Informal businesses remain on the fringes of exclusion

Access to social protection in Namibia is a privilege, not a right. This was a key conclusion reached by members of parliament after an investigation into the country’s informal economy. To change this, the Social Security Commission (SSC) and the Namibian Constitution would need to be amended, according to lawmakers.Last week, the Parliamentary Standing Committee on Economics and Public Administration presented a report to parliament on social protection for Namibians involved in the informal economy. This followed a motion tabled by MP Agnes Kafula, calling for the implementation of the International Labour Organization’s Recommendation R204 (2015) regarding the transition from the informal to the formal economy.Kafula urged parliament to address the conditions of street vendors, domestic workers, woodworkers, herders, and unemployed men seeking work along roadsides. The committee was also tasked with investigating allegations of police harassment of informal traders and the criminalization of informal businesses, despite the lack of designated trading spaces in Namibian towns. Kafula further called for the establishment of social insurance for the informal economy and for local and regional authorities to provide public markets and basic sanitation for informal vendors.Findings of the committeeIn late 2023, the committee held public hearings and consulted with government ministries, the SSC, the Namibia Chamber of Commerce and Industry (NCCI), and the Windhoek Municipality, among others. The report states that the informal economy in Namibia did not exist before independence and has since emerged due to a lack of sufficient formal-sector job opportunities. As of 2018, 55.8% of workers in Namibia were employed in the informal sector, contributing approximately N$8 billion to the economy. The informal economy also employs more women than men.A significant portion of informal workers, about 35%, are involved in agriculture, forestry, and fisheries. The majority of informal businesses, about 76%, operate in urban areas, with 85% of them being traders and entrepreneurs. Many informal business owners and workers lack business management, financial literacy, and bookkeeping skills, which limits their ability to expand or formalize their businesses. Access to credit remains a major challenge, preventing many from starting or growing their ventures. Additionally, 60% of informal businesses operate from home, indicating a lack of proper business infrastructure.The report highlights that nearly 90% (88.9%) of informal businesses are not registered with the SSC, while 84.3% of employees in the informal sector lack social security registration. This means that most informal workers do not have access to benefits such as pensions, medical aid, or unemployment insurance.Challenges facing the informal economyAttempts to formalize the informal economy have been hindered by policy gaps, a lack of legal frameworks, insufficient interventions, job insecurity, poor remuneration, and a shortage of public markets. Informal traders face continuous police harassment, bullying, and eviction threats, making it difficult for them to operate freely. Restrictions on operating hours, high cross-border tariffs, and legal exclusion from lucrative industries such as alcohol sales further worsen their situation.Many informal businesses lack land rights, making it difficult to secure stable business locations. They also struggle with limited access to credit and essential services such as electricity. Financial institutions require collateral for loans, which most informal traders do not have, effectively preventing them from accessing funding. The report also notes a lack of official data on the informal economy, making it difficult for policymakers to implement effective interventions.Municipal regulations often contribute to the stigmatization and restriction of entrepreneurship, further marginalizing informal traders. The report states that the criminalization of informal businesses is the norm in Namibia, with authorities often enforcing regulations that make it difficult for informal traders to operate legally. The committee concluded that the Labour Act must be amended, as it currently does not legally recognize the informal economy.

Informal businesses remain on the fringes of exclusion

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Namibian Sun 2025-05-01

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Informal businesses remain on the fringes of exclusion

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Namibian Sun 2025-05-01

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