According to Uganda Bureau of Statistics (Ubos), the informal sector refers to “all business activities characterised by absence of financial accounts, having less than five employees, no fixed location, in most cases not registered and sometimes such businesses are operational for only six months or less.”
The 2009/10 Informal sector survey found that Uganda has 1.8 million informal businesses with majority in the agricultural sector (27 per cent) followed by trade and services (24 per cent) while mining and quarrying (1 per cent) and fishing (1 per cent) accounted for only 2 per cent of the total number of businesses.
My only problem with Uganda’s statistics is that well-intentioned surveys are conducted in an environment where majority of the population are liars. For unknown reasons, someone with 10 heads of cattle at home will register four on interview! It is important to note that many Ugandans don’t even want to participate in surveys, so when you convince them to take part, they give you half truths. We can now formally register lying as a Ugandan characteristic.
It can be more realistic if we just say that; in Uganda’s case, informal sector refers to any enterprises without formal documentation. You will get it wrong if you define the informal sector basing on business size, human resource size, physical address or the business lifespan because you will not be able to get the required true figures and numbers.
Run mostly by under educated proprietors, many businesses have remained informal not because they are constrained by resources but instead because of a few factors built on misinformation. Business owners misunderstand professionalisation as an open invitation to URA and UNBS interfere. Many informal enterprises are like that just as a survival instinct.
The trend has been that it is in the informal sector that workers easily find paying work, employers find willing workers and wage rates varying from employer to employer. Things are changing. Interpretation of the present situation will reveal that the informal sector is struggling with labour force inflation i.e. we have more workers than jobs. All labour force qualities are available in Uganda today with varying degrees of competence. As job seekers cry, the entrepreneurs are crying too. Businesses are failing and closing every day.
According to Ubos, we have approximately 11.5 m people aged 14 – 64 (2009/2010 UNHS estimates - Ubos) with 53 per cent female and 47 per cent male. With the labour force growth at 6.5 per cent per annum, the labour market has become particular with more emphasis on skills and creativity. The papers are just not enough anymore. Well paying jobs will start looking for us with skills and creativity in your possession.
A good friend of mine, Sharpnam Muhammad, has just completed high school. Though she performed well to qualify for any local university on private sponsorship for her undergraduate, she has opted to join a little known small institute to undertake a diploma in motion pictures and 3D animation, a course, as she puts it, that will give her easy access to a well-paying job combined with a good potential for self-employment in case the former fails. At 19, Sharpnam can read between the lines.
Informal sector employers
The problems facing the informal sector players among others include low consumer spending, high costs of running a business, high interest rates, high taxes and exchange rates etc.
Most of the problems facing the informal sector are directly or indirectly related to failure to formalise. A business is a living entity with both growth and death possibilities. When it grows, it can override the owner’s competencies thus requiring some professionals to join in and offer inputs in their respective areas of expertise.
With the growing ‘corporatocratic’ tendencies, consumers will seek out better customer care not tribesmen. Why would I enter an overcrowded small shop with over 10 attendants each pulling me on to his or her table other than finding a freer environment? Would you feel comfortable having a sea of eyes scanning you head to toe?
Mr Maalik Fahd Kayondo is the C.E.O at Telesat International and the Organising Secretary at KACITA