The informal economy for local economic development in South Africa: a constitutional law approach

Abstract

The Constitution of the Republic of South Africa, 1996 mandates local government to be developmentally oriented and proactively facilitate local economic development (LED). Although LED is not explicitly listed in Schedules 4B and 5B of the Constitution, it is succinctly provided for in both the objects of local government, and in the developmental duties of municipalities. In this sense, it is submitted that the informal economy sector in South Africa constitutes the fulcrum of LED, and the overall economy of local communities. This is particularly important because the informal economy accounts for 18 percent of the employed population of South Africa. For instance, the street trading sector exclusively ensures that more than an estimated 813 000 households live above the poverty line. Similarly, the National Development Plan 2030: Our future –make it work (2012) estimates that informal trading, as a mainstay of LED will produce between 1.2 million and 2 million jobs by 2030. Despite their significant role in economic and social development, street traders continue to experience a continuum of persecutions and devaluation from local authorities and South African municipalities. These include sustained forceful evictions, incessant confiscation of their properties (goods), illegal soliciting of bribes by police officials to grant them permission to operate in certain areas, and the lack of provision of basic municipal services. This stifling situation is indicative of the repressive relationship between the street trading sector and local government in South Africa. This study critically evaluates the legal validity of the current instruments used by South African cities in the regulation of street trading in their areas through the lens of the Constitution. The study concludes that some provisions in the instruments used to regulate street trading tacitly contradict the dictates of the Constitution. The study makes recommendations on how some of the values and principles in the Constitution should guide how cities regulate street trading in order to better facilitate LED.