Insufficient data on informal economy

NDAMA NAKASHOLE

Namibia does not have sufficient data on the size, extent and magnitude of its informal economy.

Since most of the work done on the informal economy provides insufficient and outdated information, economic policymakers face constraints when they have to formulate policies that relate to the informal economy.

During a public lecture organised by the Friedrich Ebert Stiftung (FES) at the University of Namibia (Unam) on Wednesday evening, economist and deputy permanent secretary in the industrialisation ministry Dr Michael Humavindu said the country’s data on the informal economy was not dated and not comprehensive.

According to him, a 2009 National Enterprise/Establishment Census recorded 56 185 firms, of which 43 553 (77%) were unregistered.

That shows the size and dynamics of the informal economy, Humavindu said.

“It shows that it is quite an important segment of the whole economy,” he said.

In assessing Namibia’s approach to formalising that sector, Humavindu said most national development plans made no or little mention of the informal economy.

He cited the NDP5 as one that “at least managed to sneak it in”. As it is now, there is no official national policy on the informal economy, he said.

Humavindu further said there is no institutional and coherent institutional framework to ensure integrated coordination of formalising the informal economy.

Because of this, there is no explicit strategic thrust pertaining to direct or indirect formalisation in Namibia.

“I haven’t seen an institution that says directorate of informal sector,” he said.

Economist and managing director of Twilight Capital Consultancy Mally Likukela said the majority of the people that are targeted to be uplifted out of poverty through various national and global development goals and other plans are currently reliant on the informal economy.

Because of that, he said the government must take time to study the informal sector and understand what it is dealing with.

According to him, the informal economy could be the sector that propels the country to Vision 2030, given its increasing size.

“We have realised that the formal sector has over the years proved not to be the right model to uplift the majority out of poverty,” he said.

Way forward

According to Humavindu, the adoption of a national policy on the informal economy would pivot Namibia towards the recognition that such economic activities have the potential to yield macroeconomic and distributional benefits.

He further said there is a need for financial inclusion where studies can be conducted to examine the financial capacity of informal economy agents.

Likukela said while challenges of insufficient data exist, there is a need to de-regulate.

“People don’t want to go where there is too much regulation. There are really some processes that we have that are just not necessary and they are not supporting business at all,” he said.