In Hargeisa, the role of the informal economy during and after conflict has been vital to conflict prevention and peace-building.
A recently released report by Cardiff University and Somaliland research partners on their work related to the role of urban informal economies in conflict zones offers us perspective from another angle.
A little thin on insights and interpretation of their carefully gathered data, it nonetheless provides ample evidence of the value creation and economic contribution by informal sector actors in developing country contexts. In fact, I would say, it strengthens the argument for considering the informal economy as a commercial operating environment, to be taken seriously by policy makers and programme designers.
The report finds that “the IE (informal economy) became vital in replacing services and utilities destroyed by the war within Hargeisa city which both provided livelihood opportunities for the conflict-affected urban population and replaced key goods and services which had been disrupted by the conflict.”
And discovers that it was the informal economy’s acceptance by the local populace and government, characterized by extremely low levels of harassment or criminalization that was key to its ability to contribute as a trusted resource and asset during the rebuilding of society after the civil war.
In most cities in sub-Saharan Africa, urban policy marginalises the urban informal economy (IE) and IE workers are often victimised and harassed (Lyons et al., 2012). This is not the case in Hargeisa, where informal economy workers interviewed reported very low levels of police harassment, with less than 7% of the 168 current informal economy workers interviewed stating they had experienced problems with local authority. Furthermore, there are high levels of trust and reciprocation amongst informal economy workers and in society generally, and a lack of effective municipal regulation which enables and encourages the growth of the informal economy.
The report goes on to conclude with the recommendation that recognition of the informal economy (IE) had the potential to transform the developmental trajectory of both Hargeisa, as well as greater Somaliland:
Recommendation 1: Increase national legitimacy and recognition
• Recognition: It is essential that Hargeisa’s IE workers are recognised as legitimate economic actors making significant contributions to the national and city economy.
• National Informal Economy Policy: A cross-government National Informal Economy Policy should be developed, so that the key social and economic contribution of the IE is reflected in the five-year national economic development planning and other relevant government strategies.
• National Informal Economy Standing Committee: A high-level National Informal Economy Standing Committee should be set up, with a membership of about 10 people to include high-level representatives from: the Ministries Planning and Development (chair); Commerce and Trade; Labour, Employment and
Social Affairs, Hargeisa Municipality, and SONSAF, including 3-4 representatives of umbrella IE workers’ organisations. The Standing Committee should:
o Advise on development of the National Informal Economy Policy;
o Advise on inclusion of the IE in the Five Year National Economic Development Plan;
o Recommend inclusion of the IE in other relevant government strategies;
o Undertake sector-specific analyses of different IE sectors (needs and support);
o Identify ways to extend social protection to IE workers;
o Address negative impacts of the IE (e.g. from the qat or charcoal trade);
o Assess data needs for improving understanding of the IE (e.g. through labour force surveys).
o Address lack of IE access to credit and finance
According to the Somaliland Sun, these recommendations are being wholeheartedly adopted by the local government. One not only looks forward to the developments of this groundbreaking initiative but hopes that this shift in perspective and recognition of value creation diffuses outwards with impacts on informal economies everywhere.
NB: Here’s my brief TEDTalk video on this theme from TEDGlobal 2017