From the Bottom Up — Normalizing the Informal Sector
Waking up early in the morning, at every taxi rank, every street in the hood you, find yourself being able to suddenly order coffee and vetkoeks right on the spot. Oh, you can also buy sweets and snacks for your self to help you endure the taxi ride to work. This is how thousands of South Africans manage to keep their households cash positive.
Thousands of black graduates will tell you stories of how their parents self employed, worked long hours daily and managed to feed themselves. This sector that has financed lawyers, scientists, doctors and creatives through university is largely considered informal.
With the South African economy in trouble, millions of people “unemployed”, when you hit social networks you get to notice that the industry which initially was occupied by grand mothers and mothers of families has now attracted the youngsters. With a hope of putting food on the table at home, ability to perhaps have money to fill those employment forms and print endless CVs. A few have bigger hopes of finally growing their informal enterprises into futuristic sustainable businesses, suddenly the previously unattractive sector just got a lot more attractive.
This is the new age of businesses. Suddenly you listen to government and they discuss how the sector needs to be regulated, how this sector need to pay taxes and how the sector needs control. You listen to big corporates’ they also want a piece of the pie, with banks creating thousands of products to try capture this market. Money market businesses and package delivery services throwing their hats in the mix, perhaps all our approaches are entirely wrong. Perhaps the biggest hindrance is the nearsightedness approaches to this sector. We want to capture it and we want to profit from it now.
The reality of the matter is that, if you charge a tuckshop, or a street vendor a monthly business banking fee of R250 you have lost them already. Charging an informal business R175 to be registered at CIPC might also be a little too much. By calculation, for that month alone, a government sector and a bank already are requesting more than R400 from this small vendor. Lets add vendor permits, space permits, SARS lines and registration to that mix. Just a food for thoughts, Where do we think an informal tuckshop gets money and time for a five hour line at SARS?
For these businesses, an hour of their time is worth more than can be said. They are admins, employees, stock takers and man power of their businesses. If they are taxed 5 hours of their time on a SARS line, that means their revenue takes for that day are equaled to zero, no questions asked. Perhaps SARS needs to go to communities? What about if we were to have SARS container business offices at all the hoods? Maybe that would be of help don’t you think?
Banking sector is already making billions through people of South Africa. I do not think a no charges (zero charges), small businesses account will hurt. Monetizing of the informal sector should come with education and businesses support. By now we know that unless there is an incentive for this sector to join in, they will always opt to trade informally. Supporting, educating and providing them these services with incentives allow the banking sector to earn their trust.
Governmental regulations also get in the way when we discussing this topic. When you take a moment right now and think of how many people with cool products have you seen around? It can be on social media or on the road. I am sure you will count a few. Their hindrance is regulations and their expense. When you step back from this topic and analyse it, you will be in a position where you ask yourself a few questions. How approximate to people are organisations such as consumer goods council of South Africa? How much does it cost to register products at such organisations? The pricing is astronomical when you look at it in comparison to where in business the informal sector is.
Technology can be a solution to a lot of these complications. A proper working SARS software reduces time spent form 5 hours to 30 minutes. Suddenly you have time to actually register and go through SARS. A properly planned and inter governmental departments FICA system that verifies people location and personal details will also come in handy. Instead of printing thousands of documents, certifying them and sending them around, an integrated system would allow South Africans to save all their details there and the governmental organisations together with businesses to call this verified data from there. That is another possible place for revenues for government. Inefficiency is when a person is required to fill in CSD forms online, attach all this FICA documents and still have to submit those document every time they bid for a governmental contract or any contract or every time they have to submit documents to SARS.
Governmental systems need to be smart and allow people to do more while saving time. Are we expecting “international investors” to come and industrialise on our shores? Government through Public Investment Cooperation (PIC) should not just be a pension fund investment organisation. They should be an enabler of Industrialization. I understand there is IDZ, RBIDZ, Trade and Investments and a lot more organisations that focus on this part. My question is though, how accessible are this organisation to a little boy or girl in the hood? Do they even know about them? If not, whose responsibility is it to ensure that all South Africans know about this?
Continuously, one stop shops with all this organisations are created for investors in rich cities such as Sandton. It takes a lot of energy and money to get yourself from Soweto, Diepsloot or Alexander to Sandton. What about if you are from second rated provinces such as Limpopo, North West or Eastern Cape. When do they get these expensive one stop shops? We need to look from within before we can look outside and I am sad to say our within still need a lot of work
Originally published at Algorhythmlab.
