Ballooning informal sector is to blame for hawker menace in our urban centers.

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By Viscount Francis K’Owuor

November 30th, 2017

Street trading or roadside hawking has been one of the biggest challenges bedeviling our urban centers. There is hardly any city or town one will go within Kenya without having to deal with overcrowded streets, which pose security and health issues. Nairobi county Governor Mike Sonko, for instance, is at loss as to how to arrest a situation that is deteriorating. He had to rescind his initial order of kicking the street traders out of the Central Business District because of potential political ramifications.

As it is, only a ruthless Governor can kick street traders out of town, because the problem goes beyond finding a market for them. Street trade is more complex than the issue of availability of space. It involves attitudes, habits, a culture and governance. Like the culture of poverty, informal trade is rooted in deep-seated values and norms, however inappropriate. The only intervention is to halt its growth by providing effective linkages through which informal business enterprise can transit into the formal economy.

Informal character of any given sector is underlined by five critical issues. One is standardization, which unfortunately is a product of regulation. Accordingly, business enterprises must conform to set standards of quality, order, ethics, and cleanliness (where applicable). It cannot be a free for all venture, especially if such liberality would compromise quality.

Second is the idea of predictability, and this is where location comes in. Traders and customers must be caused to operate in a predictable environment to address anxiety, impulsion and losses that arise from working in an improbable business environment. Businesses thrive on trust, confidence and familiarity. This is not possible where traders have no permanent locations for business. Urban planning should therefore allocate enough space for businesses.

Since land is inelastic, there cannot be enough space for markets, malls and stalls. The solution is to embrace the concept of Integrated Development, where organizations, institutions and agencies allocate some small space for business centers. It means there will be a business center for every school, hospital, government office, apartment blocks, stadium, church, etc. This will reduce the need for stand-alone markets and stalls and save on land use.

Third is the issue of licensing. It doesn’t make sense for the county government to collect revenue from the same businesses it considers a menace, because this amounts to collecting taxes from illegal proceeds. Instead, the government should have a taxation regime that provides legitimacy and security for businesses. If a person is operating a business in an area not designation for trade, he should be issued with a quit notice and exempted from paying tax. If he is taxed then the government must protect his business to the extent expected of any other government.

Forth is the issue of culture and value system. Fragmentation among informal traders means they cannot benefit from synergy and social capital. If they were organized into co-operatives, unions, companies, etc., they be able, for instance, to buy and sell in bulk, get capital to expand their business and enter the formal economy, influence government policies and benefit from improved business infrastructure.

Last is the issue of governance. Corruption and mismanagement encumbers the government and make it difficult to expand the economy by creating a conducive environment for wealth creation. In the absence of large firms that can provide enough employment opportunities, Kenyans are left with no option but to rely on informal livelihoods.

Without the government being proactive, hawking and street trading will remain a permanent feature of our cities and urban areas.

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