South Africa

Entrepreneurship against all odds

It’s time to give informal traders a fair shake

ARCHIVE PHOTO: A street trader looks out from his store in Masiphumelele, Cape Town, South Africa 19 June 2012. EPA/NIC BOTHMA

Two new reports call on municipalities to uphold the rights of local and foreign informal traders and make recommendations on how local governments can achieve this.

On 6 July 2018, the Socio-Economic Rights Institute of South Africa (Seri) and the South African Local Government Association (Salga) released two reports to dispel the “persistent myths associated with informal traders in South Africa” and to clarify the “legal and constitutional obligations of local government”.

According to the reports, section 25 of the Constitution also protects the property of informal traders.

The two reports, one providing the statistics and background on Informal Trade in South Africa: Legislation, Case Law and Recommendations for Local Government, and the other Towards Recommendations on the Regulation of Informal Trade at Local Government Level, seek to make authorities aware of the important role that over 1.1 million South African informal trade workers play in addressing pervasive “high level of unemployment and poverty” in the country.

And on on the same day, hundreds of informal traders marched to the City Hall in Durban, to protest against the proposed by-laws restricting informal traders to work only in designated places with harsh punishment for non-compliance.

According to GroundUp, the Market Users Committee (MUC) handed over a memorandum to the mayor’s office in eThekwini Municipality rejecting the by-laws prohibiting trading in certain areas, the confiscation of goods and regulation of abandoned goods. Furthermore, the City “plans to crack down on people trading without permits”, said GroundUp.

Seri, a public interest law centre, and Salga, an autonomous association of all 257 South African local governments, collaborated to produce the reports so as to “assist municipal councils and local government officials in understanding their legal duties in relation to informal trade”, the NGOs said in a joint statement.

It is the duty of local governments to facilitate a supportive “regulatory and policy environment for informal trade” based on the Constitution’s demand for economic development at municipal level while also “addressing developmental challenges, including poverty and unemployment”, said the statement.

And it is the formulating of by-laws that enables informal traders to trade more easily rather than restricting them, that local governments will be able to fulfil their legal and constitutional obligations in addressing developmental challenges.

The first publication, Informal Trade in South Africa: Legislation, Case Law and Recommendations for Local Government, “unpacks” a court judgment that has established the rights of informal traders, rights which “municipalities have struggled to fully come to terms with”.

Furthermore, the report also challenges the “longstanding myths” associated with foreign nationals and their participation in informal trade, often seen as an act of crime and considered unlawful. Local governments’ reaction is to impound the traders’ goods and evict them from their trading spots.

The Somali Association of South Africa case against the Limpopo Department of Economic Development in 2013 is indicative of the human rights abuses that informal traders experience and the sparks of justice that the Constitution enshrines.

According to the report, a number of “lawful Ethiopian and Somali nationals” legally selling commercial goods and running different shops in Musina, Limpopo, were “forcibly prevented” from trading as part of Operation Hardstick, initiated by the Limpopo police and Limpopo Department of Economic Development, Environment and Tourism to shut down businesses operating without permits.

Since the operation began, the police have effectively shut down over “600 businesses” of traders without licences, confiscated their stock and equipment, and arrested traders.

Operation Hardstick has subsequently been challenged by the Somalia Association of South Africa in the Supreme Court of Appeal with the help of Lawyers for Human Rights (LHR), a public interest legal services organisation. They argued that municipal refusal to allow them to “apply for, obtain and renew” their trading licences violates their constitutional rights, said the report.

SCA found that the informal traders, as refugees in South Africa, enjoy the protection of constitutional rights allocated to ‘everyone’. The court recognised that the constitutional right to human dignity requires that the traders should be able to earn an income,” said the report.

The report also found that the SCA, in considering the current socio-economic context, “registered a sharp warning” that exploiting and scapegoating foreigners may fuel xenophobia.

The court ruled that confiscating the traders’ property and the closure of their businesses were unlawful since Section 25 of the Constitution “prohibits the arbitrary deprivation of property”.

The court recognised that the constitutional right to human dignity requires that the traders should be able to earn an income. Earning an income ensures that traders are afforded the ability to live without positive humiliation and degradation,” says the report.

According to the report, an order was issued allowing asylum seekers and refugees to “apply for or renew business or trading licences”, setting a precedent on how the law and by-laws ought to approach regulation.

The second publication, Towards Recommendations on the Regulation of Informal Trade at Local Government Level, sets out a list of recommendations on how to regulate informal trade at local government level in a “manner that respects the rights of informal traders”.

Its recommendations include that:

  • Municipal by-laws and policies governing informal trade should create an enabling environment for informal trade;
  • Municipal by-laws governing informal trade should ensure that the use of impoundment as a measure to ensure compliance with by-laws is only permitted in exceptional circumstances and should be used sparingly;
  • Where municipal bylaws grant local government officials discretionary powers, the by-laws should provide clear guidelines on how those powers should be exercised by officials;
  • Municipal by-laws governing informal trade should provide dispute-resolution mechanisms that enable traders to appeal and challenge any official decision that negatively affects them; and
  • Municipalities should ensure that informal trade areas have the necessary level of access to basic services, including water, sanitation, refuse removal and cleaning services.

Through these recommendations, the report “hopes” that municipalities will be able to identify “gaps” in by-law regulations and also tackle economic development in a “nuanced, feasible and workable” manner. DM


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