iii. Support to the development of the Informal economy

One of the most effective ways of combatting poverty is by examining ways of enhancing the quality, the productivity, and the social protection of workers in the informal economy. An action programme in this field must include the following six main interrelated elements:

Improving the enabling environment and social protection in the informal economy

Appropriate measures must be taken to ensure that policies are aligned with the more productive development of the sector. Rules governing zoning, registration, access to land, and work sites must be reviewed in the light of their probable impact on the workings of the informal economy. The overall regulatory environment relating to such issues as legislation, taxation and fees will also need to be streamlined and made more sector-friendly. This calls for actions to strengthen the capacity of the authorities responsible for drafting these regulations or designing policies affecting the sector.

Efforts must be made to promote collective action at the grassroots level by strengthening or supporting the formation of associations based on sectoral activities within the informal sector. This will assist informal sector operators to articulate their needs and provide the basis for participating in policy and programme design and implementation which affect informal sector workers.

Increasing access to financial services and marketing opportunities

Sub-section ii, covers the proposed suggestions in this domain.

Promoting industrial and manufacturing activities and improved technologies

A particularly important sub-sector of the informal economy is the production of manufacturing and industrial products and the provision of engineering services such as repair services largely for the benefit of the poorer segments of the population. Hence he promotion of this sector is not only aimed at raising the productivity and incomes of the poor producers, but also improving the consumption and welfare patterns of the poor. Support for the upgrading of technical managerial and marketing skills for producers of this sector will also be essential, as well as easier accessing of production inputs. Pilot experiences show that there is great demand for business advisory services. Most of the NGOs who work in the informal sector lack the capacity to develop training programmes on business management and business practices. The provision of consultancy services in the fields of business regulations, management and skills training would be highly useful and appreciated by NGOs and informal sector operators.

Improving sectoral backward and forward linkages and subcontracting

Productivity and employment will be enhanced and poverty further reduced, if both forward and backward inter-linkages between formal sector enterprises and establishments in the informal economy are specifically identified. The role of the state as a major contractor could be a major instrument in this connection, by encouraging its larger contractors to sub-contract to informal sector operators.

Intensifying infrastructural development using labour-intensive technology

Section 2.2.4, illustrates the mechanisms that could be adopted for this sector.

Improving basic education, technical skills and managerial training

Section 2.2.1, includes strategies to assist in the development of the human resources in the informal economy.