According to the City of Cape Town’s outgoing Mayoral Committee Member for Tourism, Events and Economic Development, Councillor Garreth Bloor, the aim of the plan is to empower the informal sector and to ensure that the bays are located in areas where there is a demand for trading.
Last year the City released a report stating that the informal sector provides 170 000 jobs (11.3% of the city’s workforce) and contributes a fifth (almost 5%) to the reduction of poverty. These figures show that the informal sector should not be overlooked and that it is fast becoming a formidable part of the city’s economy.
“If you take the Gross Domestic Product (GDP) contribution of this sector to the city in the last financial year, it beats construction, which is massive. It lifts people out of poverty,” said Bloor.
While businesses in the formal sector do recognise the value of the informal sector, there is a common perception that informal traders in the city do not pay anything. “Struggling small businesses say that they have rent and overheads. But informal traders do pay a licensing fee and do contribute. People accept that everyone has to contribute to the system,” he said.
He estimates that the collective licensing fee of traders in Cape Town is around R1 million a year. Informal traders apply for permits from the municipality and successful applicants are then allocated demarcated areas, which cost between R168 and R493 per month. Permits must be renewed monthly.
Most of the informal trading areas are managed by the City of Cape Town, while some – such as the Grand Parade and the Church Street antique market – operate under separate lease arrangements. Others, such as the Cape Town station area, fall under the Passenger Rail Agency of South Africa (Prasa).
“If you take the Gross Domestic Product (GDP) contribution of this sector to the city in the last financial year, it beats construction, which is massive. It lifts people out of poverty.”
Bloor says the aim is not to force the sector to formalise. Sometimes the assumption is made that traders want to formalise their businesses, but this is not always the case, especially with older traders. Assistance is available to traders who want to move into the formal sector. Opportunities for business development are discussed at regular engagements with the sector that take place throughout the year.
Responding to questions on access to amenities, like public toilets, he said the City will facilitate arrangements with private companies if needed. With few public toilets in the city, many traders make use of facilities in nearby shopping centres, such as Golden Acre and Grand Central.
On getting the right product mix, he said that the municipality cannot prescribe to traders what they can sell, but they can incentivise them by giving them access to information so that they can do market research. The City’s law enforcement and health and solid waste inspectors monitor compliance.