16th March 2021
Sello Motseta
Whilst African leaders are waxing lyrical about the landmark free trade area informal sector traders who constitute bulk of economic activity at grass roots level and have been hardest hit by the outbreak of COVID-19 are yet to realize its benefits or fully appreciate what it means.
“We are no longer able to travel freely across the border because of the outbreak COVID-19. I used to buy shoes made in Zimbabwe and sell them in Botswana,” said Thatayarona Ramusu, Chairperson of the Botswana Informal Sector Association(BOISA).
He said, “Now this is not possible because of health and travel restrictions imposed because of COVID-19. Government also has not told us how we can benefit from the continental free area.”
According to officials the Informal Sector study conducted in 2015 showed that the estimated number of informal sector businesses in Botswana was 116,571; employing around 191,176 individuals.
The estimated annual economic output of this sector was about P7.8 billion which is a contribution of 5.3% towards the country’s Gross Domestic Product. Government officials in Botswana say surveys revealed that the informal sector businesses had increased by over 233% since the 2007 survey.
Yet this critical constituency knows nothing about free trade agreement signed by government officials.
Studies show a number of challenges faced by the informal sector in Botswana, like poor working environment, low participation in the making of policies that affect them, inadequate access to credit facilities on reasonable terms and inadequate access to operating space and facilities
An exercise to register the SMME businesses was undertaken by LEA in May 2020 to determine their numbers and the areas of activities. To that end a total of 37,329 enterprises were registered, with 9,893 being formal businesses whilst 27,436 were in the informal sector. Registration is continuing.
The Ministry in collaboration with the Botswana Country Office of the United Nations Development Programme (UNDP) has commissioned further analysis of data to determine the impact of COVID-19 pandemic as well as to develop a recovery plan to mitigate the effect.
Nothing has yet specifically been developed to examine how informal sector traders can benefit from the continental free trade deal. From the data on the registered informal sector entities, most businesses are in the services sector at 64% followed by Agriculture at 21%.
The main activities in the services sector involve selling and reselling of various items that include food stuffs, catering, clothing and other items such as airtimes and other low value items.
While the Agriculture sector is dominated by goat production, poultry production, horticulture and small-scale dry land farming. Therefore, these are the focus sectors as they have the potential to deliver maximum impact in reinvigorating the sector and beneficially leveraging benefits of free trade.
Jacinta Barrins, United Nations Development Programme(UNDP) Resident Representative, said “COVID-19 has brought to light and further exacerbated the vulnerability of the informal sector businesses and in turn those whose survival is dependent on these business operations. Data shows that nearly 50% of these businesses have challenges assessing operating space and close to 40% of them have trouble assessing the market for their products and services.”
She said, “We were motivated to support the development of the plan because as a global development organization, it is in our interest to see a positive change in the lives not only of the informal sector but other vulnerable groups. We see this plan as opportunity to build-back-better from COVID-19 and emerge from it stronger.”
SMME’s with shops in Botswana precinct business shopping mall Airport Junction revealed that trading under COVID-19 has hit them hard. Manufacturers of wedding rings, necklaces, anklets, bracelets, ear rings, name plates, necklaces, bangles and ID bracelets they say business has slowed down.
They have therefore restricted themselves to trading on local shores despite the advent of a free trade area because this would require resources and further capacitating of the business.
Zamanui Dube, Goldsmith at Simsa Jewellery said “We would need to capacitate ourselves to export to other African countries. It would need machinery and skills training for employees amongst others.”
Dube said currently diamonds are cut to 10.25 carats and they often need to be cut further to convert into jewellery and various fashion accessories. There is a lot of demand for cut diamonds in Botswana but stones are sourced from neighbouring South Africa.
“We do not protect our designs. They change all the time. Unless it is a very unique design,” said Dube.
China has good cutting machinery and could possibly source raw materials cheaper because they have much better access to financial resources to enable them to buy in bulk and pass the benefit to the consumer. With weak unions and cheap labour it is possible for them to produce cheaper.
Dube an employee at Airport Junction Mall beneficiating basic mineral resources such as gold, platinum, diamonds, precious stones and silver for ornamental jewellery for consumers who are getting married and giving people gifts for various occasions is not optimistic about the continental free trade area.
One of the challenges the business is that it is difficult for them to protect their intellectual property.
“We do not protect our designs. They change all the time. Unless it is a very unique design,” said Dube.
There are therefore calls for the establishment of an Informal Sector Agency, to facilitate engagement with informal sector participants and their Associations directly and to develop, implement and manage all Government’s interventions for the sector.
“This Plan seeks to provide mechanisms for the Informal Sector businesses to respond to the effects of COVID-19; even more importantly, the plan seek to develop sustainable measures to overcome similar shocks by addressing the challenges facing the Informal Sector,” said Peggy Serame, Minister of Investment, Trade and Industry.
She said, “Therefore, the Plan rests on two strategic goals which is establishing Informal Sector Facilitation Structures and Economic Revitalization of the Informal Sector.”
Parallel to the disbursement of the P1000 grant (phase two) to informal sector businesses, is the Development of Infrastructure ensuring decent Work Hubs/ Markets and Market-Access Centres for Informal Sector Business Clusters and Services. Projects will be prioritized according to their ability to benefit a broad spectrum of informal sector enterprises, and the number of jobs they can support.
As an example an informal sector market stall is being created to establish Ledumang Car Wash City in partnership with the Gaborone City Council, who are providing all the necessary resources for the design of the infrastructure, and will manage the facilities through a cost recovery model.
It is hoped sector specific support by Government can galvanize excitement about trading across Africa.
