Speech by Limpopo Premier Mr Sello Moloto at African Co-Operative for Hawkers and Informal Business (ACHIB) 21st Annual Conference, Ranch Hotel, Polokwane

Programme director
MEC for Economic Development, Environment and Tourism
President of ACHIB-Lawrence Mavundla
National and Provincial executives of ACHIB
Honoured guests
Delegates from all provinces
Ladies and gentlemen

Informal traders and hawkers are found almost everywhere in our country; be it in taxi ranks, football stadiums, railway stations, shopping malls and even in busy intersections. For many, hawking is a form of survival rather than a business. It is an escape from a life of crime and from illegal means of making a living.

We know that, one of the reasons why people would find themselves involved in informal trading, is because of the challenge of unemployment and absence of requisite skills.

Unlike in some developed countries where people get involved in informal trade out of sheer choice or family tradition, many in our country do so out of necessity or desperation.

However, the important thing to remember is that, the little money generated by informal traders, is able to put a meal on someone's table. Many are also helping out to pay university studies through the income generated from this industry.

Although incomes in the informal economy are often too low, cumulatively this activity contributes significantly to the gross domestic product (GDP) of our country, contributing approximately 10% to South Africa's GDP. In other words, the industry accounts to no less than R51 billion (according to 2004 estimates) to the economy of South Africa, which can only suggest that the industry is growing beyond limits.

From the beginning, there were always two extremes that we had to face as a new government in dealing with informal trading. First, It was either we ignore informal trading as a nuisance, at our own peril; or embrace it as one of the drivers of our economy.

Throughout the years we learned that, removing hawkers off the streets, while it may be a short-term relief, does not always provide the solution we need in order to make the sector grow.

All too often we blame street hawkers for contributing to the amount of litter and debris on our streets, forgetting that municipalities also have a responsibility to demarcate informal trading zones and to provide good business infrastructure for housing informal business activities.

The other challenges which the sector faces, has always been on how to:

* access financial services and credit facilities
* access training and business skills
* access business infrastructure like shelter and storage
* access basic services for the sector like water and electricity
* regulate the industry.

Today everybody seems to agree that, the bigger challenge should be on how we regulate the sector by developing informal traders and their immediate environment. It is no longer a debate that, the informal economy plays a vital role in the mainstream economy, because goods and services produced in this sector are often distributed even to small communities, which under normal circumstances would not have a retail outlet. Therefore, instead of blaming hawkers for everything, from crime to uncleanness, we should rather look at hawkers as entrepreneurs who need our support to be uplifted.

While municipalities have an obligation to enforce by-laws, traders/ hawkers on the other hand have a responsibility and a challenge to keep their environment clean, and to do business under conditions of legality. We need both parties to understand their roles and responsibilities in order to make the sector viable.

This is why our long-term strategy as government is to continuously regulate the sector by shifting emphasis from punitive law enforcement, towards creating a more sustainable and supportive environment for the sector to thrive.

We believe these can be done by introducing measures such as awareness and education on by-laws, and improvements in skills and supply chain. In this regard, government has made it a policy that, all our small suppliers are paid within a 30-day cycle. Our understanding is that all our provincial departments are sticking to this policy, and if there are known deviations regarding these, let us be informed.

Programme director, however, it needs to be noted that, the informal economy cannot be classified as an "independent economy" standing on its own. To a larger extent the informal economy is part of the small, medium and micro enterprises (SMME) sector. This means, all of the activities in the second or informal economy are in one way or another linked to the formal economy. Even the most marginal of those working informally, are linked into the fist or formal economy. Take shebeens and taverns for instance; they all source liquor from suppliers like the South African Breweries (SAB) which is in the first or formal economy. The same can be said about the taxi industry, whose value chain is directly linked to the formal motor, insurance and petrol industries. Our challenge therefore, is to formalise informal trade by helping these enterprises to graduate and to climb the value chain ladder.

Government cannot be seen to be killing people's initiatives, and, if there is anything we can do, is to build more and not less entrepreneurs of different shades and backgrounds.

In this regard, we are delighted that ACHIB has seen the need to consider establishing its own co-operative bank to service its 130 000 members in the second economy. This banking model would enable ACHIB members to share responsibility, risks and profits amongst others. We believe the Mzansi Account and the Co-operative Banks Bill, will come in handy, to make the informal sector more bankable. There are already many successful community and village bank models around the world to look up to. The resounding success of the Grameen Bank in Bangladesh is one such model.

It is perhaps opportune, that as we countdown the next 1 000 days before the Fifa World Cup games begin, ACHIB should start thinking seriously about what these games hold in store for its members. As always, we will expect you to be of help and of service to the thousands of visitors who would have descended on our shores. Everybody would wish any trader or hawker to treat them with decorum and hospitality, whether they are found to be foreign or not. Once again, the conduct and behaviour of your members will determine our reputation as a country, whether we are seen as worthy hosts or not.

I wish you a successful conference.

I thank you.

Issued by: Office of the Premier, Limpopo Provincial Government
15 September 2007