New Internationalist

What Can Be Done…

Issue 173

new internationalist
issue 173 - July 1987

WHAT CAN BE DONE...

to help the subterranean
economy emerge?
In Third World countries more than half the working
population makes a living in ways that are strictly-speaking
illegal. This is rarely because they chose to. Usually they just
can't get into the 'official economy'. Either they lack education,
or money, or there simply aren't enough jobs. NI looks at ways in
which these 'informal workers' can be helped to occupy a more
secure, less exploited position - and perhaps even 'go formal'.

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1

Cut through red tape
Bribery and bureaucracy are awesome hurdles for the small business person wishing to become legal. A study in Peru showed it took 461 days, 24 bribe demands and 120ft of paperwork laid end-to-end to legally register a small clothing workshop. The same process took under four hours in a town in the US.


2
[image, unknown] Give 'barefoot' credit
'No lending to she or he who has no collateral,' is the banker's rule. But non-governmental organizations, development agencies, church and shanty-town women's groups are now making loans to small businesses being started by the very poor - whose energy and flexibility are their only assets. They repay the loans very reliably it seems.

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3

Set up advice centres
Every day thousands of migrants swell the ranks of casual workers in Third World cities. Where competition between, for example, city-centre cigarette hawkers becomes so fierce that selling is barely profitable, alternatives or ways of diversifying could be suggested. Job-skill training, legal advice and promotion of social security schemes are other possibilities. Informal workers could not only exchange information but also share equipment and could act together as a more powerful lobbying force when dealing with ministries, police and other official bodies.


4
[image, unknown] Start co-operatives
The Indian Self-Employed Women's Association (SEWA), for example, is an informal workers co-op that has its own health and social security system. Through co-ops, informal workers could agree on basic rates of pay at which they will do contract work for bosses.

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5
Create market places
Street vendors are often victims of harassment as they try to earn a living. Cities, especially Third World cities, are planned for the rich. But most of the people who live and work in them are poor. The streets are their workplace, their kitchen, and in many cases, their bed. City dwellers need ample market places, public toilets, regular street cleaning to reduce health risks, and cheap housing.

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