The role of informal trading in economic development : the case study of Mtubatuba.

Abstract

This study assessed the role of informal trading in the economic development of small towns in KwaZulu-Natal’s local municipalities using the case study of Mtubatuba. The following objectives were crucial in reaching this aim; to assess the contribution of informal trading to the livelihoods of traders, to assess the role of informal trade in employment, to examine the relationship that exists between traders and local authorities and to examine the relationship between informal traders and formal businesses. The study used a mixed methods approach in order to obtain information from informal traders and municipal officials. In recent years, small towns in South Africa have become important hubs for service delivery and the economic activity involved in the receipt and processing of produce (Donaldson and Marais, 2012). As such these towns are viewed as critical to the implementation of the goals of South Africa’s developmental local government. In relation to this view, from a theoretical perspective, the established strand relates to the small town growth and development potential with the core theme of local economic development. In Mtubatuba informal trading has become an economic alternative for some community members. Informal trading is further supplemented by tourism as Mtubatuba is a tourism gateway to Ismangaliso Wetlands Park and Hluhluwe Umfolozi Game Reserve. The motivation for the study was thus to understand the role of informal trading in the economic development of small towns. In order to ensure optimal efficiency of informal businesses there is a need to understand the needs of informal traders and the contributions made by the informal sector in their lives. There is tremendous potential within the informal business sector for it to become a major role player in sustaining the livelihoods of many people, but the efficiency of these informal businesses needs to be improved by removing some of the constraints which hinder their functioning. These constraints include crime, transport, municipal service and abuse. This research therefore assesses the role played by informal trading in the economic development of small towns. In addition, the findings will be useful for local municipalities within small towns to fully comprehend the views of municipal officials and informal traders with regards to policies and practices, as well as their impact on enabling the development of small towns through the informal economy. Lastly, the research findings will enrich the knowledge base on informal trading in small towns and may be useful input into the development of a more sustainable regulatory approach to informal trading in small towns.