Mailbox: The informal economy – what government doesn’t know

From Biznews community member Herald Thiele

Alec, I’ve always been a great fan of yours. I don’t even know how to spell the word ‘economy’ or let alone what the acronym GDP stands for.

South_African_StubI live in St Lucia, northern KZN. As you probably know, particularly in KZN, large tracts of traditional land are allocated to the Chiefs (Amakhosi). If you ask someone from these areas, where does he live, he would answer you ’emakhaya’.

I have my pick-up regularly serviced at a workshop situated in the ’emakhaya’. The mechanic typically charges only R250 for a regular service. There are thousands of Spaza shops, well stocked liquor or hardware shops. All the avos, pineapples or bananas that we or visitors buy come from these areas. The market owners buy most vegetables and fruit from conventional farmers than sell them here. I have my trousers repaired at ’emakhaya’ tailors. You can have your hair done here. You can imagine how much money changes hands here. All our plumbers, painters or carpenters are informally contracted from these areas. This is where it’s all happening. I believe our government and economists would be surprised to know what’s really going on here.

I wonder how much does this very huge informal economy contribute to our GDP. Does anybody have a vague clue – how does one measure it?

Should we call this the new economy? What would auntie Christine say about this? Is this only an African phenomena?