Benefits and limitations of the informal economy in promoting sustainable and inclusive local economic development: A Stellenbosch case study

[摘要] ENGLISH SUMMARY: Poverty, inequality and unemployment are major challenges facing South Africa. Thegovernment is struggling to create jobs in the formal economy, as economic growth rates are lowand falling. The informal economy, on the other hand, provides livelihoods to thousands ofpeople, but it is poorly understood and therefore poorly supported. Within the context of thedeveloping world, promoting and supporting the informal economy is imperative. This studytherefore sets out to: (i) investigate the benefits and limitations of the informal economy inpromoting sustainable and inclusive local economic development; (ii) assess StellenboschMunicipality's approach to the informal economy and the impact this approach has onlivelihoods and local economic development and; (iii) review a number of comparative cases tofind best practices.The study is informed by both a literature review and a case study methodology. The case studymethodology includes document and newspaper analysis and interviews whilst a review ofcomparative case studies is used to draw lessons from other municipalities.The study found that despite several ways in which the informal economy could contribute tosustainable and inclusive local economic development, it is generally disregarded or undervaluedin such discussions. Furthermore, Stellenbosch Municipality's approach to the informal economyhas had a negative impact on the participants' livelihoods and local economic developmentthrough its top-down approach and the exclusion of the informal sector in the LED process.However, Stellenbosch Municipality is now looking at implementing ways to engage andsupport the sector. The findings suggest that the local economic process of Stellenbosch has thepotential to create a vibrant informal economy to meet all local requirements for reducingpoverty, inequality and unemployment in a way that also restores the environment.

[发布机构] Stellenbosch University