Transcript Breakout 1_Asif Chida

EMPOWERING INFORMAL ECONOMY FOR LOCAL
ECONOMIC DEVELOPMENT
(The Role of Local Government)
Dr. Asif Chida
Inclusive Growth & Private Sector Development Regional Specialist
UNDP Pacific Centre, Fiji
(formerly Rapporteur, UN High Level Commission on Legal Empowerment of the
Poor)
2014 Pacific Local Government Forum
Port Moresby, Papua New Guinea
19-23 May 2013
Key Focus of this Presentation
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Introduction
Informal Economy in the Pacific- An Overview
Why do we have IE?
IE in the Pacific- Some Challenges
Empowering IE- First Steps
How Local Government can empower IE
Empowerment of IE- Making it Happen- The Way
Forward and Policy Messages
• Conclusions
Informal Economy in the Pacific
- An overview
• Informal Economy (IE) constitutes 60-85 %
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of Pacific economies and it is growing due to
lack of jobs/opportunities in formal sector
Women & Girls comprise of 75-90% in IE
IE occupy bottom of the pyramid but attracts
little attention resulting in emerging poor
poverty results from disempowerment,
exclusion and discrimination.
Why do we have IE?
• Limited employment opportunities in the
formal sector for the growing population
• Legal, financial & bureaucracy barriers to
be self employed
• Easy entry to create livelihoods/incomes
• Outside the “laws and taxes”
• IE will stay and continue to grow
The Face of Informal Economy
Lilieta Silakati of Waisa in Naitasiri at the Suva Market ( Fiji Times
4/4/11)
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Sells Fresh produce at the
weekend market for 20 yrs
- Travels 25Kms, transport
charges $10
- Leaves home @ 3.00 am
arrives market at 5.00 am
- Pay for a table $3.50
(2ftx3ft)
- Sales have been dropping
from $200 few years back to
around $100. earns <$ 40
- Husband does farming
- Income earned is to support
for school fees, food, uniforms,
transport, etc.
- Needs better table, seats and
facilities
- Lacks financial literacy
Informal Economy
Some Characteristics
• Invisible contributors to GDP
• Seen from social lens rather than commercial
• Significant contributor to Town Councils/LG operational
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budget in terms of fees
Limited or no reinvestment to address IE needs.
relying on moneylenders for weekly credit
limited access to broader economic opportunities
vulnerable to uncertainties, corruption and violence
have few means to settle disputes apart from bribery,
threats and terror or violence
IE in the Pacific – Some Challenges
Legal Deficits
• Access to Justice:
- Few means to settle disputes
- Without legal rights or protections, IE and women in particular are in a
continual and often worsening state of legal and political vulnerability
- Discrimination & lack of equal access to resources, employment, markets
and trade,
• Property Rights :
-Both statutory and customary property systems disenfranchise particularly
women. occupying land they do not own with insecurity
- Revise and repeal discriminatory laws and related administrative practices
to ensure women’s full and equal access to economic resources, including
their inheritance and equal right to own property
IE in the Pacific – Some Challenges
Decent Work Deficits
• Women work in IE 10 to 14 hrs daily under appalling
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conditions – unhygienic , poor sanitation & drainage, garbage
removal etc.
Poor occupational and Safety Conditions – personal safety &
security, sleeping on footpaths, Lack of Child Care facilities,
nursing babies, Basic health care first aid
Lack of a minimum set of enforceable labour rights for
workers in the informal economy
Lack of inclusive social protection
IE in the Pacific – Some Challenges
Governance Deficits
• Gender Blind Spot in Local Governments
• Gender insensitive bye-laws, policies,
budgets, plans and projects
• Huge funds collected in forms of taxes &
fees but less re-investment in IE
• Lack of support for women organizations
• Need for Voice, recognition and dialogue
for gender just strategies for market mgt.
How to Empower IE
First Step: Legal Empowerment
 Legal empowerment of the poor (LEP) seeks to make the law work for
everyone to provide equal economic opportunities to all
 It is an agenda of inclusive development that presents a unique focus
on key livelihood rights - property, labour, entrepreneurial rights and
access to justice – to prevent legal exclusion and foster economic
growth, poverty reduction and human development
 Legal empowerment of the poor is an end in itself as a human rights
agenda but also a means to an end
 It is a necessary condition for poverty eradication & Inclusive Growth
 LEP is an important tool and process through which threats
are reduced, protection is increased and opportunities are
enhanced by use of the law
Legal Empowerment entails Inclusive
Growth and Sustainable Livelihoods
• LIVELIHOODS of people are based on assets (such as land), activities
(business or labor) and entitlements (protections, freedoms, opportunities)
• SUSTAINABILITY: economic efficiency, ecological integrity, social equity,
resilience (capacity to cope with and recover from shocks and stresses)
• VULNERABILITY is the inability to cope with and recover from shocks
and stresses to the livelihood system
• EMPOWERMENT is the process through which people gain greater
control over their lives and livelihoods
• LEGAL EMPOWERMENT is the process through which threats are
reduced, protection is increased and opportunities are enhanced by use of
the law
Legal Empowerment of the IE
The Process
Conditions for Legal
Empowerment
Identity and
Legal Status
as Citizen
Information
and
Education
Pillars of Legal
Empowerment
Rule of Law
and
Access to Justice
Identity and
Legal Status
as Asset
holder
Identity
Property
Rights
Voice
Identity and
Legal Status
as Worker
Identity and
Legal Status
as Businessman/-woman
Rights
Labor
Rights
Organization
and
Representation
Business
Rights
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Goals of Legal
Empowerment
Access to
Justice
Access to
Assets
Protection
Access
Access to
Decent
Work
Access to
Markets
Opportunity
How Legal Empowerment help
Informal Economy
E.g. STREET VENDORS
Common issues and challenges faced
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insecure place of work: due to
competition for urban space
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secure vending sites
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access to capital on fair terms: a
loan product tailored to their daily
need for working capital
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bargaining power with wholesale
traders
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infrastructure services at vending
sites: shelter, water, sanitation
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license to sell and identity cards
ambiguous legal status: leading to
harassment, evictions, and bribes
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negative public image
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freedom from harassment,
evictions, and bribes
Positive public image
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capital on unfair terms: due to
dependence on wholesale traders
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uncertain quantity, quality, and
price of goods: due to dependence
on wholesale traders
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What local govt. can to do?
lack of infrastructure: shelter,
water, sanitation
Why Informal Businesses Need
Legal Empowerment?
Inappropriate Design Of The Legal/Regulatory Environment
(Biased Towards Larger Enterprises)
Lack Of Implementation Of Legal/Regulatory Environment
Resistance By Market Competitors And Other Stakeholders
Lack Of Knowledge Or Access To Legal/Regulatory
Environment
Lack Of Legal Rights
Lack Of Bargaining Power
Lack Of Representation And Voice
How LG can empower IE
• Strengthening Governance from supply side (capacity
building) and demand side (supporting local or
community driven initiatives)
• Reforming and Transforming Institutions (inclusion,
cohesion and accountability)
• Making laws (e.g. Alternative Dispute Resolution) work
for the informal businesses, and
• Rights (knowledge and understanding of rights,
asserting and enforcing rights collectively)
How LG can Empower IE
Linking Legal Empowerment
Pillars of Legal Empowerment
Linkages with Informal Businesses
Access to Justice and Rule of Law
a) Designing and developing of legal tools for
empowering informal businesses.
b) Examine the efficacy of above tools.
Property Rights
a) Vending security and business security
b) Stable address helps informal businesses in
its business identity, and access to finance
and clients.
Labour Rights
a)
Road Maps For Implementation Of Reforms:
Implementation Strategies, Including Toolkits
And Indices
a) Coordinate in developing a reform “toolkit”
for policy makers focussing on legal,
institutional, regulatory, operational and
financial reforms.
Strong links identified between right to
employment and business opportunities.
b) Capacity for informal businesses to provide
better protections and provisions for their
workers.
c) “Work Deficit”: Labour productivity,
Occupational health and safety, Social
security, etc.
Empowering IE: Making it Happen
Issues for further discussions
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Need for a Common Definition at National/Local Level
i)
Do we need to define informal business (es) generically, or do we
have a definition that can be adopted?
Who are the constituents of businesses in the informal sector?
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Informality to Formality – The Empowerment Process for
LED
Towards a new approach to formalization
- Addressing common legal deficits and barriers
- Developing a framework of indicators
Providing legal tools for empowerment
- Identifying and developing a set of concrete legal tools
- Explaining and illustrating the efficacy of tools
Empowering IE: Making it Happen
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Issues for further discussions
(cont)
Institutionalizing the empowerment process
i) Conceptual framework
ii) Institutional mechanism
- clear, secure and transferable property rights
- secure and enforceable contracts
- conflict resolution
Policy framework for inclusiveness
- Entry and Exit Mechanisms
- Operation and expansion mechanisms
- Extra –national dimensions of business constraints
Empowering IE: Making it Happen
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Issues for further discussions
(cont)
Inclusive Finance
i) Banking for the poor- mobile banking
ii) Micro insurance to protect livelihoods & incomes during natural
disaster, sickness, deaths & funerals
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Other Key issues include:
- Environmental Issues
- Sustainability Issues
- Benchmarking good/successful practices in the
informal businesses
Empowering IE: Making it Happen
KEY POLICY MESSAGES
i)
Adopt an inclusive and integrated
approach to local economic development
such that there is legal recognition and
empowerment of IE
ii) Engage in evidence based reform
iii) The right to participate in the market -Recognition
and correction of the bias in existing commercial policies,
regulations, laws, and procedures favoring larger
firms/enterprises
Extension of government incentives and procurements to
Tiny businesses in the IE
Facilitation as appropriate of backward and forward linkages
on fair terms between larger and smaller firms
Promotion of market access and fair trade for smaller firms
and enterprises
Adequate and relevant retraining, life-long learning, and
other support to Trade & labour mobility (Seasonal Workers)
iv) What Legal empowerment entails making laws and
regulations Appropriate and relevant to the realities in IE,
specifically, it implies:
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A competent and independent judiciary applying the law equally and
evenly on all members of the community. Essential are education of
the legal profession; full publication and dissemination of legal texts
including judicial decisions.
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Transparent and coherent laws including laws for the protection and
facilitation of business
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Enforcement officers who apply the law uniformly to all.
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Significant effort to reduce grand corruption and, ultimately, to
reinforce social norms that constrain petty corruption.
vi) Private – Public Partnership
vii) Informality to Formality: Need for value based
change process
In Conclusion
The opposite of poverty is not wealth it
is justice. The objective…is to create a
more just society, not necessarily a
wealthier one. And the great question
is how do we do this?
Leonardo Boff
Franciscan Theologian, Brazil