Contributions and challenges of informal traders in local economic development

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Abstract

Unemployment, poverty, and lack of income contributed to the rising number of people participating in informal trading (Zhanda et al., 2022). Informal street traders are faced with many challenges, namely, unavailability of funds, support from the government, infrastructure, lack of management skills, and marketing skills (Connor & Charway, 2020; Manzana, 2019). Hence, this research investigates the contributions and challenges of informal traders in local economic development in Thulamela municipality. The research was quantitative in nature and used a self-administered questionnaire to collect data. The questionnaires were hand-delivered to the respondents. Probability sampling techniques, specifically, cluster sampling was used to sample 100 Thulamela municipality informal traders. A 96 percent response rate was achieved in this research. Descriptive statistics were used to describe the collected data. The study found that informal street traders experienced lack of financial assistance from government, lack of management skills, and lack of marketing skills. However, the research established that the informal sector creates job opportunities, income source, and lead to poverty reduction. Consequently, it is recommended that government and private sector should initiative strategies to support informal traders. Informal traders should strive towards formalizing their business to access support offered by government and private sector.

Keywords: Informal Traders Challenges, Thulamela Municipality, Poverty, Unemployment, Local Economic Development, Government Support, Job Opportunities

Authors’ individual contribution: Conceptualization — M.A.R., N.F.R., and T.E.N.; Methodology — M.A.R., N.F.R., and T.E.N.; Investigation — M.A.R., N.F.R., and T.E.N.; Resources — M.A.R., N.F.R., and T.E.N.; Writing — M.A.R., N.F.R., and T.E.N.; Supervision — T.E.N.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: F1, F63, H7, I3, J6

Received: 05.03.2022
Accepted: 18.04.2023
Published online: 21.04.2023

How to cite this paper: Ramasimu, M. A., Ramasimu, N. F., & Nenzhelele, T. E. (2023). Contributions and challenges of informal traders in local economic development [Special issue]. Corporate Governance and Organizational Behavior Review, 7(2), 236–244. https://doi.org/10.22495/cgobrv7i2sip3