Economics of Informal Sector

Abstract

Namibia is facing a daunting structural unemployment and underemployment problem, worsened by the global downturn. In spite of increasing growth rates prior to 2009, unemployment worsened, reaching unacceptable levels, this has cause serious threat to the prevailing peace and stability in the country. Though, the Government of Namibia has requested the assistance from ILO to develop a new growth path in respond to the emerging scourge of unemployment and work towards updating the 1997 Employment Policy. Yet, the unemployment situation in Namibia has deteriorated markedly over the years. Overall unemployment has been varying from 51.0 percent in 2008, 27.0 percent in 20012 and 30.0 percent in 2013. The rates of unemployment are very high indeed. In the context of developing countries, unemployment is considered to be an extreme situation of total lack of work, lack of alternative labour absorbing sectors (Namibia Labour Force Survey, 2008) and this led to more participation in informal activities operation. Thus, the purpose of this research was to explore the role of informal sectors in the Namibian economy, with the focus on the employment potential of informal sector, challenges they are facing, and measures what needed to assist informal operators towards becoming formal enterprises. Therefore, this research study Economics of Informal Sector: A study in Namibia is conducted on the economy of informal sectors in Windhoek the capital city of Namibia. To identify the characteristics of the informal sector which is significant to job creation, and identify the challenges that the sectors are facing in their operation while also setting up measures that can be taken to enhance their contribution towards becoming formal enterprises and provide the policy frame work. The research philosophy of the mix method approach was adopted. Quantitative methods were used to explore the extent and nature of the informal economy and the qualitative methods was used to understand the motives of people s actions, their perspecti