Informal Sector Entrepreneurs Research Articles

The Relationship between Financial Literacy and Retirement Planning among Informal Sector Workers in Randburg, South Africa

Abstract Research background Retirement planning is viewed as one of the cornerstones of long-term household financial security. The responsibility of retirement planning has now been shifted to the individual and is no longer the responsibility of the employer. Purpose This paper examines the link between financial literacy and retirement planning among informal sector traders in the Randburg area of Johannesburg, South Africa. Research methodology A questionnaire approach was used to collect data from 269 randomly selected informal sector respondents. The data was analysed using ordinal regression. Robustness tests were executed using the Wald test. Results Findings reveal that financial literacy is linked to retirement planning, and especially with reference to informal sector workers. Additionally, education, income and the informal business sector were observed to have a positive and significant influence on retirement planning. Novelty The paper contributes to both theoretical and practical discourses on retirement planning for informal sector entrepreneurs which has not received much attention. These results are important for policy makers in retirement planning as well as curriculum development.

How Immigrant Shopkeepers in Johannesburg Townships Succeed: A Customer's Eye View

In the face of struggling native-owned informal grocery businesses, immigrant-owned shops in Johannesburg townships have demonstrated remarkable success. While research on this topic has been primarily informed by shopkeeper data, this article explores the phenomenon from the viewpoint of customers. Given that customers play a significant role in facilitating the success of businesses, the dearth of a customer perspective of the success of immigrant shopkeepers presents a gap in knowledge. This study addresses this gap by investigating the interaction between shopkeepers and customers from the perspective of customers. Drawing on the theories of customer value and customer satisfaction, the author proposes that customers prefer to patronize immigrant shopkeepers due to the considerable value they provide. The study was conducted in the Johannesburg township of Alexandra and involved the collection of cross-sectional quantitative data from 400 households. The findings indicate that customers patronize immigrant-owned businesses due to the superior value they receive, thereby enabling their success. This research highlights the importance of providing value to attract customers and contributes to the literature on the role of customers in informal business performance. Furthermore, the study sheds light on the contribution of customer reciprocation of shopkeeper value and has important implications for policymakers, business owners, and scholars alike. It underscores the need for a more nuanced understanding of the dynamics underlying the success of immigrant entrepreneurs in South Africa's informal retail sector.

Social Inclusion of women Entrepreneurs in Informal Sector of Uttar Pradesh (A Case Study of Meerut District)

Every emerging economy urgently needs to empower women in order to create a system of socially balanced labour force needed to accelerate economic development. Because of this, the rate of employment for women is higher. Women's contributions to the informal sector, however, cannot go ignored. In the unorganized/informal sector, there are women who work for themselves and their families as independent contractors. Thus, the five main categories of women entrepreneurs in the unorganised sector—self-employed in businesses including beauty parlours, tailoring, retail stores, grocery stores, and food/tiffin systems—were identified in this paper. In Meerut City's unorganised sector, where the beauty parlour and tailoring industries have been recognised as having the highest proportion of women workers, this paper identified and highlighted the socioeconomic position of women entrepreneurs. From the overall number of self-employed women studied, the majority belonged to the Hindu faith and to the General group. Women entrepreneurs face a number of difficulties, such as financial constraints, a lack of managerial skills and time, societal concerns, a decrease in the number of customers who support them, family issues, a male-dominated society, and awareness issues, among others.

Motorcycle three-wheelers in Pakistan: Low-cost rural transport services, crucial for women’s mobility

Rural women and men without their own means of transport depend on transport services. In low- and middle-income countries these are mainly provided by informal sector entrepreneurs. In Pakistan, motorcycle three-wheelers (designed as six-seater, route-based vehicles) provide most rural transport services. Research was undertaken in three districts of Punjab Province, with traffic counts and surveys of transport users. Motorcycles are increasing rapidly, and men’s use of transport services is declining. The traffic counts showed motorcycles for personal and family use carry almost half of the people travelling. Women are increasingly passengers on motorcycles driven by male relatives, but these are seldom available for women’s multipurpose trips during the daytime. On village-to-town roads, motorcycle three-wheelers are the only low-cost (two cents USD per passenger-km) public transport throughout the day. Point-to-point taxis are more costly. Most (55%) of women’s public transport journeys are in three-wheelers. Women and men rate motorcycle three-wheelers highly, particularly their fares and frequency. Women have a greater willingness to pay more for less crowded, safer vehicles than men. It is concluded that the informal sector motorcycle three-wheeler services are optimising village-to-town transport connections, providing the only low-cost travel option for many rural women. Policies should avoid disrupting their vital services. With motorcycle growth undermining transport services, gender-aware strategies should be developed to facilitate frequent, uncrowded three-wheeler operations.

BEYOND THE MARGINALIZATION THESIS: AN EVALUATION OF THE PREVALENCE, CHARACTER AND MOTIVES OF INFORMAL SECTOR ENTREPRENEURS IN KOSOVO

The conventional depiction of the prevalence, character and motives of informal sector entrepreneurs, here termed the ‘marginalization thesis,’ has been that informal entrepreneurs are a small, insignificant minority of all entrepreneurs, are more likely than formal entrepreneurs to belong to marginalized groups and are more likely to be necessity-driven entrepreneurs. To evaluate critically this marginalization thesis, evidence is here reported from a 2017 survey of entrepreneurs in Kosovo. This reveals that 42.5 percent of entrepreneurs are informal entrepreneurs, that only some characteristics of marginalized populations are more prominent among informal than formal entrepreneurs (e.g., low educational level, deprived households) but others are not significantly associated (e.g., gender, age, ethnicity), and that although informal entrepreneurs are more likely than formal entrepreneurs to be necessity-driven, only fourteen percent of informal entrepreneurs are purely necessity-driven. The outcome is a call to recognize the prevalence of informal sector entrepreneurship, the heterogeneous groups engaged in informal entrepreneurship and the existence of opportunity-drivers among informal entrepreneurs. The theoretical and policy implications are then discussed.

Dimensions of Informal Sector Association Membership: Experiences from Jua Kali Associations in Western Kenya

This article explores the various dimensions of membership of informal sector entrepreneurs in business associations they ostensibly formed to pursue their needs and strategic interests. It is based on a case study of Jua Kali Associations (JKAs) in Homa Bay Town in Western Kenya using Hirschman's concept of exit, voice and loyalty as the theoretical frame and data generated and analysed through a qualitative research design. The broad spectrum of membership dimensions ranging from active membership, to dormant membership and non-membership are being examined. The analysis points to certain factors that influence decisions of informal sector entrepreneurs to what degree they engage in their associations. The study further shows that there are jua kalis who decided not to join any association in the first place. Only very few jua kalis took the conscious decision to exit their associations (often due to disappointment and frustration) leading to ‘open exit’. The study concludes that exit is multifaceted and that this experience merits attention since it contributes to the fact that only a very small number of all informal sector entrepreneurs operating in Homa Bay Town were JKA members utilizing the associations in pursuit of their organized voice.

Manifestation and Benefits of Voice among Informal Sector Entrepreneurs: Experiences from Jua Kali Associations in Western Kenya

This article explores how voice manifests itself among informal sector entrepreneurs and the benefits of voice based on a case study of Jua Kali Associations in Homa Bay Town in Western Kenya using Hirschman's concept of voice, loyalty and exit as the theoretical frame [30] based on data generated and analysed through a qualitative research design. The study’s findings show that voice among entrepreneurs in the informal sector constitutes expression of interests, needs and priorities which vary among the members of the JKAs examined and are shaped by different factors such as their socio-economic profile, the nature of their business and the environment the women and men entrepreneurs operate in. Expressions of voice can be in a continuum ranging from soft voice used by individuals in the private sphere to loud voice and organised protests in the public domain. The study further shows that among this group of people, voice can have multiple benefits; key among them contributions to their social protection, and economic and political empowerment; voice can also contribute to enhanced self-esteem of individual entrepreneurs. The former benefits can be realised when Jua Kali Association members are organised and have systematic and prolonged engagement with their respective audience.

Social Capital and Entrepreneurial Outcomes: Evidence from Informal Sector Entrepreneurs in Ethiopia

In Africa, social capital (SC) is an important resource for the informal economy. It substitutes the limited formal business support systems as factor inputs for enterprise development. This article investigates the effect of Burt’s structural holes theory of social capital in the context of the Ethiopian informal economy. Data were collected from street entrepreneurs in Addis Ababa using multiple name generators constructed on the basis of entrepreneurs’ frequent interaction with people related to resources needed for entrepreneurial activities. Social network analyses and statistical procedures of instrumental variables estimation were used to analyse the data. By controlling the potential endogeneity problem between structural holes and enterprise outcomes, the findings of the study show that entrepreneurs’ dense network structure, which lacks structural holes, has a significant negative effect on entrepreneurial outcome. Accordingly, policies that aim at supporting informal entrepreneurs need to consider the benefits of social contacts while taking into account the downside of being excessively embedded in dense networks.

Social Inclusion of Women Entrepreneurs in Informal Sector of Uttar Pradesh

Social Inclusion of Women Entrepreneurs in Informal Sector of Uttar Pradesh

Theorising Entrepreneurship in the Informal Sector in Urban Brazil: A Product of Exit or Exclusion?

This article evaluates critically the competing explanations for informal sector entrepreneurship that read such endeavours to result from either ‘exclusion’ from state benefits and the circuits of the modern economy or the voluntary ‘exit’ of workers from formal institutions. Reporting evidence from a 2003 survey in urban Brazil, it is revealed that similar proportions of informal sector entrepreneurs explain their participation to result from their involuntary exclusion and voluntary exit from the formal economy. The outcome is a call to shift from an either/or to a both/and approach when explaining informal sector entrepreneurship and for wider research on the relative weightings given to exit and exclusion in different contexts so as to develop a socio-spatially contingent explanation for participation in informal sector entrepreneurship across the globe.

Is Informal Sector Entrepreneurship Necessity- or Opportunity-driven? Some Lessons from Urban Brazil

The aim of this paper is to evaluate critically the widely-held assumption that entrepreneurs operating in the informal sector in developing nations are largely necessity-driven entrepreneurs, pushed into this entrepreneurial endeavour as a survival strategy in the absence of alternatives. Reporting an extensive 2003 survey conducted in Brazilian urban areas of informal sector entrepreneurs operating small businesses with less then five employees, the finding is that under half of the surveyed entrepreneurs are driven out of necessity into entrepreneurial endeavour in the informal economy. The outcome is a call to recognize the prevalence of opportunity-drivers amongst entrepreneurs operating in the informal economy and to reposition informal sector entrepreneurs more centre-stage in discussions of entrepreneurship and enterprise development.

EVALUATING THE GENDER VARIATIONS IN INFORMAL SECTOR ENTREPRENEURSHIP: SOME LESSONS FROM BRAZIL

The aim of this paper is to evaluate critically the gender variations in informal sector entrepreneurship. Until now, a widely-held belief has been that entrepreneurs operating in the informal sector in developing nations are lowly paid, poorly educated, marginalized populations doing so out of necessity as a survival strategy in the absence of alternatives. Reporting an extensive 2003 survey conducted in urban Brazil of informal sector entrepreneurs operating micro-enterprises with five or less employees, the finding is that although less than half of these entrepreneurs are driven out of necessity into entrepreneurial endeavor in the informal economy, women are more commonly necessity-driven entrepreneurs and receive lower incomes from their entrepreneurial endeavor than men despite being better educated. The outcome is a call to recognize how the gender disparities in the wider labor market are mirrored and reinforced by the participation of men and women in the realm of informal sector entrepreneurship.

Sustaining Informal Sector Women Entrepreneurs through Financial Literacy

The United Nations’ Millennium Development Goals seek to address poverty among other things. It is assumed that addressing poverty issues through financial literacy will bring growth to a country’s economy. The informal sector is one avenue that has been observed to be contributing highly to the creation of employment opportunities, economic development and empowerment in South Africa, especially for women. However, the informal sector is heterogeneous which makes it difficult to quantify its profile, and due to the nature of its existence, informal sector entrepreneurs are often characterised by low levels of skills, limited access to organised markets, and low and unstable incomes. This is influenced by their lack of knowledge and skills in business management. It is believed that financial literacy can improve the performance of informal sector entrepreneurs and sustain business information and skills. By means of financial literacy, their basic life skills such as numeracy and literacy, communication skills and information searching skills will be improved which, in turn, will improve their confidence, generate good income and Millennium Development Goals 1−3 , namely that of poverty alleviation and equal education opportunities for women, though not all will be reached. The study uses focus group discussions, interviews and observations to explore financial literacy levels and their impact on informal sector women entrepreneurs (ISWEs) in South Africa. The purpose of this study is to determine their mathematical literacy, money management behaviour and skills, selection and utilisation of financial products, and access to and utilisation of information and advice. There were young, middle-aged and older ISWEs in the three focus groups. Participants had some limited skills such as personal, business operation and mathematical literacy. It was also interesting to determine the ISWEs’ realisation of their lack of awareness of business information services, and of their need for training interventions.

The Contribution of Entrepreneurship Education Course in Enhancing Management Skills of Informal Entrepreneurs

The study was conducted to investigate the contribution of entrepreneurship education in technical training colleges in enhancing management skills of informal sector entrepreneurs in Kenya. A case study of informal sector operators in Nairobi was conducted. Qualitative data was collected using in-depth interviews and observations. The data was analyzed using the grounded theory. Findings of the study showed that the informal sector operators used skills they gained in entrepreneurship education in technical training colleges to gain access to the informal sector industry and to manage their business. Those with higher training in entrepreneurship education tended to excel in their operations. A closer look showed that there was still a need for further training of management skills to better their activities. The recommendations were that secondary schools in Kenya should include entrepreneurship in secondary education system curriculum so as to help the school leavers who fail to join tertiary education and end up in the informal sector.

Determinants of the Locational Decisions of Informal Sector Entrepreneurs in Urban Zaria

This paper examines the factors that determine the locational decisions of small-scale informal enterprise promoters in urban Zaria. The paper relied on data obtained through the administration of structured questionnaire that was designed to gather information on the relative importance of the locational factors considered by entrepreneurs in making decisions of the enterprise location. For the purpose of this study, Zaria area was divided into seven neighborhood clusters and three clusters were purposively selected for indepth study. The three selected neighborhoods have high density of informal activities. The first step in the survey was the identification of the small-scale informal enterprises in the selected clusters. A purposive sampling technique was adopted in selecting the sampled informal enterprises. The data was analyzed using descriptive statistics, Kruskal-Wallis non parametric test and Spearman Rank correlation matrix. The results indicate that proximity to family was the most critical factor (Mean = 2.83) that entrepreneurs consider in making their locational decisions. The results further indicates that proximity to family members was positively correlated with entrepreneur’s residence (rho = 0.406, p < 0.001). The implications of this result is crucial for urban planning because the location of informal enterprises in residential areas poses serious environmental challenge and disamenity effects to residential clusters that were not designed for industrial activities.

THE VIABILITY OF INFORMAL MICROENTERPRISE IN SOUTH AFRICA

This paper analyzes entrepreneurs in South Africa's informal sector. The aim is to determine the extent to which African informal retail trade spawns viable enterprises. To assess the prospects for South Africa's informal retail sector, we obtained questionnaires from owners of small-scale establishments in a random sample taken throughout the country in 2007. Owner's income and sales data provided a basis for investigating viability. Regression analysis tests hypotheses identified as crucial to higher income and sales, including startup capital, size, male/female ownership, business training and the proximity to shopping centers. Also tested is the influence of urbanization externalities on sales and owner's income. Initial capital and positive urban externalities have a strong influence on the ability to generate a sustainable livelihood for informal entrepreneurs. After controlling for startup capital, location and other factors, it appears women entrepreneurs face distinct difficulties in generating a viable income through informal retail trade.

Women entrepreneurs in the Indian informal sector

PurposeStudies on women entrepreneurs either view women through a structuralist lens, as marginalised populations engaged in low‐quality work, or through a neo‐liberal lens, as engaged in relatively higher quality endeavour more as a rational choice. The aim of this paper is to evaluate critically these explanations in relation to women entrepreneurs in the informal sector in India.Design/methodology/approachTo evaluate the contrasting explanations of structuralist and new liberal approaches, questionnaire surveys were conducted in two phases, namely 2007 and 2010, over a period of several months. The sample design was stratified random and the sample was taken from a range of cities in different parts of India.FindingsThe survey of 457 women entrepreneurs of the informal sector shows that although the structuralist representation is largely appropriate for women working as waged informal employees, it is not as valid for women informal entrepreneurs working on a self‐employed basis. The results challenge the traditional understanding of the informal sector, and self‐employed women in particular, and are discussed in the light of the institutional rational choice framework.Research limitations/implicationsThe analysis highlights how the decision of entrepreneurship does not stand in isolation from other decisions and choices, is in line with normative considerations, and is a collective rational choice for women entrepreneurs in the informal sector. This analysis is a first of its kind and calls for additional surveys to be undertaken of female (and male) informal entrepreneurs in other countries to establish this concept.Originality/valueThe analysis critically evaluates established explanations in relation to women entrepreneurs in the informal sector through an empirical survey and establishes new explanations on women entrepreneurship.

Informal-Sector Entrepreneurs, Development and Formal Law: A Functional Understanding of Business Law

The informal sector represents 40-60% of Sub-Saharan Africa’s GDP, and employs as much as 93% of non-agricultural workers in Sub-Saharan Africa. Given the importance of this sector, and given the understanding that formal law does not penetrate easily or predictably there, classic business law alone cannot create for informal-sector nano-entrepreneurs an environment comparable to that enjoyed by a business person in the global North.Reform of business law must focus on functionality: how to assist informal-sector businesses by increasing the predictability of transactions while limiting government abuse, all in connection with the formation, operation, and, ultimately, termination of businesses. The attack is two-pronged. Formal law can constrain formal-sector actors, such as some landlords transacting with informal-sector businesses, and mandate that formal-sector actors provide pro-business realities that Northern businesses enjoy, including sanitary work environments. With respect to the informal-sector nano-entrepreneurs, who tend not to be directly affected by formal business laws, but who do have a legal a quasi-traditional legal regime that affects businesses, formal laws that reinforce existing business norms will be the most effective in supporting North-style predictability. Further, a modern legal study focused on the formal sector suggests that, in Sub-Saharan Africa where the legal regimes tend to be highly centralized, formal law can be most effective for nano-entrepreneurs if it assists them in coordinating and, ultimately, in creating or negotiating for basic protections taken for granted by businesses in the global North.

Absorbing informal sector operators into improved urban services

Urban development for growing, modern cities may have adverse effects upon the inforal sector. This article is based on three case studies from Bangladesh, India and Ethiopia. The first two illustrate the challenges faced by informal sector workers resulting from developments in the transport sector in Bangladesh, and in the energy sector in Ethiopia. In both cases, the informal sector entrepreneurs are characterized by low incomes, vulnerability and high competition for limited markets, and the research suggests that their vulnerability was increased by urban development. The third case study is intended to show how the needs of informal sector workers can be accounted for in development processes. In it, waste-recycling entrepreneurs are employed by an organized waste collection service. The author considers what could have been done to avoid some of the adverse impacts, and asks what is now needed to address the hardship and vulnerability faced by displaced service providers. Recommendations are made for future projects aimed at practitioners and policy-makers.

Information Seeking Behavior of the Informal Sector Entrepreneurs: The Uganda Experience

This article reports the results of a study aimed at identifying the information needs and uses of the informal sector in Uganda. The demographic and business characteristics of these entrepreneurs are highlighted and empirically tested with regard to their information needs. This study has largely employed qualitative research methodologies, such as the critical incidence technique for interviews with 602 informal sector entrepreneurs from a variety of trades. Observations of the entrepreneurs' work environments and historical methods were also employed. The results suggest that modern/exotic models of information transfer based on textual media and ICT exhibit less impact on the entrepreneurs' information needs and use at macro levels because of poverty, illiteracy and poor information infrastructure. It is however noted that most ‘elite’ models share a platform with information behaviour of entrepreneurs at the micro levels. The study concludes that an appropriate model for information behaviour for the information poor community must be grounded on oral traditions and indigenous knowledge and be sensitive to poverty, infrastructure and illiteracy. Recognition is also made of the need for information repackaging and the use of appropriate media for information provision.