Policy highlights:

• Informal trading forms an important part of South Africa’s economy. With an unemployment rate of 25.2%, for many South Africans informal trade is the only alternative. Policymakers should not view the informal sector as a problem, but as instrumental in tackling unemployment and vulnerability.
• South African local governments have the authority to regulate informal trade through special by-laws. These regulations are said to force informal traders out of business.
• It is estimated that if informal trading were suppressed, South Africa’s unemployment rate would rise by 20%. Moreover, informal trade contributes to the growth of the formal economy, which suggests that informal traders should be encouraged and aided instead of made illegal.
• Policymakers should establish ‘developmental informal trade laws’ that create a balance between the need to regulate the informal economy and the need to support livelihoods.