**5.1 Origin of informal economy**

The informal economy or sector had existed in various forms in the pre-historic times. In literature, however, two research works are credited with popularizing the concept. The honor of "discovering" the concept has frequently been given to Keith Hart, a British Anthropologist, as a result of the work he did in Ghana from the mid-to-late 1960s [29]. The second work was the research by the International Labour Organization (ILO) alongside the United Nations Development Programme (UNDP) Employment Mission to Kenya in 1972 [30]. These research efforts are believed to have greatly popularized the use of the term and as a result triggered off much research in that field. Going through literature, however, reveals that each bloc/country within the economies in the global south regions have their peculiar version as regards the origin of informal economy.

## **5.2 Predominance of informal economy in Global South: Statistical evidence**

Evidence is rife in research literature concerning the prevalence of informal economy in the Global South. On a global scale, World Bank [31] observed that an equivalence of two-thirds of the entire workforce is employed in the informal sector. On the African continent [32] observe that a good junk of economic activities are taken-up by the informal sector notably in mining, finance, commerce and manufacturing. Xaba et al. [33], in his sub-Saharan African countries' study has

*Sustainability in Urban Planning and Design*

frameworks that drive neo-liberal thinking are capitalism (economic mode of production) and democracy (political ideology). Prior to the era of neo-liberalism of the nineteenth and twentieth century, various countries of the global South cities adopted various types of political-economic ideological formation. In sub-Saharan African countries for instance, depending on their historical experiences, there were divergent political experimentations. While some practiced various forms of western democratic type of government, others practiced eastern type of communism and yet others experimented on domesticated forms of African socialism. At some point, military type of centralized totalitarian government became the vogue among many countries in the global south nations. However, with the increased specter of neo-liberal thinking there is an overwhelming convergence in the adoption of western democracy as the best form of political ideology. The tenets and values of western democracy has become so internationalized that there is instant global rejection of any overthrow of any democratically elected government by way of coup d'état. Fascism and totalitarian government in any form, including apartheid regime were denounced and repudiated. As a result, what you see, albeit there are various shades, is the enthronement and respect of democracy as the dominant

The question is how did this neo-liberal thinking permeate the political thinking of these global south cities? The answer to the question takes us back to the nature of the relationship between the global south nations and their previous colonial or trading masters. During and after colonialism the relationship between these developing countries and their colonial masters continued in the form of dependence of the former on the latter. This subservient relationship shifted from direct political and administrative dependence during colonialism to economic dependence during post-colonial dispensation. For instance, most advanced western countries used loans and grants conditionalities to compel these nations to politically align to liberal democracy and to deregulate their economy. The Breton woods institutions (IMF and World Bank) that are used to supervise many of these credit handouts would usually require the beneficiary nations to structurally adjust their economy

Another manifest influence of Neo-liberal thinking in the global South economies is the unprecedented bilateral, multilateral and international growth in trade relations between and among countries of the various geographical divides. Neo liberalism has supported the removal of barriers and inhibitions to global trade to the extent that most global south cities are net importers of basic necessities of life. Several institutions such as World Trade Organization (WTO), United Nations Conference on Trade and Development (UNCTAD) and a plethora of regional and sub-regional trade agencies were conceived to facilitate international trade. The implications are that the specter of neo-liberalism has left in its wake a clear dismantling of the structural inhibitions to international trade. This move is further supported by credit, aid and donor granting agencies that insists that these barriers would be removed as a condition for continuous financial aid to these countries. The anticipated and sometimes unintended consequences of these unequal economic relations are the growing huge indebtedness of these developing countries to

The concluding remark of this section is that neoliberalism provides the theoretical context that explains the spiraling growth of informality in the global South cities. Neo-liberalism supports a milieu that promotes free economic enterprise with minimal, if any interference from the state. The implication of the tenets of neoliberal theory is the roll back of the state and by extension, the reduction of formal sector which unfortunately, contemporary formal urban planning in developing countries superintends [25, 26]. The growth of urbanization and complimentary

global political thinking; many thanks to neo-liberalism.

to align to neoliberal thinking before the deal is struck.

international financial institutions.

**40**

shown that the informal economy has shown to be the single practical option in the face a drop in rise of formal employment and has effectively functioned as a shock absorber, remained consistent across period and got enlarged in operations. Gali and Kucera [34] in agreement assert that the informal economy has repeatedly acted as a shock absorber for official employment, whereas, the informal sector accounts for 93% of jobs created in the African continent in the 1990s [35]. Comparably, whereas, the portion of formal economy recorded a reduction in the total workforce, the informal economy recorded an increase [33].

More statistics on the prevalence of informal economy in the global South was presented by ILO [36] and; Williams and Nadin [37]. When the incidence of informal sector vis-a-vis the formal sector is disaggregated across the various regions of the world in terms the percentage of the self-employed, we have the following data: 70% in sub-Saharan Africa (SSA); 62% in North America; 60% in Latin America and 59% in Asia. Horn (cited in [38]) notes that: 72% of non-agricultural employment in sub-Saharan Africa is informal; 84% of women non-agricultural workers are informally employed in sub-Saharan Africa and the greater part of recent employment in Africa are in the informal economy. Across the continent of Africa, reports that the informal sector provides between 50 and 75% of jobs, and 72% of non-agricultural employment. The portion of non-agricultural employment rises to 78% with the exclusion of South Africa. The informal economy has the following portions out of some countries' labour force in Africa: more than 50% in Kenya and Uganda; about 43% in South Africa and Zambia; and 89% in Ghana [35]. Nigeria's informal economy is believed to have contributed greater than 50% to both the entire country's labour force as well as its GDP, estimated to have gone up from about 50% in the 1970s to about 65% in the 1980s [39–41]. Estimate of Nigeria's average portion of informal economy relative to the nation's GDP was put at 56% within 1999 to 2005 [42]. A third of Nigeria's urban labour is believed to come from the informal economy [33].

#### **5.3 The role informal economy in global South**

Informal economy plays a vital role in transition and developing countries in facilitating successful adjustment to globalization and structural reforms. It provides a means of survival to a large number of poor and extremely poor workers in a society and also plays a vital role in unlocking entrepreneurial potentials which could become lost in the bureaucracy of formality.
