From formal to informal sector

A woman waits for customers.  Before you make a transition from the formal workspace to informal work space, you must have a ‘why’.  PHOTO/FILE

What you need to know:

  • The informal sector rides on one’s character as it sustains relationships. Character determines the kind of business you can thrive in.

Unless you are permanent and pensionable and working in government, or if you own a corporate company, then you are contractual on the availability of funds. The short of it is that when the funds are unavailable, you have no other option but to leave. However, the question is, “Where will you go?”

The top fear for most cooperates regarding transition is failure but Mr Aggrey Nshekanabo, the proprietor of Naalya Motel says one must adjust and forget the cooperate trappings. 

“It is the fear of failure to meet your family’s hospital needs because the health insurance will go. When I left, I removed all children from insurance and our hospital visits were actually reduced because previously, we went to hospital oftentimes. The other is how you will cater to the transport needs because previously, you ‘owned’ a car that you cannot afford without the company’s fuel card.”

Aware of this, even as he left the media for the NGO job and got a nearly 100 percent salary increment, his lifestyle did not change. “Then, the balance helped me build a family house,” he says. 

However, making these mental adjustments is just the tip of the iceberg as there are a couple of things you need to work through before making the leap.

Mr Livingstone Mukasa, the founder of Four One Financial Services, says before you make a transition, you must have a ‘why’. It could be the freedom you seek to manage your affairs to earn more. It might be that there is no room for growth in your career, say no prospects or probable promotion. 

“It could also be that you have lost your job. In this sudden case, it requires that everyone in formal employment gets into saving to be ready for that moment when you finally transition. The other could be that you need to supplement your income hence gradually starting a side hustle that you will eventually transition to. For instance, look at a primary school teacher who may never earn a monthly pay of Shs1m hence choosing to prepare for their exit. I know of a former primary school teacher that became a boda rider. Ultimately, he was able to build rentals,” he says.

Transitioning is a journey and preparation is crucial to know where you will go, and survive. For instance, you need to look for who will help you. Mr Mukasa says after the ‘why’ is dealt with, ‘how’ gets a little easier. 

“Having worked at the intersection of the informal and formal economy, I learned that while processes and documentation work in the formal economy, in the informal economy, people depend on relationships. I have seen one give another Shs10m without demanding a receipt but trust. Therefore, as you transition, you should learn to form relationships because the ‘how’ is in you learning to talk to people to enable you to survive. That is why people in the informal sector see to it that they communally go for burials,” he says. It is usually those relationships that will show you where to invest your money and time. They will show you the ins and outs of the businesses.

The informal sector also rides on one’s character as it sustains relationships. Mr Mukasa adds that character determines the kind of business you can thrive in. He says he once made an investment in transport, obtaining a few taxis but failed to gel with those in the park making the venture troublesome.

“While I was in the informal sector, I could not understand their modus operandi. I have since learned, as one that networks easily, that I thrive in businesses that run alongside my character,” he says.

As such, not every business will work for you. For instance, if you do not like to make your hands dirty, then scrap work is not for you. One of Mr Mukasa’s friends owned a sauna but had problems with his wife who looked at the sauna as a brothel. Therefore, your character and those around you will greatly influence your business choice.

Living costs: As you choose a business prospect, it ought to have the ability to pay you a living wage because your living costs will always be there.

“The living wage should be defined by you and no other. That means that one person’s scale should not determine yours. That is why I love to work with things that can scale. For instance, if I were doing a pancake business and started with 100 pieces, is there an opportunity that I could increase this to 5,000 a day? If yes, where would that be? That way, my standard of living will be sorted,” he says. 

Mr Nshekanabo adds the most pressing need as you leave the cooperate world is food as it makes up about 70 percent of expenses.

“Therefore, if you can feed yourself and your family, you have solved about 70 percent of your problems and can make a move,” he says.

Job requirements
People in the informal sector work hard and for long hours. You need to prepare for that and assess if your age and health condition can permit it. For instance, if you are 40 and are envisioning working as a porter, you may not thrive well as one who is 18.

Leave a good footprint: Prioritise leaving your employer on good terms, tomorrow they could be your client. 

“Sometimes, people move into the informal sector because of a soiled relationship with their employer. While some instances are unavoidable, do your best to part on a good note as these could recommend you to your groundbreaking business project,” Mr Nshekanabo says.

To build clientele, he adds that one can volunteer to do some work such as skilling and share their expertise to build more client mass.

As you move away from the corporate world, Mr Nshekanabo says one must take care of their mental health.

“While you need to thrive in your new job, you need to ensure the job is not at the expense of your health. Therefore, take the time to rest, and have an accountability partner to hold your hand in those tough times,” he says. 

Be patient
Breaking even is not experienced at the same time in every business. “Give yourself time in everything you do because it will not kick off as soon as you put your hands to work. There are several life lessons you will pick up along the way that will,” Mr Mukasa says.