5.6 Emerging Critical Issues for Policy
5.7.3 A One-Stop Centre on Informai Sector Matters
It is recommended that the Government create a One-Stop-Shop to take charge of all informai sector matters. This stems from what this study ·recognises as a serious lack of institutional support for the sector in the Gambia. Y et to be successful at gradually formalizing informai sector enterprises, and coordinating the different policy and programmes needed to develop it, there needs to be a purposeful-built institution as a parallel necessity. The Department of State responsible for industrial development and employment matters in the Gambia may be assigned the responsibility to work out the legislations for resource mobilisation to found the Center.
The proposed Center should, among other things mainly geared toward removing all constraints to informai sector enterprise growth and integration, target at the following specifie issues:
+
needs identification and assessment of the physicallfinancial and marketing needs of the enterprises;+
Identifying of actors with whom to pursue and maintain regular consultations and dialogue on all matters arising from these assessments. Certainly, key government ministries and parastatal agencies, financial institutions [bank and non-bank], the Cham ber of Commerce and Industry, sorne NGOs, informai cooperatives/associations, municipal authorities, etc are a potential pool of actors with whom the Centre can work very closely with;94
+
Spearheading the conduct of training and capacity building aimed at enterprise enhancement, productivity and formalisation [Note: this is taken up later to signify its unique importance];+ Canvassing favourable legislations aimed at bringing informai sector enterprises to the doorsteps of services that they have long been unable to access. Here, the Center must work out legislations to entice banks to avail credit to informai sector producers on special terms and within appropriate procedures for repaying loans. It will be advisable that the Government, via the proposed Center, establishes sorne loan guarantee schemes by which it would bear a portion of the risks associated with potential defaults. Such a scheme implies in short, sorne degree of risk sharing involving the borrower, the bank, and the Government via the Center;
+
seeking sources of new and appropriate technology[ies] and encouraging the spread and use of such technologies to help raise product design and quality. Where buying of new machines are involved, the Center should step in as guarantor in the process;+ pursuing an aggressive information-education-communication (IEC) strategy with the sole aim of
(i) sensitizing the public with whom the informai sector deals with, and making them recognise important role and contribution of the sector on the socioeconomic plane;
(ii) sensitizing informai sector producers themselves, about the need for cooperating with government in the crusade to help them realise their potential. This implies their cooperation at policy and programmes design and/or amendments in which they must be a part;
(iii) encouraging and assisting the process therein, the coming together or formation of producer associations among informai sector operator in similar activities/trades and within the same locations. This will enable them to raise large amounts of money, make informed decisions and gain the recognition of powerful bargainers ( certainly not troubleshooters) during dialogue with the government;
(iv) encouraging, and assisting the process therein, the formation of joint partnership ventures, this time, involving formai trading companies such as supermarkets, import-export houses, hotels and restaurants, and other commercial stores. This is likely to spur up a spirit of bigger-smaller relationship in which the bigger and
95
formalised stores necessarily support the smaller informalised ones they regard as their babies. In this way, the problems of credit, markets, and even technology will be alleviated, in addition io the possibilities of grea ter integration of the informai and the formai economies.
In the event the proposed One-Stop Center cannot be immediately set up, it is recommended that a Planning Committee to comprise the agencies already listed, be set up to work towards the long-term setting up of the Center while in the interim, assume full responsibility in the design and implementation of duties, including those requiring short-term intervention that the Center will assume shortly. In order to ensure that work is in progress, there should be an apex supervisory body [perhaps, the Policy Analysis Unit (PAU) directly under the Office of the President], and a tail-end like body [a special parliamentary committee, proposed] to whom the supervisory body will present progress reports, and possibly during a special question-and-answer session in parliament.
5.7.4 Capacitv Building
As discovered with the exception of the entrepreneurs, entrants into informai sector establishments are generally young. Together however, both the workers and entrepreneurs have very little or no education at all. This should regarded a rather disturbing attribute since it raises questions about the ability of the entrepreneurs in particular to innovate, and to assess fully, sorne emerging opportunities that they ought to recogi?.ise and take advantage of quickly. The generally low educational background serves as a limit to such ability. It may also inhibit efforts to formalise their enterprises, since many are likely to see the novelty of such an idea. It is therefore recommended here that capacity building goals be developed along side others to aim at enhancing the capacities of the entrepreneurs, especially at improving their product quality and innovation based on simple use of technical drawing techniques, angular measurement, etc. They should also help them to read and
96
understand sorne technical concepts including guidelines for applying loans and accessing credit.
Training should also cover bookkeeping and general accounting of all the financial transactions by the enterprise. These goals could be achieved through workshops and special training courses to be delivered through the radio, television or at community centers or parks, and classes must comprise of people in similar trade or activity with a view to facilitate greater flow and ex change of common ideas among a homogeneous group. The proposed One-Stop Center or the interim planning committee should coordinate such an effort in conjunction with technical secondary schools, vocational centers and experienced practitioners likely to be retired informai sector workers.
5.7.5 Infrastructural Development
The Gambia is generally handicapped by the lack of sufficient supplies of such basic infrastructural facilities as roads, communication and transport, and undoubtedly most severe, electricity. It is no secret indeed that the condition of the roads is generally deplorable, and the nation-wide network poorly developed, imposing as a result, restrictions to the flow and movement of people, goods and services into and out of the different parts of the country. The absence of roads separates markets in any one locality, and contributes to lower sales of goods, unimproved productivity and income levels for most people in informai production. The government should therefore very urgently tackle the problem of the poor and largely inaccessible road situation in the country to encourage easy trading between people. It is therefore important that roads pass through and link all towns and villages in the country.
With regard to electricity, this is just as bad, remaining as the single most deficient, most unreliable and yet most expensive social infrastructure in the Gambia, reaching arguably barely a quarter of the country' s population. Its cost is considered as one of the highest in the world, which may be one of
97
the most likely explanations why foreign investment in the country is not the level anticipated of it, as industrial stagnation almost looms in. There are of course alternative sources of renewable energy, but these are equally, or even more expensive and beyond the reach of most, if not all, informai sector operators. Thus it is recommended that the govemment seriously solve the electricity problem once and for all, a sure way to realizing the goals of the ali-important Vision 2020 framework for socioeconomic development in the Gambia.
In:frastructural development should also take into account the needs of the informai sector with respect to the types of facilities that their enterprises need, and their immediate surrounding. The govemment may have to reserve land in every center (town or village) for the purpose of building thereon sizeable sheds fitted with electricity, communication (telephones and postal), water, health and general sanitary facilities, and storage facilities for goods, and complemented further by recreational facilities such as rest houses, discussion rooms, and a general service center.
5.8. Study Conclusion and Limitations
In concluding this study, it is important to remark that the findings of the study may not be significantly different from those by other researchers, especially when it cornes to the typical constraints that face informai sector enterprises. The study has disclosed among other things, that informai enterprises have features that distinguish it from the formai sector. The establishments are indeed small, and handle very small transactions, in the face of which they are less likely to exp and on their own, and remain marginal if they were le ft to operate unassisted. The reader will notice that both supply-side, constraints, notably credit and capital constraints, and demand-side factors are at play, and impose sorne restrictions for enterprise growth in the informai sector. Demand is generally
98
low largely because the lack of appropriate machinery and technology could not allow for products of the enterprises to reach unexploited markets bath from.
The study argues that there is a need for sorne forms of intervention, which especially seek to address these constraints on the basis also of the specifie features of the sector, which must be understood. It is hoped that the recommendations of the study will go a long way to integrate the sector in the country's national planning efforts. The sector is certainly a positive factor in poverty reduction, incarne distribution, and indigenous enterprise growth. However, the reader's attention is brought to the fact that the recommendations presume that that the role of the state, which is implicitly very critical to the success of the informai sector, must not be to eliminate the sector through cumbersome procedures and enforcement of regulations. As already argued, informai sector operators mainly avoid the arms of government for fear ofbeing too regulated.
Finally, it is worth painting out sorne limitations to this study. Although the use of a survey technique is an interactive process, a complimentary analysis using regression techniques to capture relationships between variables and to make projections would have enriched the study. However, problems of data on the informai sector at the nationallevel, could not allow for this. Secondly, the dynamics of the sector could not be examined to show growth of incarne levels, investment and output changing in between different periods. And finally, it would have been interesting to derive another sample of enterprises in similar activities in the formai sector. This would have shawn sorne interesting comparisons of the 'stories' -and experiences of the two sectors and their combined perception on issues related to informa! enterprise growth.
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BIBLIOGRAPHY
Aboagye, A (1985) "An Analysis of Dar-es-Salaam's Informai Sector", in lLO Africa Employment Report, 1988 [ibid.]
Abumere, S.I etal (1998) "The Informai Sector in Nigeria's Development Process", Development Policy Center Research Report No.1
Aubell, J [1994] "Guidelines for Studies, Using Group Interview Techniques", ILO/WEP, 1994 Charmes, J (1988) "A Critical Review of Concepts, Definitions and Studies in the Informai Sector",
Turnham et al ( eds.) [ 1990, Ibid.]
Dewar, D (1987) "Sorne Proposais for Small Business Simulation: A Case Study of the Durb and the Metropolitan Region" in Hirschowitz [1993, ibid.]
Esim, S [1994] The Informai Sector and Microfinance Institutions in West Africa, in World Bank Regional and Sectoral Studies; Fidler. et al eds. [ibid.]
Feige, E. L [1990] "Defining and Estimating Underground and Informai Economies: The New Institutional Economies Approach" World Development, Vol. 18, pp. 989-1000
Fidler etal (eds.) (1992) "The World Bank Regional and Sectoral Studies", World Bank 1992
Fields, G (1975) "Rural-Urban Migration, Urban Employment &Underemployment, and Job Search Activities in LDCs," Journal of Economie Development 165-187
Giri, J (1987) "Formai and Informai Enterprises in the Long-tenn Future of Sub-Saharan Africa", Economie Development Institute, W orld Bank, 1992
Grey-Johnson, N (1992) "The African Informai Sector at the Crossroads; Developing merging Policy Options", Africa Development, 1994
Hirschowitz, R (1993) Training for the Development of the Informai Sector", Issues in Development, No. 3
Horton et. al (1992) "Research on Informai Sector in East Africa, A summary of Findings", The World Bank Economie Development Institute
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Hyden, G (1990a) "The Changing Context of Institutional Development in Africa", World Bank Long-Term Perspective Study of Sub-Saharan Africa, Vol. III
ILO (1972) "Employment, Incomes and Equality: a Strategy for Increasing Productive Empioyment in Kenya", lLO; Geneva
ILO (1995) "The Urban Informai Sector in Asia; Policies and Strategies", RAS/90/M11/FRG ILO (1988) "Africa Employment Report", Addis-Ababa
ILO (1985) "Informai Sector in Africa: A Synthesis; Part One"
ILO/JASPA/WEP (1991), "The Urban In:formal Sector in Africa in Retrospect and Prospect", An Annotated Bibliography, No.lO, 1991
King, K (1987) "The Popular Economy in Anglophone Africa", Seminar on the Informai Sector as an Integral Part of the National Economy
Lubell, H (1991) The Informai Sector in the 1980s and 1990s, OECD Center Studies, Paris
Marsden, K (1991) "African Entrepreneurs: Pioneers of Development", International Finance Corporation, Discussion Paper, No.9
Mazumdar, D (1976) "The Urban Informai Sector" in Lubell, H (ed.) [1991,ibid]
McCormick, D (1988) "Small Manufacturing Enterprises in Nairobi: Golden Opportunity or Dead End?" in Horton et. al [1992, ibid.]
Morawetz, D (1974) " Employment Imp_lications of Industrialization in Developing Countries: A Survey in Steel, W [1992, ibid.]
Natrass, N. J (1967) "A Struggle Against Poverty, Persecution and Prosecution" World Development, Vol. 15; No. 7
Ndua and Ng'ethe (1984) "The role of the Informai Sector in the Development of Small and Intermediate-Size Cities", in Horton et. al [ .1992, ibid.]
Nihan, G (1979) "The Modem Informai Sector in Lome", International Labour Review, Vol. 118, No.5; Sept-Oct;
Onyeiwu, S. [1991] "Graduation Problem amongst Medium and Small-scale Enterprises (MSEs), Eastern Nigeria", Small Enterprise Development. An International Journal, Vol. 3, No. 4, 1992;
Owoye, A (1990?) An article on the Informai Sector and Development found in the ACP-EU Courier No. 137, Jan-Feb, 1993
Parker, J &Dondo, C (1991) " Kenya: Kibera's Small Enterprise Sector baseline Survey Report" in Horton et. al [1992, ibid.]
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Sethuraman, S.V (1981) "The Urban Informai Sector in Developing Countries, Employment, Poverty and Environment, ( ed.) lLO Geneva 1981 c
Simel E (1992) "The Informai Sector and Microfinance Institutions in W/Africa", Fidler etal (eds.) [ 1992 ibid.]
Steel W (1992) "How Small Enterprises Have Responded to Adjustment", World Bank Economie Development, Vo1.6, No.3 423-438
Strassman, P.W (1987) "Home-Based Enterprises in Cities in Developing Countries", Economie Development and Cultural Change, Vol.36, No.1
Takundwa, M (1996) "The informai Sector in Zimbabwe, Features, Impediments and Potentials"
IDEP MA Series
The Economie Intelligence Unit (ElU). Country Profile on the Gambia
Turnham etal (eds.), The Informa! Sector Revisited OECD Center Studies, Paris, 1990
Vision 2020; the Gambia Inc. and other national documents including the National Industrial Policy (NIP), Policy Framework Paper (PFP), National Poverty Alleviation Strategy
World Bank: Sub-Saharan Africa From Crisis to Sustainable Growth: Long Term Perspective Studies, 1989
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Annex 1: Informai Sector Enterprise-Based Interview Questionnaire
1.5 Number ofworkers in the enterprise (including apprentices) 1. None other than the entrepreneur ·
2. Five or less workers
3. More than 5 but less than 10 workers 3.Ten or more
1.6 Is farnily labour involved, and ifYES how many 1. Yes ... .
2. No
1.7 Are there female workers in this enterprise?
1. Yes 2. No
1.8 What is the age of the youngest worker in this enterprise .......... Years
Training And Skills Level In The Enterprises
1.9 How many of your workers are already full y qualified for the job (STATE) ........................ .
1.10 Where did these workers receive their training and skills from (CHOOSE ALL THAT APPLY) 1. From a formal vocational training center wi~ the country
2. From an informai system of training
3. Other (STATE) .............................. . 1.11 How many workers are working as apprentices in this enterprise?
( STATE) ........................ . Nature Of The Location Of The Enterprise
1.12 Is this workplace operating (CHOOSE ALL THAT APPLY) 1. on a prernise which is rented out to you
2. on a prernise which is owned by you
3. on a leased prernise for a specified period oftime 4. Other (STATE) .......................... . 1.13 Is workplace part of a building, in which other people live or reside?
1. Yes 2. No
1.14 If "YES", how many other rooms are there in the building (STATE)
...
1.15 If workplace is rented, how much are you paying monthly for the place?
1.16 What facilities or services can be found at the premises of the workplace: (CHOOSE ALL THA T APPL Y) 1. Tap
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2. Telephone 3. Electricity
4. Office equipment (such as computers, typewriters, etc. ;) 5. Other (specify) .............. .
1.17 How near is the workplace to basic facilities such as water, telephone, and/or electricity ifthese facilities are not found inside the prernises of the workplace?
1.19 Is this enterprise registered with the incarne tax or any other govemment departrnent?
1. Yes 2. No
1.20 If the answer is 'NO', what is/are the reason(s) for not registering 1. It is very expensive to register
2. The process takes tao long to complete
3. Do not consider registration of the business Iiecessary (Askfor the reason and note .............................................................. . 4. Do not know how to go about the registration process
5. Other reason( s) ............................................................... . 1.21 Is the enterprise registered with any labour or workers union?
1. Yes 2.No
SECTION B: PROFILE OF THE ENTREPRENEUR 1 BOSS
2.1 Sex 1. Male 2. Female
2.2 Age: .......... .
2.3 Nationality: 1.Gambian (From: Rural area 1 Urban area) 2.0ther West African (STATE) ........ .
2.7 As far as this job!activity is concerned, where did you receive your training and skills?
1. From a vocational training center (Name of center. ..................... . 2. From an informai apprenticeship training system
3. Other (STATE) ............................ ..
2.8 How many years did you spend learning the skills?
1. Five years
2. less than five years
3. More than five years . . . . .
2.9 Apart from the basic skills for the job/activity, did you rece1ve trammg from a formal trammg center on
(CHOOSEALLTHAT APPLY) .
1. how to efficiently manage a business ( through better keepmg of records 104
of receipts and expenses)
2. how to design and improve quality ofprodÙcts 3. how to reach better markets for products 4. Other (SPECIFY) .......... .
2.10 Did you ever work in a government department or office?
1.Yes, and still working
2.13 What is the Prime motive or reason for starting this business?
1. To crea te employment for myself 2. To make profits
3. Other reasons (STATE) ............................. .
SECTION C: REMUNERATION AND WORKTIME 3.1 Do y ou remunera te y our workers (exclu ding apprentices)
1. Yes 2. No
3.4 If 'NO' how do you remunerate your apprentices
(STATE) ................................................... . 3.9 What income on average accrues to the enterprise weekly/monthly /daily?
a) Daily ... ..
b) Weekly ... . c) Monthly ... ..
e) Yearly ... .
3.10 The income received by the enterprise is divided between (CHOOSE ALL THAT APPLY) 1. Payment of rent for the workplace 7. Meeting costs of transporting input and output
8. Other (specify) .................. . SECTION D: CAPITAL, INVESTMENT, FINANCING Structure Of Capital of The Enterprise
4.1 Does the enterprise possess any of the following assets (CHOOSE ALL THAT APPLY) 1. Machines
2. Tools
3. Equipment (such as computers, typing machines) 105
4. Permanent workshop 5. Vehicle(s)
6. Warehouse
7. Others (SPECIFY) ........................................................... . 4.2 Which of the above mentioned do you own yourself? ............................ . 4.3 Which of the assets is/are either lent out to you and therefore not yours?
·····································
4.4 Does the enterprise have land of its own on which to carry further activities?
1. Yes 2. No
4.5 If 'NO' are you in the position to acquire land in case of future expansion of the business/activity 1.Yes 2.No
4.6 If 'NO' wh y are you not in the position ........................................... . 4.7 How would you describe the quality of each of the assets mentioned earlier?
Machines . . . . . .. . . . . . . . . .. .. . . . .. .. .. Valued at. ...... ..
4.8 Where did you obtain these assets (CHOOSE ALL THAT APPLY) 1. Purchased from a govemment institution
2. Purchased from a non-govemmental organization
3. Donated to the enterprise by a non-govemmental organization 4. Donated to the enterprise by a govemment institution 5. Imported into the country by the enterprise itself
6. Other(s) (state) ....................................................... ..
Mode Of Financing Of Capital
4.9 If assets had been purchased or irnported, how did you obtain the credit/money to pay for them (CHOOSE ALL THA T APPL Y)
6. From Local fmance practices (such as Kafos and Osusus) 7. From an NGO assistance
8. From IBAS assistance
9. From other source (STATE) .................................................. .
4.10 If acquisition of the above assets was partly or wholly through bank loans, how would you describe the
4.10 If acquisition of the above assets was partly or wholly through bank loans, how would you describe the