The advent of COVID-19 was a devastating occurrence to the world and to Botswana and it continues to be so. The pandemic is a big blow to different sectors and groups and especially to the vulnerable ones. The informal sector businesses and workers have not been spared. In fact, they have been disproportionately affected.
As part of responding to the early days of Covid- 19 in Botswana UNDP together with UN agencies supported the development of three Covid – 19 Recovery Plans for the Private Sector, Social Protection and the Informal Sector.
Globally: The numbers speak very loudly about the level of importance of the informal sector to the economy. Globally, the informal sector employs 61% of the working-age population (2 billion workers). ILO estimates that in Sub-Saharan Africa, the informal sector accounts for 86% of men and 92% of women in employment. Unfortunately, most of these workers are not covered by social protection.
Who are the Informal Sector?
Informal workers encompass various sectors of work, ranging from subsistence small holder farmers, gardeners, urban street vendors and market traders, that you and I buy from each week, waste pickers, domestic workers, unpaid family workers, migrant workers, as well as many platform and gig workers.
The plan agreed on a definition for Botswana that identifies them as “…. all economic activities by workers and economic units that are – in law or in practice – not covered or sufficiently covered by formal arrangements”.
For instance, they are not formally registered as businesses (with CIPA) or workers and are not registered as tax-payers (with BURS).
The informal sector constitutes 5.3% of GDP, it is estimated that there are more than 116,000 informal sector businesses which employ more than 191,000 people. It is also a sector that is rapidly expanding, growing 233% from 2007 to 2015. 67% of informal businesses are at least partially women-owned. Women and youth are among some of the vulnerable groups.
ERTP acknowledges that the informal sector businesses and informal workers provide social safety net and contribute to household resilience (ERTP).
What was the Impact of Covid-19?
As UNDP, we are happy and proud to have rendered support during the critical time to analyse the impact of the pandemic as part of developing the Plan.
The analyses shows that the initial government Covid -19 relief plan was geared towards wage subsidies and financial relief benefitting formal businesses. It became clear that the informal sector had become the ‘missing middle’ both in terms of policy making and the economic response.
Their annual income which was already relatively low was completely wiped out due to the restrictions on travel, movement and meetings, especially during the earlier period of the pandemic.
As you may know, about 16.3% (about 380,000) of our population live below the poverty datum line and 5.8% live in extreme poverty (about 135,000). So we do not want the informal sector falling below the poverty datum line. Keeping the informal sector in business is helping to reduce the numbers falling into poverty. So it is in all our interests to ensure we support this sector.
What are the Informal Sector main issues?
COVID-19 has brought to light and further exacerbated the vulnerability of the informal sector businesses and in turn those whose survival is (directly and indirectly) dependent on these businesses’ operations.
Data shows that nearly 50% of these businesses have challenges accessing operating space and close to 40% of them have trouble accessing the market for their products and services.
Building Back Better, the Plan : We were motivated to support the development of the plan because as a global development organisation, it is in our interest to see a positive change in the lives not only of the informal sector but other vulnerable groups. We see this plan as opportunity to build-back-better from Covid -19 and emerge from it stronger.
Fundamentally the plan focus on, in brief : highlighting the need for dedicated policy-making and government support structures for the informal sector. It calls for support to women and youth-led businesses . It calls for an inclusive recovery and a broader platform for economic diversification so that the informal workers have access to training , friendly spaces to work in while also having opportunities to market their products .
I want to thank all those who helped and participated in some way to the development of the plan including the Informal Sector Associations
UNDP support to the implementation of the Plan:
UNDP HQ has put together a Rapid Response Facility, to Covid -19 not only to develop this and other recovery plans but also to support their implementation. A seed fund of over two million Pula has been availed to support part of the initial implementation of the plan. The recovery plan is anchored on two Strategic Goals with 11 strategic objectives.
I am pleased to share that UNDP will support some aspects/actions from 6 of the 11 strategic objectives. Among the areas that will be supported are:
1. Engagement of Technical Advisor to help the MITI and LEA with kickstarting the key activities of an Informal Sector Unit.
2. Setting up of a Business Intelligence System to ensure data-driven and evidence-based decision making for the informal sector businesses.
3. Promotion of digitisation of business operations by the informal sector and in particular offering digital training and virtual spaces .
4. In recognition of the risks that are faced by the informal sector businesses and informal sector workers, commissioning of a feasibility study on a social insurance scheme for the informal sector.
We are already working with the MITI and LEA to realise the intended objectives of these actions. The whole objective is to not only see the informal sector recovering from the devastating effects of COVID-19 as quickly as possible, but to also see them being built into stronger and more resilient businesses that will find it attractive to formalise their operations.
I do cherish the long-term partnership with MITI and am looking forward to the new partnerships with LEA and the informal sector associations.
In closing, I want to loudly say that this informal sector plan is about acknowledging and appreciating the informal sector and to say again that the ‘missing middle’ is no longer missing . The plan has set out a policy direction for you and will provide economic and social opportunities as you are valued and you have a voice. You have been heard. We are proud to work with MITI and LEA and the Informal Sectors associations to assist you to access operating spaces and to access the market for your products and services. We are pleased to be part of providing training especially in digital skills so you can carry on your business on line . I have no doubt we have so much to learn from you and you will be the ones spearheading in Botswana the digital age and businesses .