Focus on the informal business sector

The informal business sector, usually dismissed by economic planners and their balance sheets, is taking on increasing importance in Swaziland as the government struggles to battle poverty and unemployment. Street vendors of fruits and used clothes, hair cutters working under trees in city parks, and boys washing cars at stream beds - people at the margins of the economy - are now being taken seriously as a route for semi-skilled workers to become entrepreneurs. Every micro-project has the potential to be an embryonic formal sector business, is the dawning realisation. "Formal sector employment recorded only 749 additional jobs to the country's 93,962 jobs in 2001, which is low even for a small economy like Swaziland," a statistician with the Central Bank told IRIN. "But the informal sector's ability to create jobs is limitless." The proliferation of street hawkers in Manzini, the country's commercial centre, has grown from a dozen vendors 10 years ago to hundreds today. Mostly women, they spread wares from mangoes to alarm clocks on sidewalk pavements beneath colourful awnings of translucent plastic. Earnings in the informal sector are low, but rent and other overhead expenses are nonexistent. In a land where two-thirds of the population live below the poverty line, any activity that generates income is embraced. Unemployment stands at 40 percent in Swaziland, according to the Ministry of Economic Planning and Development. While concerted efforts to lure foreign investment to the kingdom has resulted in new factories that have reduced the unemployment figure from last year's historic high of 45 percent, for many Swazis the desire for a job cannot be met by limited opportunities in the formal sector. "You have to be self-reliant," said Thuli Ndsinisa, who sells cookware at Manzini market, where vendors are required to pay monthly rental for stalls whose address is considered more up-scale than the city pavements. Her husband, Jabulani Ndsinisa, makes the cookware at the market, cutting, bending and pounding sheets of thin galvanized iron into pots, washtubs, and chimneys. He says these goods are always in demand, but the big chain stores and supermarkets in town do not handle such merchandise. "I could make more money if I could hire assistants, and find a workshop," Jabulani said. Toward that end, the European Union this week dispersed nearly US $300,000 in grant money for micro projects approved by the Ministry of Economic Planning and Development. The ministry's principal secretary, Ephraim Hlope, heads the technical steering committee that approves projects that receive EU funding. "Small entrepreneurs have come to us with ideas in agriculture, education and rural electrification," Hlope said of projects that were found to dovetail into national development needs in those sectors. "Ten schools were allotted funds for education-oriented projects that will train the entrepreneurs of tomorrow." But not everyone agrees that the informal sector is the answer to high unemployment or poverty eradication. Jan Sithole, the secretary-general of the Swaziland Federation of Trade Unions, told IRIN: "The money people can earn is not much at all, and of course there are no benefit packages that come with such work. It is not a replacement for formal sector employment." Nevertheless, the workers federation took up the cause of street vendors seven years ago. The security of those workers was attached to a list of social and economic reforms presented to government as the "27 Workers Demands". At the time, city council rangers physically routed women vendors from the pavements, and confiscated their wares. While such raids still occur, they are rare, and most vendors have been given corners at Manzini and Mbabane intersections where foot traffic volumes are high. "Informal sector growth has been hampered by a lack of capitalisation," said business writer, Titus Shabangu. "There are a lot of home owners who cannot use their property for collateral because 80 percent of Swazis live on chiefs' land, which is communal, and they don't own title deed to the land. All the people who live in the township slums don't have any property at all to get started." Swazis are encouraged to create micro projects that can become businesses. Lending to micro projects has become a preferred form of donor assistance because they can spread funding among many more people, and less risk is involved because the sums are small. With grants come technical support to ensure that a project works. Some NGOs that arrange funding for micro projects use these businesses to promote social welfare efforts. In Manzini, Bomake Wabomake has as its agenda the empowerment of Swazi women. The micro projects include women's cooperatives that raise poultry, sew garments, and cultivate vegetables. The payback rate for its loans has been an impressive 97 percent. The government's National Emergency Response Committee for HIV and AIDS, gives grants to projects that address the AIDS epidemic in the country, while providing jobs and needed community services. These include agricultural schemes for rural areas that give income-earning opportunities to people who are HIV-positive or who have AIDS but cannot work regularly, and town hospices and orphan facilities requiring staff. Most small business grants dealing with AIDS in towns are provided by the Alliance of Mayor's Initiative for Community Action against AIDS at the Local Level (AMICAALL). The mayors of Swaziland's 11 towns and cities have AMICAALL community coordinators attached to their municipal staff to consider business projects, and to assist entrepreneurs with funding applications. Nkululeko Simelane, 22, carves figurines from wood he gathers in the hills, and sells his wares at the roadside for tourists. He has been doing this for five years, without the assistance of grants. "I have never looked for a job working for anyone. You hardly ever see a Swazi boss in the stores and factories. But here I am my own boss. I get an idea, and I go with it."