Organising the disorganised: the proposed Informal Economy Voice Strategy

Market in Madang, PNG (Tanaka Juuyoh/Flickr/CC BY 2.0)
Market in Madang, PNG (Tanaka Juuyoh/Flickr/CC BY 2.0)

Despite its contribution to the economy by way of providing employment and income to almost 85% of the population, especially women, very little has been done to promote the informal economy in Papua New Guinea (PNG). Although the PNG government has made clear its intention to support the growth of the informal economy through the introduction of a policy and Informal Sector Development and Control Act, informal economy participants are largely marginalised from government plans and priorities. Participants in the country’s large but fragmented informal economy lack “voice”, or the ability to collectively bargain with the government to ensure that their issues are addressed. To date, there is no proper mechanism to allow for dialogue between the government and informal economy participants throughout PNG. Subsequently, the informal economy operates in total anarchy, with very little (if any) government control.

In a move to organise PNG’s informal economy, the Consultative Implementation and Monitoring Council (CIMC) and the Department for Community Development and Religion have embarked on developing a new Informal Economy (IE) Voice Strategy. The strategy aims to mainstream and integrate concerns raised by informal economy participants to the relevant government agencies at various levels of government. The strategy also provides for systematic multi-stakeholder involvement, including Civil Society Organisations (CSOs) and local community representatives. The outcome of this strategy is to provide for specific actions and outputs relating to organising informal economy participants into Investment Promotion Authority (IPA)-registered Informal Economy Associations. This will give them a strong voice to influence government decisions concerning the informal economy.

Under the strategy, the objective of creating IE Associations is twofold. The first is to enhance the representation of informal economy participants in the decision making processes of government at all levels. This will allow the informal economy to be recognised and provided a space to thrive alongside the formal sector. In the Constitutional Law Reform Commission (CLRC)-revised Informal Economy Development and Control Bill, a provision (Section 17A) has already been created to allow for the creation of “Informal Economy Committees”:

The Minister responsible for community development affairs may, where he deems proper, establish informal economy committees at the national, provincial and district levels as a voice mechanism for the informal economy participants. The primary function of these committees shall be to act as the voice mechanism that can be the link between the informal economy vendors, administering authorities and the Provincial and National Government for the purposes of promoting and protecting the informal economy in the country.

Secondly, the strategy will enhance coordination and management and address capacity gaps within the informal economy. This will enable the advancement of the sector and contribute effectively to the development of PNG.

The lack of consultation between informal economy participants and authorities has led to many problems. Establishing IE Associations will bridge the gap in communication and provide a medium for informal economy participants to be heard and given adequate support and attention. Developing this mechanism will also allow a balance, with businesses operating in the informal economy within the established guidelines, and challenges dealt with through dialogue between key stakeholders. In addition, the informal economy will increasingly become a partner, rather than being viewed negatively as a competitor to the formal economy. The IE Association would provide for regular dialogue between formal businesses and informal economy micro entrepreneurs. Through this mechanism it is anticipated that vendors and city authorities will be made aware of their responsibilities. It is also hoped that informal economy participants will be protected from abuse and exploitation, as is often the case when police officers or city rangers confiscate items belonging to vendors or demand “freebies” or money from vendors as payment for protection.

Dialogue between informal economy participants and authorities about the limited amount of land for new developments, particularly in urban areas, is also essential. Without adequate representation in policy and planning processes, the priorities of the informal economy could become marginalised from that of those engaged in formal employment. Given the government’s push to drive the economy through stimulating growth in the formal sector, more and more land may be allocated for these investments at the expense of the informal economy which caters for the majority of Papua New Guineas’ urban and rural dwellers. In light of this, urban planning may become biased in favour of formal business and the informal economy may not be given space in which to operate. The IE Association should advocate for the interests of the informal economy to be explicitly captured in the planning process.

Government authorities do not have data on the number of people engaged in the informal economy, how they are engaged, or the various forms of informal economic activities. This data gap prevents local and provincial governments from adequately planning and budgeting for investments to support the work of the informal economy. The lack of data and regulation of the informal economy also hinder authorities from disseminating information (e.g. regarding basic personal hygiene, safe handling of food, etc.) to persons engaged in related work.

Work on the Strategy started with the development of a concept note which was further discussed through various consultative processes facilitated by the CIMC under its Informal Economy Sectoral Committee. The Committee has multi-sectoral representation, including from government, private sector, civil society and development partners.

A technical working committee (CIMC IE Voice Mechanism Sub-Committee) chaired by the National Capital District Commission (NCDC) was set up to develop the strategy from the concept note. The strategy was informed by a literature review highlighting the progress made and challenges facing the UN Women/NCDC Safe Cities Market Project. It also drew lessons from other studies looking at street vending and unionisation, particularly in South-East Asian countries. This was further supported by consultations that took place within the main CIMC IE Sectoral Committee and the CIMC IE Voice Mechanism Sub–Committee between 2016 and 2017.

The strategy is now in its final draft phase and plans are in place to conduct nationwide consultation with various stakeholders in preparation for submission to the government.

Busa Jeremiah Wenogo

Busa Jeremiah Wenogo is an economist who works with PNG’s Consultative Implementation & Monitoring Council as a Senior Project Officer specializing in informal economy.

2 Comments

  • Busa, I see a potential flaw in the way this initiative is set up. The Minister is asked to approve a link mechanism to give voice to informal economy ‘vendors’. I’m sure your intention is not to restrict access to this consultative mechanism simply to those selling goods (‘vendors’) outside the formal sector. What about the emerging (and as yet ill-developed) informal service sector? Hair-dressers, beauticians, car mechanics and other tradespeople, and so on. An important objective of informal economy policy should be to widen the scope and increase the depth of informal economy activities.

    • Hi John, as you know dealing with the informal economy in its entirety is a difficult proposition. Even the development of a law and policy has been found to be wanting, particularly in terms of engaging the government to make available adequate investment to support the growth of the sector. During the review of the Informal Sector Development & Control Act the Constitutional Law Reform Commission (CLRC) concluded that lack of government ownership was one of the major set-backs in implementing both the law and policy. The Department for Community Development & Religion stated that they were not ‘clear’ on what role they were to play (until the creation of the Informal Economy Section) in implementing the ‘public Goods & Services’ arm of the strategy. If it was stated it was found to be ambiguous. So the strategy in itself is an attempt to assist in refining the role of the Department towards implementing the National Informal Economy Policy. To this end the role of the Department is to coordinate, facilitate and network with the informal economy participants through their respective associations to design programs and interventions to assist with their development. The Department is to work with key government departments/agencies, private sector, development partners and CSOs to assist in delivering these programs. The Department will take lead in setting up these associations, building the capacity of its leaders and membership and monitoring its progress.

      The Informal Economy Associations proposed in the strategy have no limitations. In fact, the strategy advocates that associations can be registered based on the type of activity or geography i.e. where the informal economy participants conduct their activities. While it would be in the best interest of the large PNG informal economy that we take a broader outlook, we have to be mindful and realistic of how government support (in terms of funding and training) will be delivered to participants. At present such support is not coordinated and is delivered (by a myriad of partners) on an ad-hoc basis, and the government is unable to report on the progress that has been made against its goals articulated in its policies such as the National Informal Economy Policy and its Medium Term Development Plans. Such progressive report and monitoring is crucial in the event the National Informal Economy Policy is to be reviewed.

      At an initial stage of the implementation of the strategy, formal markets will be targeted (because they are within government control and regulations and some work have already taken place in the case of the UN Women/NCDC Safe Cities Market Project on registering vendors into associations/financial inclusion, financial literacy training etc) and then gradually the focus will move beyond the markets to incorporate peddlers, mobile traders, street sellers, home based workers, etc. So as you can see the introduction of the strategy is in no way an attempt to defeat the aspiration of the National Informal Economy Policy but it is aimed at complementing the policy because our end goal is the same and that is “to establish the position of the informal economy as the grassroots expression of private enterprise, and to see the informal economy acknowledged as the full and legitimate partner of the formal economy in the economic system of PNG”. This entails diversifying the PNG informal economy. In fact this vision is also the vision of the strategy. Nevertheless, we realise to achieve this high level vision the informal economy in PNG needs be ‘coordinated and organised’, with the government taking an active role. Lacking these we have a messy informal economy that is suffering from negative government and public perception.

      A very important step towards achieving the vision of the policy and strategy is the creation of the ‘Informal Economy Section’ with the Ministry of Community Development & Religion. The section is headed by an Assistant Secretary (Program Manager) who has a team of about five officers dealing with various key initiatives such as ‘financial inclusion’, national audit of informal economic activities, informal sector development & control act and stakeholder engagement. The section will take carriage of the Strategy once it is endorsed by the National Government. When the review of the Informal Sector Development & Control Act got underway we (CIMC and DFCDR) felt that it was important that some provision(s) is made in the new law to connect the strategy. What is proposed (section 17A) is what CLRC has suggested would be the best approach after we consulted them on our proposal. The advice from CLRC is that the law can only propose for a ‘committee’ to be set-up rather than an association because the latter operates under a separate piece of law called the ‘Association Incorporation Act’. Our original intention was for the law to explicitly create provision(s) whereby representatives from peak informal economy associations can become members of the existing committees of the government at the National, Provincial & LLGs such as the District Development Authority, the Provincial Coordination & Monitoring Committee (PCMC) or Joint Provincial Planning & Budget Committee (JPPBC) to directly contribute to the decision making process. Subsequently, we hope that the informal economy can feature prominently in the policy and planning process. This is a long term measure but one that can work if the government through the Department for Community Development & Religion sustains its focus, effort and drive. While the Minister is entrusted with the powers to create this committee, it will only do so per the advice from the Secretary for the Department for Community Development & Religion. Furthermore, the composition of the committee is explicitly stated in the Bill: that there is very little room to appoint ‘political cronies’ to the committee. Having the Minister involved in the creation of these committee may also be a “blessing in disguise” as it will bring the informal economy agenda into the government spotlight, something that the informal economy really needs.

      Whilst the strategy advocates for the formation of Informal Economy Associations and the need for government to take ownership; it also realises that the success of these associations depends on its ability to represent the interest of its members without any form of bias. The end goal of the Strategy is making sure that these informal economy associations are able to stand up and raise concerns affecting their membership, which means these organisations are essentially CSOs in nature.

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