing the role of the middle man During my research for my maiden book TRANSFORMING THE ECONOMIES OF DEVELOPING COUNTRIES (Botchwey, 2013) I came to the realization, the important role improved infrastructure plays in the marketing of goods not only in the informal sector but also for the formal sector. Most subsistence farmers who account for a chunk of the workers in the informal sector had no access to well maintained roads. Most of the roads were either foot trails or untarred roads that have to be maintained by local folks who did not have the basic resources to keep these roads roadworthy. The tarred roads also have numerous huge potholes in them. The consequence of this state of affair was the exploitation of local farmers by middlemen who will brave the road conditions and buy primary produce and even processed food items at extremely low prices to the detriment of the local subsistence farmers. Most farmers are faced with either selling to these middlemen at unbelievably low rates or risking their produce from getting rotten on the farms. Most of the major marketing centers are several miles away and most of these subsistence farmers do not have their own vehicles. Another disadvantage facing these hard working farmers is their inability to know the national/local equilibrium prices of their goods and services. A sustainable way to promote livelihood activities in the informal sector is to have more prudent proactive plans to overhaul the transportation system which should essentially encompass:
 Road and highway networks, including structures (bridges, tunnels, culverts, retaining walls), signage and
markings, electrical systems (street lighting and traffic lights), edge treatments (curbs, sidewalks, landscaping), and specialized facilities such as road maintenance depots and rest areas ·
 Mass transit systems (Commuter rail systems, subways, tramways, trolleys and bus transportation) ·
 Railways, including structures, terminal facilities (rail yards, train stations), level crossings, signaling and communications systems
 Canals and navigable waterways requiring continuous maintenance (dredging, etc)
 Seaports and lighthouses
 Airports, heliports, including air navigational systems
 Bicycle paths and pedestrian walkways
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 Ferries
Maintenance of the transportation system should not be the responsibility of the incumbent governments in developing countries, but it should include all stakeholders, policy makers, NGOs, academia, International aid organizations and donors. One of the reasons for the lack of sustainability of livelihood activities in the informal and formal sectors could be attributed to the bad and inhospitable roads in developing countries. Another culprit is the lack of communication between subsistence farmers and national marketing centers mainly located in urban areas on the existing equilibrium prices of goods and services because of the remoteness of subsistence farmers and cottage industries. One method being adopted by local institutions to let subsistence farmers get such vital information in Kenya is for farmers to have direct access to the virtual market portal known in the local language as Sokopepe with the website
http://www.sokopepe.co.ke, which links local farmers to the national markets by mobile phones and the Internet. Not only is using this medium as a means of informing farmers on current produce prices, but it has also to a great extent improved the market shares of these farmers. More of such programs are needed in developing countries to ensure the sustainability of livelihood activities not only in the informal sector but also the formal sector. Subsistence farmers should consistently be informed through local presentations, meetings and seminars about the need for the recording and sale of commodity goods, processed goods, cash flow analysis, Income Statement, revenue levels, marketing supply chain and value chain analysis for livelihood sustainability (Botcwhey, 2012). Technological Engineering Efficiency and Economic Efficiency
Regardless of whether we are dealing with the formal or informal sector, both Technological Engineering Efficiency and Economic Efficiency play important roles in the marketing of products and services. To use a nation’s resources efficiently amounts to producing the goods and services which will satisfy societies’ wants as fully as possible, which in turn implies taking into consideration the societies’ preferences. It is to the interest of farmers, artisans, and industrialists to use as few resources as possible in the production of any product or produce. It therefore makes sense to ensure that the fewer the resources employed in manufacturing a good, the greater will be the resources available for the production of other goods and the more fully wants can be satisfied. The term Technological Engineering Efficiency emanates from this idea where a good of stated quality is produced using the fewest resources possible. On the contrary the concept of Economic Efficiency deviates slightly from the concept of Technological Engineering Efficiency with the difference being in its definition. For Economic Efficiency to prevail in the allocation of a nation’s resources not only must the least amount of resources be used in the production of each good and service, but that set of goods and services which is produced must also be the set that satisfies wants as fully as possible (Lumsden, 1995). Let us consider the Jua Kali in Kenya and other clusters in developing countries like Kokompe and Suame Magazine in Ghana, West Africa. This idea is prevalent in these informal setting because why will they waste essential resources in the creation of a product or service when they could use these resources for the production of more unique products and services. The second aspect of the equation is Economic Efficiency; why will they produce goods and services that will not meet the needs and demand of their customers? Since they want to be successful and aspire to be rich by all standards it will be to their advantage to produce the set of goods and services which will satisfy fully the wants of their customers or they will risk a natural demise by other players producing unique goods and services that fully satisfy the wants of their customers. For the Jua Kali in the developing world to penetrate the international market they have to strictly adhere to both Technological Engineering Efficiency and Economic Efficiency in all spheres of production in the three sectors of the economy. That translates into avoiding waste in resource management in mining, farming, forestry, quarrying, hunting, fishing, value addition, industrialization, and in the Services Sector. Further, regardless of whether the end products are farming produce, industrial products, the provision of services, the allocation of resources should be geared towards satisfying fully the wants of consumers both in their local societies and consumers abroad. To offset global economic
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shocks the Jua Kali in developing countries as a matter of priority, need to not only add higher value to primary goods but also need to have a sustainable Export Diversification platform to continuously stay afloat in an increasingly competitive global environment. This will mean unique goods and exceptional services from the Jua Kali in the Developing World should be designed to fully satisfy the wants and needs of customers globally. Once this is achieved it will facilitate the sale of products and services in a global market devoid of protectionism (Botchwey, 2012). This principle appears applicable to not only to the formal sector but the informal sector. Role of the Labor Market and unemployment reduction Regardless of whether we speaking about the formal and informal sector in any country, the labor market plays a significant role in the creation of the type and quality of jobs in the society. That is the dynamics in the interplay of demand and supply in the Labor market has to be taken into cognizance in the determination of the quality, quantity, depth and appropriateness of university and professional education in Developing Countries (Botchwey, 2012). It is demand and supply that determines or drives the creation, supply of goods, quality, depth, quantity and type of labor in the Informal sector. The implication therefore is that stakeholders, academia, governments, donors and policy makers have to recognize this and should put resources together to strengthen and formalize the informal sector as a way of not improving indigenous technology but also creating jobs thereby reducing unemployment. Secondly, this process could lead to innovation and patents which are badly needed in developing countries. Most cottage industries can fall into this category and governments are encouraged to finance such innovators. It is therefore refreshing to know that researchers at the University of Nairobi have formulated surveys and censuses for the informal sector. That is highly commendable and in the right direction. Further, a number of engineering schools are piloting co-creation workshops with local jua Kali in Kenya. It is increasingly becoming apparent to scholars as well as practitioners in the developing world the correlation existing between the informal economy and employment generation in the national economy and its important function as a buffer between employment and unemployment. Based on this development it could safely be stated that the informal sector has particular relevance to the creation of livelihood opportunities and alleviating poverty as part of individual survival strategies for the poor. Case in point in South Africa, the informal sector forms a key component of strategies to addressing unemployment and poverty and to supporting the creation of a sustainable livelihood. Unfortunately, the majority of South African municipalities have so far failed to ensure a more friendly and developmental strategy pertaining to informal economic policy and by-laws (Led.co.za, 2013). Value Addition Methodologies and Export Diversification platforms
Lately numerous researches, studies and analysis have proven a direct linkage between value addition methodologies and export diversification as the new engine of growth in developing countries. Today, many analysts view export development and diversification as the new engine of growth. Consequently, in the light of the experience of successful exporting countries, there is a growing consensus in economic literature that outward-oriented policies combined with selective market friendly interventions can help countries grow more, and reap the benefits of trade liberalization. There is also a growing consensus that patterns of economic development is associated with structural change in exports and increased export diversification. In virtually all regions of the world, the patterns of trade have changed from primary exports to manufactured exports of labor intensive types and subsequently to more resource intensive manufactures, but Africa is one of the rare regions where exports remain predominantly of primary nature (Samen, 2008). Based on Sectoral analysis of statistical data on GDP in the Economies of Developing and Developed Countries it is logical to conclude that there is a correlation existing between the Sectoral distribution pattern (of Labor/GDP and overall GDP creation) in the Economy where a slimmer Labor force/smaller GDP in the Primary Sector and the subsequent increase in the Labor force and GDP creation with progression from the Secondary to the Tertiary Sector resulted in phenomenal cumulative
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GDP growth per nation (Botchwey, 2013). Why is the informal sector paramount when it comes to economic growth and a sustainable livelihood? It is very simple. Between 50-80 percent of the population in the developing world is engaged in farming, forestry, gathering, fishing, quarrying and mining. A chunk of those engaged in these activities could be found in the informal sector where their contribution to the GDP are yet to be recorded since for one reason or the other they are not registered and therefore not taxed. Why cannot authorities, government officials, donors, NGO’s and international aid organizations recognize and have them formalized and encouraged to reduce their sole dependence on commodity goods and instead encourage them to add higher value to raw materials-from low tech goods to high tech goods by processing these raw materials in the form of agricultural goods and other natural resources before their sale on the global market. It has again been proven that value addition due to its inherent “multiplier effects” does not only create jobs, but also negates the perishability of raw materials (especially farm produce). Further it has been proven that processed goods from raw materials also value more than their raw material counterpart in global trade. It has further been proven that this can tremendously improve the quality of life of natives, improve indigenous technology and open the “floodgates” for the granting of patents which are critically needed in developing countries. The countries involved will also have access to more foreign exchange than just selling raw materials or commodity goods on the global market. What is value chain in the context of Export diversification and the informal sector? Value is about price and quality. As a product gets nearer the point of completion and sale, its value increases. So, for example, cotton on a cotton plant has a certain value. Once it has been spun into cloth its value increases. This increase continues with each stage of production. All the stages from the cotton in the field to the completed garment in a retail shop make up a chain of production and distribution, and because value is added at each stage it is called a value chain” (Lund and Nicholson, 2006) . It is noteworthy that some of the best prospects for economic growth in the last few decades have been found in East and Southeast Asia where the State itself led the industrialization drive. As a consequence of this approach China, South Korea, Japan, Thailand, Taiwan, Vietnam, Malaysia, Singapore, the Philippines, and Indonesia are developing at high to moderate levels. Thailand, for example, has grown at double-digit rates most years since the early 1980s. China has been the world leader in economic growth since 2001. It is estimated that it took England around 60 years to double its economy when the Industrial Revolution began. It took the United States around 50 years to double its economy during the American economic take-off in the late nineteenth century. Several East and Southeast Asian countries and other Developmental Countries globally today have been doubling their economies every 10 years (Wikipedia.org, 2011). By NGOs, government officials, academia, International aid organizations and policy makers recognizing the informal sector and giving it the needed boost, livelihood sustainability goals will be achieved and bring about a higher standard of living for natives in affected regions on the globe. International Aid Organization, governments, policymakers and academia need not only promote good agricultural practices but also aid in improving the cottage industry and value addition methodologies/processing of commodity goods as against solely relying on the production and export of commodity goods. My recent study on the GDP of the economies of developing and developed countries has clearly shown a correlation existing between the sectoral distribution pattern (of labor/GDP and overall GDP creation) in the economy where a slimmer labor force/smaller GDP in the Primary Sector and the subsequent increase in the labor force and GDP creation with progression from the Secondary to the Tertiary Sector resulted in phenomenal cumulative GDP rates per nation. What is amazing is that the South East Asian countries that in 20-30 years ago were classified as Developing Countries are now competing for economic supremacy with giants like the United States, Germany, Israel and Sweden. Mauritius and Botswana are typical examples where the exploits of value addition methodologies and the acceptance of export diversification platform recognition have propelled their economies and sustained continued economic growth (GDP) which today stands at $14,000, one of the highest in Africa today(Botchwey, 2012).
SOURCE : CIA WORLD FACT BOOK 2011 The above charts give credence to not only my research on livelihood sustainability via value addition methodologies but also export diversification in South East Asia and also Africa as showcased by Mauritius and Botswana (Botchwey, 2013). There is therefore an urgent need for a paradigm shift in Africa if livelihood sustainability is to be fully realized. Let us start with the Jua Kali in the informal sector!
Further it has been pointed out in other quarters that in most of these Asian countries, it is not just that the rich are getting richer, but the poor are becoming less poor. To support this assertion, poverty has dropped dramatically in Thailand with the passage of time. Research in the 1960s showed that 60 percent of the people in Thailand lived below the poverty line. By 2004, however, similar estimates showed that poverty in Thailand was around 13 to 15 percent. Thailand has been shown by some World Bank figures to have had the best record for reducing poverty per increase in GNP of any nation in the world (Wikipedia.org, 2011). This development can ultimately be considered as a game changer and a possible breakthrough for the plight of millions who consistently have to deal with hunger and the endemic vicious cycle facing developing countries. This has been made possible because these countries sought alternative ways of development; their number one choice was the developmental state that enabled their various States to determine an
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appropriate and highly successful state-led macro-economic planning and policy (Botchwey, 2012). While International aid is important in ensuring sustainable livelihood in both the formal and informal sector, the local governments, stakeholders, academia and policy makers have an even bigger role to play as showcased by the South East Asian Tigers and the Tiger cubs’ phenomenal economic growth in the past 30 years. Besides, no society or country can survive economically if they keep all their “eggs in one basket” due to global shocks stemming from undiversified economies showcased by developing countries with their dependence on commodity goods in the primary sector. International Organizations, governments, academia and stakeholders are now at the crossroad of making hunger, the endemic vicious cycle, excessive unemployment, an unsustainable bio-diversity and hyper inflation things of the past through intervention by not only formalizing and recognizing both the informal and formal sectors of the developing world by simply boosting value addition methodologies, export diversification platforms and promoting environmentalism. There is, therefore the urgent need for a paradigm shift in Africa and all other Developing Nations yet to join the bandwagon. How critical is Value Addition vis a vis livelihood sustainability in Africa (making a case) The information below goes to the extent of showcasing the significance of value addition methodologies and the promotion of export diversification; critically needed to help the poor and marginalized in Africa and elsewhere: Case in point, Azuri Health Ltd an upcoming East African company is currently using solar drying techniques to package dried fruits and nutritious flours. See pictures below. Azuri says its strength is in the partnerships formed with the small scale farmers all over the region, who grow these foods and thereafter learn these drying techniques and are able to earn extra for their value addition. Azuri has managed to sustain the demanded stringent hygiene requirements in the production of these foods and has been in the market for almost eight years. It is no news today that Africa is endowed with agricultural resources including fertile soils, water resources and good climate. These have, however, not been put to proper use leaving lots of room for improvement in the level of production. The root of the problem facing African countries is simple: Today, farm produce from most farmers go to waste due to poor marketing or storage, or is bought at low prices by middlemen. Value addition methodologies will fix these problems through processing, bottling, drying and proper storage East Africa and elsewhere on the African continent now holds a lot of potential for production of value added horticultural products. There is also room for transforming other natural resources or commodity goods from low tech goods to high tech goods. There have been sustained efforts to diversify from staple crops like maize to fruits and vegetables and the results are showing with increased supplies of fruits and vegetables. This trend has been coupled with improvements in the quality of the products. The short shelf life of these products has however meant that most of it gets spoilt with shortages occurring when the product is out of season –the negation of the perishability of commodity goods can be eradicated through processing (Value addition). Mangoes, passion fruit, pineapples, bananas, tomatoes, oranges, tomatoes, lemon, fish , cassava and African leafy vegetables are just some of the products that are in abundant production across the African landscape. Most of these are either exported fresh or sold locally, with the region missing out on profits from value addition of these products, which has the added advantages of shelf life extension, product diversification and employment creation. It is significant to note that, there are numerous opportunities for the production of fruit beverages, jams, marmalades, jellies, sauces, canned products, frozen products, dried products to mention just a few. Fruits such as Mangoes, pineapples, bananas and vegetables and traditional African leafy vegetables, when well marketed, can create a niche market both for the local market and for export. Most produce are also grown organically by small farmers and entrepreneurs.
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It cannot be denied that challenges still exist in production but with proper coordination and investment in post harvest systems a lot of these can be solved. There is a whole world of untapped opportunities in the region for value addition of products. The Asian Tigers of South East Asia and countries like Mauritius and Botswana are pioneers in both value addition methodologies and export diversification and it could be exemplified by other African nations. Moving in the right Direction Today among other things, the East African Agriculture Value Chain Investment Summit and exhibition is focusing on how to strengthen the Agri-Food sector in East Africa, by encouraging partnerships, exchanging best practices and attracting investments. This should be commended and encouraged by all stakeholders from incumbent governments to International donors. Already some shrewd international agents have identified the appeal of this buyer market in Africa, by establishing networks and actively targeting markets in not only East Africa but also buyers and producers found in the African context.

For a detailed account check the following links:

https://www.createspace.com/3753615

http://www.amazon.com/dp/1475155298

http://www.amazon.it/dp/1475155298

http://www.amazon.com/-/e/B008MMY74S

 

From Emmanuel Botchwey

ebotc@netzero.net

Developing countries

Developing countries (Photo credit: Wikipedia)

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