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Part III The dynamics of city development

10 Globalization or informalization? African urban economies in the 1990s
11 Residential property markets in African cities
12 The state and civil society: Politics, government, and social organization in African cities
13 Urban lives: Adopting new strategies and adapting rural links

10 Globalization or informalization? African urban economies in the 1990s

Christian M. Rogerson


La persistance de la crise économique africaine, en particulier en matière d'insuffisance de l'emploi et de pauvreté massive, se manifeste dans la situation des grandes villes du continent. Ce chapitre a pour objectif de faire ressortir les nouvelles tendances des économies urbaines africaines dans les années 90. L'on a choisi d'évaluer l'impact respectif de la mondialisation et de la marginalisation, processus indissociables structurant l'aspect et la situation de l'économie urbaine. La discussion se présente dans trots sections. L'on étudie d'abord la signification et la ramification de la mondialisation en termes de disparition des emploi du secteur moderne ou former dans les grandes villes d'Afrique. L'on examine ensuite le progrès de la marginalisation, à savoir la progression massive du secteur informer dans pratiquement toutes les villes africaines. La troisième section est axée sur une facette particulière de la marginalisation qui est en train de transformer de façon spectaculaire le paysage des principales villes africaines: le développement de l'agriculture urbaine. La conclusion met l'accent sur la nécessité d'assurer en Afrique une "gestion urbaine" qui abandonne la réglementation et le contrôle du développement au profit d'une promotion active du développement économique urbain local.


In the 1990s assessments on the state of African economies make dismal reading. It is now apparent that most of the development scenarios in the 1980s severely underestimated the length and the extent of the structural adjustment, and its ramifications for employment and unemployment, particularly in the continent's large cities. The optimistic scenarios for the 1990s had been premised on a much earlier recovery of international commodity prices and a speedier response of and support from national and international investors. Beyond these failures, another unexpected setback to economic upturn was the reappearance of East European countries as strong competitors for the already diminishing flows of external resources to the continent. Overall, available evidence reveals that the anticipated upturn in growth and employment failed to materialize across most of Africa and that the long-term prospects for economic recovery, especially in sub-Saharan Africa, "are most sobering and disturbing" (ILO-JASPA, 1992, p. 5). Africa is now the only global region where, during the next decade, the economic situation is expected to deteriorate, with "significant increases in the proportion of the population under poverty" (ILO-JASPA, 1992, p. viii). Accordingly, it is argued that the question of unemployment and its impact on poverty "still remains, perhaps, the number one social problem facing many African countries" (ILO-JASPA, 1992, p. 1).

The persistent economic crisis in Africa, particularly as regards weak employment growth and mass poverty, is manifest most visibly in the condition of the continent's large cities. The objective in this chapter is to tease out emerging trends in the state of Africa's urban economies in the 1990s. This task will be approached in terms of assessing the respective impacts of globalization and informalization as interwoven processes shaping the complexion and condition of city economies. Three major sections of discussion are presented. First, the meaning and ramifications of globalization in terms of the demise of modern or formal sector employment in Africa's large cities will be reviewed. Against this background, in the second section the focus turns to examine the advance of informalization and of the massive extension of the informal economy throughout most of urban Africa. The third section centres on a particular facet of informalization that is dramatically altering the landscape of major African cities, namely the advance of urban cultivation. Lastly, the concluding comments draw attention to certain urban policy initiatives that might offer signposts for a way forward from the current economic dilemma of Africa's large cities. Although source material and examples will be cited from all parts of Africa, the discussion is biased towards the experience of the urban areas of eastern, central, and southern Africa.

Globalization and the demise of urban formal economies

As explored in chapters 2 and 3, the phenomenon known as globalization - the progressive integration of various parts of the world into a global economy and global finance system - has attracted considerable debate over the past decade (Dieleman and Hamnett, 1994). For some writers, notably Castells (1992), the forging of a global economy is an intoxicating and momentous process, one of the major structural features of the contemporary age. The global economy is viewed as one:

that works as a unit on real time on a planetary scale. It is an economy where capital flows, labour markets, commodity markets, information, raw materials, management and organization are internationalized and fully interdependent throughout the planet, although in an asymmetrical form, characterized by the uneven integration to the global system of different areas of the planet. (Castells, 1992, p. 5)

Most observers agree that, in the current phase of globalization, "a new structure of global competition has arisen" as a result of the appearance of "global" markets and "global" production complexes (Thrift, 1994, p. 368). Although many factors contribute to the making of this new structure of competition, particular importance is attached to new innovations in technology, such as micro-electronics, telecommunications, or materials science, which exert a profound impact on refashioning world production systems. Key elements in globalization have been the growth of transnational production and the increasing openness of and interdependence among national economies. Alongside new globalized production strategies "there has been a parallel integration of financial markets which, together with a vastly improved global telecommunications and transportation infrastructure, has increased global economic integration in general" (Doohan, 1994, p. 26).

Such changes have profound impacts at the level of both national and urban economies and for individual enterprises. At the level of national and urban economies, the major impact has been an intensification of international and local competition for markets and investments. Increasingly, rates of growth of GDP and of employment hinge on an economy's ability to compete successfully within the new system of globalized production. At the level of the enterprise, the effects have been to stress the importance of adopting new process technologies, of new flexible systems of work organization, and of shifting towards flexible rather than Fordist mass production systems. Recent processes of globalization have given rise to new geographies, with the global economy described as a "space of flows" (Castells, 1989) or a necklace of localized production agglomerations strung out around the world (Storper, 1992). As noted by Rakodi in this volume (chap. 2), a central place in the organization, coordination, and control of the new global economy is accorded to sets of global or world cities. In addition to managing a new international division of labour in manufacturing, these cities are key hubs for the control and coordination of global finance and producer services. Because world city status brings with it considerable economic benefits in terms of the development of new, dynamic, high-income growth sectors of the economy, "global city status is something to be coveted, defended and fought over" (Dieleman and Hamnett, 1994, p. 358).

What are the implications for Africa and its cities of recent globalization trends and of the new competition? In many respects the changes associated with globalization are disturbing. None the less, it is clearly better for national and urban economies to be affected by them than to be left out. For all its negative side-effects, exposure to "the new competition" seems to be increasingly essential for augmented growth, efficiency, and sustained job creation (Storper, 1992; Doohan, 1994). Despite some notable African efforts at place marketing for industrial investment (fig. 10.1), most of Africa has been "left out" of the globalization processes now taking place. With notable exceptions, such as parts of North Africa and Mauritius (Rogerson, 1993a), the so-called new international division of labour, characterized by export-processing manufacturing, has bypassed the major part of the continent. Participation in the globalized production system was determined partly by location and geopolitical significance, partly by the existence of a strong, repressive, and reliable state apparatus, and partly by the existence of a technological and human resource infrastructure (Schmitz, 1984). In Africa the preconditions were not established for national and urban economies to compete successfully in the new growth sectors of the global economy; overall, Africa has lacked the infrastructure, human resource base, and the capacity for state intervention that the experience of the newly industrializing countries shows are so essential to capture new growth opportunities.

Fig. 10.1 Place marketing in Africa

Looking to the prospects for flexible production, it is evident that in certain parts of the developing world the shift to flexibility may generate renewed growth opportunities for both import substitution and export-oriented production (Pedersen et al., 1994; Rogerson, 1994a). Kaplinsky (1991, p. 33) points out that flexible production "is inherently descaling at the plant level in many sectors, and this holds open new possibilities for renewed import substituting industrialization." Moreover, additional opportunities for new manufacturing growth are raised by the possibility of fashioning production to take account of product specialization. This capacity to "niche" output to the specific conditions of individual markets opens the prospect of evolving appropriate products for developing world markets and the development of niche products (Kaplinsky, 1991, p. 34). Nevertheless, the prospects for evolving export-oriented flexible production are recognized as highly uneven because key changes in the transition to flexible production are of an organizational nature and thus human resource intensive, a situation that creates particular problems in much of Africa. For example, in Zimbabwe it was concluded that a fully fledged scenario of flexible specialization is "not on the agenda" (Rasmussen and Sverisson, 1994, p. 30). Overall it has been suggested that the greatest future potential for evolving post-Fordist production forms lies in Mexico and the Caribbean, North Africa, and the economies of the Association of South East Asian Nations, with the weakest overall prospects in sub-Saharan Africa (Kaplinsky, 1991, p. 34), with the possible exception of a democratic South Africa (Rogerson, 1994a).

As Simon and Rakodi both argue (chaps. 2 and 3), central to Africa's progressive peripheralization and current economic crisis is the fact that the continent has been largely unable to transcend its traditional functions in the world economy of raw material supplier and a captive market for imported manufactured goods. Put simply, globalization processes have been "stalled" in Africa, with corresponding severe consequences for its urban economies. In terms of manufacturing investment, as Rakodi notes, large foreign enterprises have shunned the continent, particularly since 1980, creating a situation that for many African countries the major sources for outside investment derive from international development agencies rather than private capital investment. Accordingly, Africa is the only large and populous continent without a true newly industrializing country, "seemingly another reason for its marginality to global circuits of commercial, industrial and financial capital" (Simon, 1993, p. 7), despite some progress in state and external investment in industry in North African countries between the 1950s and the 1970s. Much attention (and hope) currently centres on the prospects over the next decade for a post-apartheid democratic South Africa to emerge on the global stage and attain the status of a true newly industrializing country. Indeed, the city of Johannesburg is targeting its urban economic development strategy for the next decade to an ambitious goal of attaining "world city" status (Rogerson, 1994b; Rogerson and Rogerson, 1994). Elements of that strategy will involve building up the financial and producer services sector, attracting the offices of international organizations, and developing a cultural strategy to "image" the city better to foreign investors. In this respect, over the next decade, Johannesburg will increasingly be in the business of competing with Nairobi, currently the only other sub-Saharan African city that assumes a supranational role in the sphere of information flows, international agencies, and financial transactions (Simon, 1992, 1993).

The stalled process of globalization in Africa underpins the emasculated character of the formal economy in the majority of the continent's cities. In most countries of sub-Saharan Africa, regular urban wage employment opportunities constitute only a small fraction of total employment, typically between 5 and 10 per cent (ILO, 1992). For the period of the early 1980s, ILO studies disclose that regular urban employment fell in many countries (down 33.6 per cent in the Central African Republic in 1980-1986 and down 27 per cent in the Gambia between 1979 and 1986) and elsewhere failed to match the growth of the non-agricultural labour force (van Ginneken, 1988, p. 17). For example, in Windhoek, Namibia, the most recent data point to employment growth in the formal sector running at "probably less than 1 per cent" (Frayne, 1992, p. 7). The slow-down in modern sector employment in recent years is essentially attributed "to the fact that the public sector - as the engine of employment growth - has become increasingly unable to sustain the high rates of labour absorption of the 1970s and early 1980s" (ILO-JASPA, 1992, p. 47).

The impact of structural adjustment, which created shortages of imported materials, reduced investment, and led to declining effective demand, has meant that urban-based manufacturing has suffered particularly badly (ILO, 1987, p. 92; Gilbert, 1994). Although large-scale manufacturing enterprises have created an impressive volume of jobs in the newly industrialized countries of Asia and Latin America, they have generated only a relatively small number of employment opportunities in urban Africa (Rondinelli and Kasarda, 1993, p. 105). Indeed, as described by Beavon in chapter 5, the downturn in large-scale manufacturing has affected even the most dynamic industrial agglomeration in Africa, the Pretoria-Witwatersrand-Vereeniging region - South Africa's economic heartland. Underpinning this downturn has been a complex of factors including a decline in mining, cut-backs in military production, and the consequences of excessive decentralization programmes that encouraged the outflow of labour-intensive production activities, most notably of much of the region's clothing and textiles manufacturers (Rogerson and Rogerson, 1994; Rogerson, 1995a), rather than structural adjustment.

In some countries, such as Tanzania, private sector formal employment has been stagnant ever since the mid-1960s, producing a situation that "public sector employment is the most important source of formal employment," especially in cities (Therkildsen, 1991, p. 252). In Luanda, employment in "public service and state enterprises absorbed almost half of the working population" (Aguilar and Zejan, 1994, p. 348). In Kenya, where it was estimated that the public sector accounted for 50 per cent of employment, job growth in this sector hovered around 4 per cent in the early 1980s, accelerating to 4.7 per cent per year in 1987/88 (Moser et al., 1993, p. 40). Nevertheless, under adjustment programmes, civil service reform has meant that public sector employment has no longer expanded rapidly and been able to serve in part as a welfare system during periods of economic downturn (ILO-JASPA, 1992, p. 48). Instead, public sector reform in several African countries has precipitated substantial layoffs, particularly in the lower echelons (Fapohunda, 1991; ILO-JASPA, 1992). A wave of public sector retrenchments took place in the 1980s and has continued into the 1990s (see table 10.1) effecting a downturn in urban jobs in particular. Women appear to have been most affected by the retrenchments and restructuring of the civil service because they tend to concentrate in the lower end of the occupational hierarchy (ILO-JASPA, 1992). Alongside this general faltering in public sector driven urbanization across Africa (Therkildsen, 1991), there has been a sharp fall in modern sector wages in urban areas, especially once again among civil servants (ILO, 1992, p. 39; ILO-JASPA, 1992; Hodd, 1993). For example, in Mozambique "probably no family in an urban context is able to survive on the income derived from one of the 400,000 formal sector Jobs" (Assuncuo, 1993, p. 32). The impact of these trends on employment is noted by Dubresson in Abidjan (chap. 8), Obudho in Nairobi (chap. 9) and, complicated by the transfer of the capital to Abuja and the role of oil prices, Abiodun in Lagos (chap. 6).

With public sector retrenchments accompanied by a declining absorptive capacity of the (private sector) formal economy, levels of open unemployment have escalated across urban Africa. During the 1980s few urban areas of sub-Saharan Africa escaped major increases in joblessness; current estimates are of unemployment levels in the range of 20 per cent, which, it is projected, "could exceed 30% in most cities in sub-Saharan Africa by the year 2000" (ILO-JASPA, 1992, p. 29; see also Dubresson, chap. 8). Even South African cities are part of this continental trend, with open unemployment in Port Elizabeth climbing to an estimated 25 per cent in 1991 owing to restructuring and a severe shake-out in the city's manufacturing sector (Rogerson, 1995b). The ILO (1994a, p. 24) records increasing open unemployment in African urban areas and notes that a "worrying aspect is that unemployment is creeping up the education ladder, with even university graduates now being affected." The worst levels of unemployment, however, are among the urban youth, who are said to constitute 60-75 per cent of the unemployed though they account for only one-third of the labour force (ILO-JASPA, 1992, p. 16). Typically, in urban Kenya the most affected age group for unemployment comprises those aged 20-29, who represent 65 per cent of all those reported as unemployed (House et al., 1993, p. 1212). Abiodun (chap. 6) notes that at least 70 per cent of the unemployed in Lagos State are aged between 15 and 29.

Table 10.1 Public sector retrenchments in selected African countries, 1980s and 1990s

Country Period Numbers retrenched % of total period public sector employment
Nigeria 1984-1988 156,550 20
Kenya 1992-1997 149,000 30
Zimbabwe 1990/91 -1994/95 123,000 25
Ethiopia 1992-1995 80,000 15
Tanzania 1992/93-1994/95 80,000 30
Uganda 1991-1994 80,000 26
Ghana 1987-1991 49,873 15
Cameroun 1985/86-1991/92 47,639 20
Guinea 1986-1991 40,000 20
Côte d'Ivoire 1983-1990 15,000 15
Togo 1983-1985 5,000 10
Gambia 1985-1986 n.a. 17

Source: based on ILO-JASPA (1992), p 55.

The consequences of stalled globalization on the formal economies of Africa's cities have therefore been devastating. Adjustment and economic restructuring have produced major changes in urban economies and the urban labour market since 1980 (van Ginneken, 1988; ILO, 1994a). The security, if not the stability, of regular wage employment has declined and as a result the distinctions between employment conditions in the formal and informal economies of cities have become progressively blurred. With the erosion or slow growth of the formal economy, large numbers of people have moved into either self-employment or casual wage employment or have to supplement formal sector wages with income generated from informal sector activity. This has produced the widely noted phenomenon of the informalization of the urban economy in Africa (Stern, 1992a, p. 542).

The informalization of the African city

In almost all the cities of sub-Saharan Africa (with the exception of certain South African cities) the majority of the urban workforce are currently engaged in a highly differentiated range of small-scale, micro-enterprise or informal activities such as hawking, scavenging, informal construction, small-scale production, or the provision of a host of low-cost services, including public transport activities. The diversity of informal economic life across the continent is evident from examining a cross-section of research studies from all parts of the continent (see, for example, Olowolaiyemo, 1979; Oyeneye, 1980; Fowler, 1981; Jourdain, 1982; Abdel-Fadil, 1983; Lachaud, 1984; Schamp, 1984; Aboagye, 1986; Hofmann, 1986; Antony, 1989; Maldonado, 1989; ILO, 1991; Mutizwa-Mangiza, 1993; Tevera, 1993, 1994; Yankson, 1995; Rogerson, 1996).

Informal economic enterprises - those defined as small-scale, mostly family-operated or individual activities that are not legally registered and usually do not provide their workers with social security or legal protection - absorb at least half of the workforce in many large African cities (Rondinelli and Kasarda, 1993, p. 106). The most recently available data produced by ILO-JASPA (1992, p. 29) reveal that, for sub-Saharan Africa, the informal economy currently engages 63 per cent of the total urban labour force. Moreover, the informal economy is still on an upward growth trajectory as regards labour absorption (Doohan, 1994, p. 25). Evidence from urban Zambia suggests that during the 1980s the size of the informal economy "more than trebled in six years" (Peters-Berries, 1993a, p. 3). The ILO estimates that during the 1990s the informal economy will be "generating some 93 per cent of all additional jobs in urban Africa" (ILO, 1992, p. 39; Maldonado, 1993, p. 245). Such findings underscore the conclusion that the small-scale, micro-enterprise or informal economy currently represents the most rapidly expanding employment segment of the contemporary African urban economy (ILO-JASPA, 1992, p. 29; Stren, 1992a, p. 542). That said, it must be acknowledged that in certain parts of the continent, particularly in the urban areas of west and north Africa, the informal economy is not a new phenomenon; rather, there is evidence that the economies of many pre-colonial cities in west and north Africa have been "informal" for centuries (see, for example, Peil, 1979; Diemer and van der Laan, 1981; Findlay and Paddison, 1986).

The small-scale or micro-enterprise economy in urban Africa exhibits considerable differentiation. In South African research a useful conceptual distinction is made between two categories of informal enterprise (Rogerson, 1996). First are survivalist enterprises, which represent a set of activities undertaken by people unable to secure regular wage employment or access to an economic sector of their choice. Generally speaking, the incomes generated from these enterprises, the majority of which tend to be run by women, usually fall short of even a minimum income standard and involve little capital investment, virtually no skills training, and only constrained opportunities for expansion into a viable business. Overall, poverty and the desperate attempt to survive are the prime defining features of these enterprises. Second is the category of growth enterprises, which are very small businesses, often involving only the owner, some family members, and at most one to four paid employees. These enterprises usually lack all the trappings of formality, in terms of business licences, formal premises, operating permits, and accounting procedures, and most have only a limited capital base as well as rudimentary business skills among their operators. None the less, many growth enterprises have the potential to develop and flourish into larger formal small-scale business enterprises.

In most cities, including many of those studied in part II of this volume, the pattern is overwhelmingly of a small-scale and informal economy weighted towards trade-related activities (on Angola see Assuncao, 1993; on Botswana see Karim-Sesay, 1995; on Namibia see Frohlich and Frayne, 1991; on Zambia see Peters-Berries, 1993a; on South Africa see Rogerson, 1992a, 1996; see also in this volume Abiodun on Lagos and Piermay on Kinshasa). Typically, a 1988/89 survey in Dakar disclosed that 72 per cent of enterprises were in commercial trading activities (ILO, 1992, p. 39). In the urban areas of southern and eastern Africa a sectoral breakdown of micro-enterprise discloses that the share of trading enterprises is at least 50 per cent in Swaziland, more than 60 per cent in Botswana and Malawi, and reaches almost 70 per cent in the cities of Kenya and South Africa (Liedholm and Mead, 1993, p. 9). A converse pattern appears for manufacturing micro-enterprise, ranging from 17 per cent in South Africa and Botswana, to 35 per cent in Lesotho, to 65 per cent in Zimbabwe, mostly engaged in the production of textiles and garments (Liedholm and Mead, 1993, p. 8). Although the structure of Zimbabwe's urban small-scale economy distinguishes it from most other African countries, recent evidence suggests that one impact of structural adjustment has been to change "the structure of the [expanding] urban informal sector from predominantly manufacturing to more trading activities" (Peters-Berries, 1993b, p. 8).

Participation in the small-scale enterprise economy does not mean that most of the workforce is self-employed. Recent ILO (1992, pp. 39-40) research shows that often a considerable proportion of the workforce, almost two-thirds in the case of Abidjan, work for wages rather than profit (see also chap. 8). However, it is clear that the vast majority of micro-enterprises employ only limited numbers of workers. In their seven-country comparative investigation of micro-enterprises in urban areas of southern and eastern Africa, Liedholm and Mead (1993, p. 12) demonstrate that consistently over 90 per cent of enterprises engage fewer than five workers and the largest share (normally at least 50 per cent in most countries) is made up of one-person enterprises. What these data suggest is that the growth recently recorded in the small-scale sector of African cities is occurring primarily through the replication of informal businesses, a pattern of involution rather than evolution, which would result in an increase in the number of employees. Manning and Mashigo (1993, p. 16) write of a process of "growth through replication, or 'extensive' growth rather than growth through 'intensification' or capital/skill/technology upgrading" as typical of most urban micro-enterprise.

Finally, one other effect of the increased importance of the informal and small-scale economy in African cities is that more women are now working. Consistently, women emerge as the major proprietors of micro-enterprise in urban Africa (Liedholm and Mead, 1993, p. 14; Aguilar and Zejan, 1994, p. 349; Karim-Sesay, 1995). Thus, for example, in Kenya between 1977/78 and 1986 women's participation in the urban workforce rose from 39 to 56 per cent, accounted for largely by their prominence in informal work (ILO, 1992; House et al., 1993; see also chap. 9). Several studies draw attention to the existence of marked gender divisions of labour within the urban small-scale economy of Africa. In urban areas of Lesotho, women cluster in businesses that are "an extension of domestic chores (such as selling food items) and a spatial and temporal extension of traditional activities (such as beer brewing)" (ILO, 1994b, p. 33). Likewise, a clear sexual division of labour surfaces in urban Zambia and Angola, with women predominating in petty trade whereas men are mostly found in activities surrounding manufacturing, construction, or repair services (Peters-Berries, 1993a, p. 3; Aguilar and Zejan, 1994, p. 349). For Windhoek, Frohlich and Frayne (1991, p. 8) observed marked sexual divisions of labour in trading activities, with fruit, giblet soup, offal, and vetkoek sold mainly by women, "whereas all other groceries, clothes, wood and luxury goods were sold by men almost exclusively." In South Africa, women cluster in trade, food preparation, dressmaking, and child-care activities (Liedholm and McPherson, 1991; Rogerson, 1994c). Moreover, research discloses the disproportionate number of women relegated to the lower end of the informal economy in terms of profitability and long-term development potential. Businesses run by women in urban South Africa, for example, were more likely to be a source of supplementary household income than were those run by male proprietors (Riley, 1994). An important finding is that women earn less than men in the informal economy, because the most profitable and fastest-growing small-scale businesses are dominated by male entrepreneurs (Friedman and Hambridge, 1991; Riley, 1994).

In seeking to explain the recent widespread surge of activity in the micro-enterprise economy across urban Africa, two major sets of issues must be discussed. The first concerns the demise of the formal economy, the mushrooming of survivalist enterprise, and a linked decline in the profitability of certain formerly promising spheres of informal work. The second relates to the increasing "informalization" of formal enterprise, which is associated with an expansion of subcontracting and outwork in a number of economic sectors. It is important to monitor the balance between these two trends in terms of assessing the long-term developmental implications of informalization processes in urban Africa.

The key explanatory factor for the proliferation of small-scale and informal economic enterprise is undoubtedly the progressive emasculation of the formal economy. This can be linked back in turn to the nature of stalled globalization, producing a mosaic of unevenness in the global economy. The implications of structural adjustment have further exacerbated the contraction of the formal economy. Clearly, informal work is not a refuge for newly arrived migrants to African cities, because many participants are long-term urban residents. Falling real wages in the formal economy forced many employed workers to search for a supplementary income source in the informal economy, as has been richly documented for Kampala (Bigsten and Kayizzi-Mugerwa, 1992), Maputo (Assuncao, 1993), and Kinshasa (Piermay, chap. 7). The withering of the formal economy (including both public and private sector components) gave rise, however, to a renewed impetus for an outflow of skilled labour into the small-enterprise economy (Fapohunda, 1991, p. 28). Retrenchments in the public sector affect not only civil servants but also skilled technicians made redundant owing to restructuring or closure of public sector enterprises. Because the informal economy "has become an important means of survival for this group of workers," this raises the prospect of technological upgrading of the small-scale economy (Tesfachew, 1992, p. 26). For example, Tesfachew notes that Structural Adjustment Programmes in Nigeria induced informal sector enterprises to increase their intake of apprentices, thereby furnishing new skills. Nevertheless, the impact on the small enterprise sector of wide-scale retrenchments and/or closure of formal enterprise may not always be positive (Tesfachew, 1992). In many cases a flood of new entrants into the informal economy can engender a situation of "overtrading" and a consequent decline in incomes earned and working conditions in such activities (Mhone, 1995). For instance, Dawson (1990, p. 11) observed of the Ghanaian experience: "While a steady flow of skilled labour into small firms acted to inject new skills and ideas into the sector, the avalanche of new entrants which followed on from the implementation of the retrenchment process - which saw 20 per cent of the total salaried labour force retrenched by the end of 1989 - had an altogether more negative impact." In urban Zimbabwe, there is alarming evidence that many areas of informal services and production, particularly those activities dominated by women, are now saturated and cannot absorb any more labour (Kanji, 1995, p. 46).

In urban South Africa the demise of the formal economy is, to a large degree, responsible for the surge in the number of survivalist enterprises in already "overtraded" income niches such as spazas (informal retail businesses) and hawker operations (see Rogerson, 1991a, 1994c, 1996) and for falling levels of profitability in activities such as the operation of taxis or shebeening, which formerly exhibited signs of expansion and seeming long-term growth potential. Recent work shows that in both these particular spheres of small-scale enterprise, a rash of new business entries has been associated with a deepening crisis of declining returns for entrepreneurs and worsened working conditions for employees (Khosa, 1993).

Overall, it must be emphasized that the combined impacts on the small-scale enterprise economy of recession in the formal economy and of structural adjustment measures are both varied and potentially contradictory. One set of consequences, noted above, has been the flood of survivalist enterprises in urban activities such as hawking, trading, or transport services, as occurred in Ghana, Zambia, Zimbabwe, or South Africa (see Tesfachew, 1992; Peters-Berries, 1993a,b; Rogerson, 1994b; Kanji, 1995; Mhone, 1995). By contrast, in Côte d'Ivoire "the informal sector appears to have been protected or shielded from the unfavourable trends in the world economy" (ILO, 1987, p. 93). Here the recession has reinforced or strengthened the comparative advantage of the urban small-scale economy by the transference of a large share of the demand for modern sector goods to informal enterprise (ILO, 1987). What appears to have occurred in urban Côte d'Ivoire is a process of informalization that has shifted the locus of production activity away from formal to informal establishments (Moser et al., 1993, p. 43). The evidence is less clear, but seemingly "a similar shift is said to have occurred in Kenya" (Moser et al., 1993, p. 28). Nevertheless, Dubresson (chap. 8) is far from convinced that the small-scale enterprise sector can replace the formal sector and promote an accumulation process sufficient to sustain Abidjan's economic vitality.

A second key theme in the expansion of the African urban small-scale and informal economy relates not to the demise of the formal economy as such but to growing linkages between formal and informal enterprise. Informalization is the process by which formal factory jobs are increasingly displaced by jobs in unregistered plants and home-working. The advantages of contracting out work to informal producers are the circumvention of labour regulations and the lowering of labour costs. A strengthening trend has been noted towards the so-called "informalization of formal enterprise," which refers to situations in which larger business enterprises seek to bypass regulations covering employment protection and labour security by establishing or linking their production to small, informal ancillary enterprises on terms that make those who work within the latter particularly vulnerable to exploitation (Rogerson, 1991b, 1994a). Nevertheless, whereas subcontracting of production activities is a widespread phenomenon in Latin America and parts of Asia (Rogerson, 1994a), its occurrence is less common in urban Africa "owing to the lower levels of industrialization, and the lower levels of skills and quality in African informal sectors" (Meagher and Yunusa, 1991, p. 3). Evidence is available of limited amounts of industrial subcontracting between formal and informal micro-enterprise taking place variously in the cities of South Africa (Rogerson, 1994b, 1995c) and Côte d'Ivoire (Moser et al., 1993). More prevalent than production subcontracting is subcontracting by formal sector commercial firms to informal traders in order to take advantage of lower overheads and the wider markets available within the informal economy (Meagher and Yunusa, 1991).

It has been argued by some observers that the "predominance of trade-based linkages and survival strategies in African informal sector expansion suggests a low potential for the emergence of a productive dynamic informal sector, particularly under conditions of economic crisis and structural adjustment" (Meagher and Yunusa, 1991, p. 3). The international experience of "informal economies of growth" points to the conclusion that a dynamic informal economy of "growth enterprises" cannot be created simply by legislative programmes for deregulation; rather, what will be required is state support in the areas of credit, technical training, and human resource development, together with coherent interventions to support a transition of informal enterprise beyond merely the production of low-quality consumer goods into other spheres of production (Rogerson, 1991b,c, 1995c). An important focus for nurturing the group of "growth enterprises" is the adoption, assimilation, and upgrading of technology (Maldonado, 1989; Maldonado and Sethuraman, 1992). In addition, ILO research cautions that "in formulating policies towards the informal sector, policy-makers (in Africa) need to give more attention to the macro policy environment rather than focussing exclusively on projects targeted at specific groups of enterprises" (Tesfachew, 1992, p. 29). Conditions for fostering an "informal economy of growth" as opposed to an "informal economy of bare survival" are rarely evident if one reviews the patterns of state intervention as regards the micro-enterprise economy. The picture that emerges overwhelmingly across Africa of a weak implementation capacity and limited attempts, if any, to nourish a flourishing small-scale enterprise economy linked to large-scale enterprise in a mutually supportive manner (see Assuncao, 1993; Peters-Berries, 1993a,b,c). To cite two recent assessments of Kenyan state policies towards the informal economy, Machuria (1992, p. 235) argues that the state in Kenya has supported the informal sector "only half-heartedly, despite public statements and policy publications"; likewise, another study concluded that the government "speaks strongly in support of the urban self-employed, but practical support has been limited and uneven" (House et al., 1993, p. 1218). Moreover, although official documents assert the importance of informal and small enterprise development, "program development and implementation have frequently lagged behind and occasionally contradicted stated policy" (House et al., 1993, p. 1218). The situation of the urban informal economy in contemporary Zambia typifies much of the rest of the continent: the micro-entrepreneur "has to struggle with an extensive underwood of inhibitive regulations, hostile local authorities and lack of support facilities" (Peters-Berries, 1993a, p. 11).

A final set of issues concerning inter-enterprise relationships relates to the assertion of Schmitz (1990, 1992) that the encouragement of flexible specialization and of sectoral clusters of small and medium-sized firms is potentially an important means for boosting competitiveness and collective efficiency in urban African industrial development. The notion of flexible specialization relates back to "the new competition" in the global economy, which is based on an entrepreneurial firm, often located in an industrial district (van Dijk, 1993a,b; Pedersen et al., 1994). A major premise is that the capacity for growth of small enterprises cannot be achieved individually; instead it depends on the efficiency and flexibility made possible by geographical clustering and by a division of labour between enterprises. As Dawson (1992, p. 34) avers, the degree to which "small firms are capable of dynamic and innovative endogenous growth is seen as being primarily dependent on clustering." In turn, this "opens up efficiency and flexibility gains which individual producers can rarely attain" (Schmitz, 1992, pp. 64-65). Recent important research points to the possible emergence in the developing world of local areas of "collective efficiency" within sectoral agglomerations of small-scale industrial enterprises, including parts of urban Africa (Schmitz, 1990; Dawson, 1992; van Dijk, 1993a,b; Nadvi, 1994; Pedersen et al., 1994).

The developmental possibilities of further promoting this form of flexible specialization, small-firm industrial development in Africa have been raised by several writers (Aeroe, 1992; Rasmussen, 1992a,b; Rasmussen et al., 1992; Rogerson, 1994a). Policy interventions to foster inter-firm cooperation should consider the lessons of international experience, which point to the potential for encouraging dynamic growth based on cooperative networks of small firms and micro-enterprise. In dynamizing sectoral agglomerations of micro-enterprise an important "enabling" role falls to local urban authorities. Although the major models for advocating this type of urban economic development are drawn from the successful small-firm industrial districts of Italy and Denmark (Pyke, 1993), the relevance of the "industrial cluster" model to the developing world context has been convincingly shown in a series of important works (Schmitz, 1990, 1992; Schmitz and Musyck, 1993; Nadvi, 1994; Nadvi and Schmitz, 1994). Undoubtedly, the extent to which this small-firm industrial development model can be successfully fostered will be vital to the trajectory of African urban economies in the 1990s. In particular, the fostering of small-firm industrial districts could make the informalization of African urban economies a positive base for long-term urban efficiency.

Finally, beyond policy interventions directed towards an informal economy of growth, government decision makers in urban Africa must formulate a set of strategic programmes to furnish an appropriate environment for the operations of survivalist informal enterprise. Several studies have offered packages for enhancing livelihoods in this informal economy of survival, which is often dominated by communities of hawkers and garbage pickers, or an array of home-based enterprises (Rogerson, 1991c; Tevera, 1993, 1994).


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