GEOGRAPHY RESEARCH PROJECT

GROUP MEMBERS

[Link] Dimakatso Tshabalala

2.

3.

4.

TOPIC

Role of informal sector in economic development of the local area

(MALAMULELE COMPLEX)

GRADE:12A

NAME OF THE SCHOOL: MAHUNTSI SECONDARY SCHOOL

DUE DATE: 17 APRIL 2025

YEAR: 2025

EDUCATOR:
TABLE OF CONTENT

COVER PAGE
Table of content
HYPOTHESIS and Topic
Map interpretation
Background information
Data collection
Analysis and Synthesis of data
Recommendation and Solution
Conclusion
Bibliography
TOPIC: THE ROLE OF INFORMAL SECTOR IN ECONOMIC
DEVELOPMENT OF MALAMULELE AREA.

HYPOTHESIS

The informal sector plays an important role in alleviating poverty in

Malamulele. The informal sector, which consists of economic activity that is not
regulated by the government, is an important driver of economic development,
particularly in developing countries.
 Map

Background information
Malamulele is a low-lying area with a large population, including numerous
villages and informal settlements. It has a mix of Xitsonga and Tshivenda-
speaking residents, which has been a source of tension and [Link]
Settlements:Many residents of Malamulele live in informal settlements, where
access to basic services is limited or [Link] Delivery
Issues:Residents have repeatedly expressed dissatisfaction with the lack of
service delivery, including issues with water supply, sanitation, electricity, and
[Link] Concerns:There are concerns about the Thulamela
Municipality's responsiveness to the needs of Malamulele residents, with
residents feeling that their voices are not being [Link]
Context(Flowerdew, R. and Martin, D. (2015)

The area has a history of protests and unrest related to service delivery issues
and the perception of poor Malamulele is a town in the Limpopo province of
South Africa. It serves as a central hub for surrounding rural areas, providing
various services such as Healthcare, Education, Shopping, Government services
Malamulele's economy and infrastructure likely play a significant role in
supporting local communities, including those in nearby villages like Xitlhelani.
The town faces challenges common in rural areas, such as limited economic
opportunities and infrastructure constraints. Some additional aspects of
Malamulele might include Malamulele has cultural importance, with a mix of
traditional and modern influences.( Montello, D. and Sutton, P. (2012).

Socio-economic challenges: High unemployment rates, poverty, and limited

access to basic services are common [Link] surrounding area may
support agriculture, with opportunities for farming and livestock production
Community development initiatives Efforts to improve infrastructure,
education, and healthcare might be underway (Wilson, H.F. and Darling, J.
2012)
DATA COLLECTION

In Malamulele town the informal economy is crucial for stimulating local

economic development, and informal trading has a role to play in supporting
this informal economy. Yet there needs to be more effort made to assist the
informal economy directly. In addition to government efforts to analyse
comparative advantages and locate strategic capital, special efforts should be
made to bring services for the informal economy into these towns.

Government or private spending is a necessary, but not a sufficient, [Link]

injection of funding is required to stimulate the local economy (and to
counteract many economic forces which detract from the performance of the
local economies); but it is not sufficient to reach survivalist and micro-
enterprises. Informal trade is an especially important part of Malamulele
economy and offers good employment opportunities for traders, as well as
affordable goods and services to locals.
 The informal sector is the fifth largest employment sector in Malamulele. Many
occupations in the informal economy not only contribute significantly to
GDP,but also have the potential to generate meaningful livelihoods that can
shape the well-being of citizens and cities. Although difficult to measure, some
estimate the value of the informal economy at 28% of South Africa's GDP. In

July 2018, GTP launched a study to better understand informal traders, their
needs and challenges. It also seeks to gather information related to business
structure requirements, merchants' willingness to transition to formal structure,
ability to pay rent and service fees, business needs, and inventory. yards as well
as the source of their goods. This project includes a comprehensive survey of
informal traders in Malamulele CBD. The project considers the most
strategically appropriate business plan, operating modality, and funding
opportunities to develop physical and management structures. Once approved,
the proposal will be rolled out to participating merchants and tested for
feasibility in other parts of the city.

DATA ANALYSIS and Synthesis

 1. The are more females than males

Malamulele's Central Business Area sees street trading as a popular informal

sector activity, with vendors selling a variety of goods and services. A
significant portion of informal sector workers in areas like KwaMsane and
Mpukunyoni are female, with some studies indicating a high percentage of
women-owned businesses. Informal sector businesses can be a crucial source of
income, even serving as the primary income source for households, and can
contribute to poverty alleviation.

[Link] are many people between the age of 26 30 who own the informal

The specific spending habits of consumers in Malamulele would be influenced

by factors such as income levels, access to resources, and the availability of
goods and services. The presence of tourism activities in the area, such as those
related to the Kruger National Park, could also influence the spending patterns
of tourists and potentially impact local businesses. The local economy in
Malamulele is likely driven by small businesses, markets, and agricultural
activities, impacting consumer spending on goods and services(According to
Austin martinez)
 [Link] of people who own the informal sector don’t have matric

The informal sector in South Africa, and particularly in areas like Malamulele,
often involves small businesses, street vendors, and home-based workers. It's
characterized by a lack of formal regulations, contracts, and benefits. The
informal sector can offer a livelihood for individuals who may not have the
educational qualifications for formal employment. This makes it an accessible
option for those who have not completed their schooling. IN many cases, the
informal sector prioritizes skills and experience over formal qualifications. This
means individuals can start businesses or work in informal roles even without a
Matric. (According to Beets. Hanekom. [Link]. Nojjar. Samadi. Smitt.
Swanevelder. Tylor published in 2004 july senior geography )

[Link] business is most likely to have a lot of people in the informal sector

Trans
port services, especially in the informal sector, often offer flexibility in terms of
work hours, routes, and types of transport used, making them accessible to
people with limited resources or skills. Low Barriers to Entry:The informal
sector requires less capital investment and paperwork compared to formal
businesses, making it easier for individuals to start their own transportventures.
Demand for Affordable Services:In many developing countries, public transport
is inadequate or unaffordable, creating a demand for cheaper, informal transport
options. Rural Areas:In rural areas, where formal transport infrastructure is
often lacking, informal transport becomes essential for accessing goods,
services, and markets. Self-Employment:Many informal transport workers are
self-employed, operating their own vehicles or providing services like taxi or
minibus transport.( Varga.E, Friedman.M, Ranby.P, 2012 Solution for all
geography (grade 10)

[Link] owner of the informal sectors employs people mostly around 0 to 6

people

Informal businesses often lack the resources and infrastructure to support large
employment. They frequently operate on a small scale, with limited capital and
technology. Family-Based Businesses: Many informal sector businesses are
family-run, with family members working together to manage the business.
Survivalist Micro-enterprises:Some informal sector businesses are driven by
necessity, with owners and workers often facing unemployment or limited
formal employment options. These businesses often prioritize survival and may
employ fewer workers than larger, formal businesses. Lack of Formal
Regulations and Support:Informal businesses often operate outside of formal
regulations and may lack access to government support programs that could
encourage larger scale growth and employment.(Hambly.A.W,
Jacobs.J.A,Najaar.K, Samai.G, Gear.S, Beets.P.A.P, Shabalala.Z.P.L, 2010 Via
Africa geography )

[Link] informal sectors are most likely to face challenges like crime in their
businesses

Informal businesses often operate without official permits or licenses, making

them vulnerable to harassment from authorities and leaving them without legal
recourse if they are victims of crime, Vulnerability to Theft: formal traders
often lack safe storage for their goods, making them easy targets for theft. Lack
ofSecurity: Informal businesses may operate in areas with higher crime rates
and lack access toad equate security measures. Harassment and Xenophobia:
Informal traders, especially those who are foreign nationals, can be subject to
harassment and even xenophobic attacks, as reported by Thulamela
Municipality. Fear of Violence: The fear of violence and crime can deter
informal traders from investing in their businesses and can lead to them being
forced to close down, according to the University of the Free State. Limited
Access to Support:Informal businesses often lack access to resources like credit,
business insurance, and legal support, which can further expose them to
criminal activity.( according to the University of the Free State.)

[Link] owner of the informal sector mostly suggested to be supplied by the

infrastructure to solve challenges
Improved productivity and efficiency: Access to reliable utilities like electricity
and water can make businesses more productive and efficient. Reduced
operating costs: Well-maintained infrastructure can lead to lower costs for
businesses in the informal sector. Enhanced safety and security: Adequate
infrastructure can improve safety and security for both business owners and
customers. Increased business opportunities: Better infrastructure can attract
more customers and create new business opportunities. Improved public image
and reputation: Having access to clean and well-maintained facilities can
improve the public perception of informal businesses. In addition to basic
infrastructure, informal sector owners may also benefit from: Better roads and
transportation: Good road networks can facilitate the movement of goods and
people, making it easier for businesses to operate (Cavenserof.G, Produced by
moskew miller longmon in 2007, Focus on geography )

8. Make informal sectors don’t make a lot of money

they typically pay indirect or consumption taxes on the goods that they
purchase. Informal economies include garment workers working from
their homes, as well as informally employed personnel of formal
enterprises. Employees working in the informal sector can be classified as
wage workers, non-wage workers, or a combination of both(Conen.S,
 Fleming.B, Kroli.L, Ranby.P, Sounders’, In cape tpwn 2012, Platinum
geography )

9. Many people in the informal sector need training for their business

Training can equip informal sector workers with the skills they need to be more
efficient and effective in their businesses, whether it's through vocational skills,
entrepreneurial skills, or soft skills. Increased Productivity: With better skills,
informal businesses can operate more efficiently, leading to higher output and
potentially higher profits. Higher Income: Improved productivity and efficiency
can translate into increased income for informal sector entrepreneurs and
workers. Career Advancement: Training can also help informal sector workers
advance their careers and move into more specialized or higher-paying roles.
Access to Finance: Some training programs may also include guidance on

accessing finance, which is crucial for small businesses to grow and develop.
( Cavenserof.G, Produced by moskew miller longmon in 2007, Focus on
geography )

10. A lot of informal sector help community by bringing food on the table
The sector plays a crucial role in poverty alleviation, as it often serves as a
primary source of income for many households. The informal sector in
Thohoyandou is recognized for its role in reducing dependency on government
support and providing livelihoods for many residents.3 It also helps in
redistributing ownership of productive assets, which is a promising way to
empower economically marginalized groups (BOBY L.T 2013)

CHALLENGES OF INFORMAL BUSINESS OWNERS IN MALAMULELE

COMMUNITIES

Lack of financial assistance:Many informal traders struggle to access funding for business expansion
and investment.

Lack of management and marketing skills:Insufficient training and resources can hinder business
growth and profitability.

Competition from formal retailers:The presence of larger, established businesses can impact the
market share and profitability of informal traders.

Vulnerability to macroeconomic trends:Informal traders are often susceptible to economic

fluctuations and changes in consumer demand.

Lack of access to technology:Limited access to technology can hinder their ability to improve
efficiency and market their products.

RECOMMENDATION AND SOLUTION

HOW CAN THE LIVES OF THOSE IN THE INFORMAL SECTOR BE

IMPROVED ?

Job Creation: The informal sector provides employment opportunities for many
individuals who may not have access to formal jobs. It is an easily accessible
economy that offers a chance to acquire skills and knowledge, potentially aiding
future integration into the formal sector.1(Tyler published 2004)
Income Generation: It serves as a vital source of income for households,
contributing to poverty alleviation. The informal sector is crucial in reducing
poverty and providing an alternative for those unable to find formal
employment.2

Entrepreneurship: Encourages small-scale entrepreneurship, fostering

innovation and local business development. Informal businesses, such as street
vendors and small-scale traders, are prevalent in Thohoyandou, providing
essential services and goods (blaww published in 2012 spot on geography)

WHAT CAN A LOCAL AREA (MUNICIPALITY) DO TO REGULATE

INFORMAL SECTOR

Designate Informal Trading Areas: Municipalities can declare specific areas

within their jurisdiction for informal [Link] should demarcate these areas
clearly and provide public notice.
2. Ensure Access to Basic Services: Informal traders should have access to basic
services like water, sanitation, refuse removal, and [Link]
should set targets for providing and maintaining these services.

CONCLUSION

The informal sector is a vibrant and often overlooked part of the economy in
many countries. While it may not always be recognized or supported by official
policies and institutions, it plays a crucial role in providing employment and
income opportunities for millions of people. However, working conditions and
wages in the informal sector can be poor, and workers may lack access to basic
protections and benefits. Addressing these issues and providing greater support
for the informal sector could help to improve the lives of workers and contribute
to more inclusive economic growth. (MARION J.S)

BIBLOGRAPHY
 According to Charmers, J. (2013) Informal Sector, Informal
Employment and National Accounts. African Group on Employment
and Informal Sector (AGEIS), Yaoundé, Cameroon. April 29-May 3,
2013.
 According to Islam . (2012) The informal economy worldwide: trends
and characteristics. Margin-The Journal of Applied Economic
Research, 6:2 (2012): 103–132.

 According to Smith, David. (2011) A worldwide overview of trends

and characteristics of employment in the informal economy and
informal sector in a gender perspective. Contribution to the update
of the ILO-WIEGO Women and Men in the Informal Economy.

 According to Legalise J. R. eds. Is Informal Normal? Towards More

and Better Jobs in Developing Countries (pp.27-62). An OECD
Development Centre Perspective, Paris.

 According . Turnham, Salomé B. & Schwartz A. (Eds.) The Informal

Sector Revisited (pp.11-51). Paris: OECD Development Centre
Seminars.