How Illegitimate Is the Informal Economy?

This over at NigeriansTalk and this piece at The Economist's Baobab Africa blog on how expensive Angola is have me thinking about the informal sector in most African countries.

Chad's N'Djamena and Gabon's Libreville are second and third, respectively, on the Expensive African Cities list (you can see the world list here). On Luanda, The Daily Maverick puts quite succinctly why the trouble of expensive African cities is such a problem:

As foreign expatriates and the money which underpins them push prices of top end goods and services, so the local elites – who eat in the same restaurants and compete for the same properties – are forced to spend more and more. And to spend, they must earn. As elite salaries rise, so the inequality gap between the vast majority of the country and the few who have made it to the top gets wider and wider. In Luanda, it’s not unusual to see Porsche’s whiz through sprawling shanty towns, their drivers on their way to a top hotel for a R1,000 meal while onlookers ponder how to feed their families on the R10 they earned that day. Not exactly a recipe for social cohesion, or development.

What is scary about the high cost of living in many an African city is not just the effect it has on Africa's rising middle class, but also the fact that most Africans find employment in the informal sector.

According to the International Labor Organization (ILO), the informal sector makes up about 80% of employment in Sub-Saharan Africa, and is also the realm in which most women in the developing world find work, whether we're talking prostitution or selling food on the side of the road (This is in the document below). The number isn't at all far-fetched to me - anyone that has ever walked or driven on a road in an African city can tell that there are far more wooden shacks selling cigarettes and sweets and street hawkers selling recharge cards than there are, say, skyscrapers and shopping malls with banks or salons or boutiques.

An interesting observation: the more developed the economy, the lesser the percentage of people who work outside the margins. 33% of South Africans and 44% of Namibians work in the informal economy, for example, compared to 74% of Madagascans and 82% of Malians). This observation, though, makes one wonder to what extent the state is complicit in creating an informal economy. To what extent is the pervasiveness of informal economies and the resigned acceptance thereof an admission of failed economic policies on the part of African governments? This, from the African Association of Planning Schools, frames it interestingly from a planning perspective:

Ananya Roy (2009:10), in an analysis of the Indian context, argues that planning cannot solve the crisis of Indian urbanisation since ‘planning itself is implicated in the very production of this crisis’. She continues,

Informality then is not a set of unregulated activities that lies beyond the reach of planning; rather it is planning that inscribes the informal by designating some activities as authorized and others as unauthorized.

This view is echoed in Oren Yiftachel’s (2009:88) analysis of the political geography of informality.
He posits the notion of ‘gray spaces’ positioned between the ‘whiteness’ of legality/approval/safety, and the ‘blackness’ of eviction/destruction/death. He goes onto argue that planning is always deeply implicated in ‘whitening’ (condoning, approving) and ‘blackening’ (criminalizing, destroying) different types of informality. Yiftachel states bluntly that the ‘informality of the powerful’ is often authorised by the state whilst alternative forms of informality remain indefinitely gray or are officially ‘blackened’.
Urban planning – that is, the combination of relevant spatial policies – is often behind both the existence and criminalization of gray space. Urban plans design the city’s ‘white’ spaces which usually create little or no opening for inclusion/recognition of most informal localities and population, while their discourse continuously condemns them as a chaotic danger to the city (2009:94).
Roy pushes this point further, arguing that ‘informal spaces’ are produced by the state, and that ‘to deal with informality therefore partly means confronting how the apparatus of planning produces the unplanned and unplannable’ (2005:156).
Wilson (1991) echoes these sentiments pointing out that historically, even the most benevolent projects and traditions of state planning have emphasized control and confinement. Although she stops short of advocating the abandonment of planning, she argues,

There is a sense in which all town planning contains both a utopian and a heroic, yet authoritarian, element. Although its purpose may seem purely practical, it does claim to offer, like the utopian work, a permanent solution to the flux and flow of the ever changing city. The plan is always intended to fix the usage of space; the aim the state regulation of urban populations.

This would suggest that informality demands a critical analysis of traditional planning tools and techniques.

I've included the document here. Check it out.

Informal Economy Toolkit 1