Understanding the Informal Sector with Catherine Gwynne-Evans

“Phaphama is a paradigm of the social change that we need, that doesn’t ignore the clear correlation between power, money, social and political issues.”

Before telling the success stories of Phaphama, it is important to understand why these stories matter – why is Phaphama’s mission relevant?  According to our mandate, “Phaphama aims to awaken the potential of small businesses”, hence its name, meaning ‘to awaken’.

In order to answer the question of Phaphama’s relevance, I sat down with Catherine Gwynne-Evans. We discussed her position on Phaphama’s research team, the informal sector, and Phaphama’s role in Cape Town’s economic landscape.

Catherine, along with Sophie de Bruyn, is onPhaphama’s Research Team for 2021. They receive partial funding from the Southern Africa Labour and Development Research Unit (SALDRU) to pursue their Economics Honours degree. Their aim is to conduct research on the South African informal sector that is widely accessible.  

Too frequently the informal sector is not given adequate attention by economists and policymakers. This results in inadequate policymaking that limits the potential of entrepreneurship and can have dire consequences for small business development in the informal sector. Catherine gave me an overview of how although government is often not in favor of the informal sector, as the ability to regulate becomes limited, in an economy where unemployment is rife, this sector can provide a buffer between the formal sector and joblessness.

Catherine became involved with Phaphama in 2019 and worked as consultant for the next two years. Each year held its own challenges and achievements, especially as 2020 marked a transition online, amongst the other hurdles of a nation-wide lockdown. From these two years of consulting, she is in a good position to know what works well for the online Phaphama programme.

It is not necessarily the goal for each entrepreneur that enters the Phaphama programme to leave with a registered business. In fact, Catherine emphasized how the Phaphama programme, where small-business owners consult with students is not fixed, and can be adapted by entrepreneurs or consultants. Particularly in the second semester, entrepreneurs will have the chance to establish their specific needs and requirements based on their type of business, its size, expenses and target market. Each entrepreneur contributes to the informal sector differently and it is Phaphama’s intention to amplify each business’s unique strengths by adjusting the programme accordingly and meeting their needs.

With a broad focus on the informal sector, Catherine’s research tracks small-business owners over an eight-month period. She asks the questions: ‘Where were these informal enterprise owners before entering into the informal sector? How long did they remain in informal enterprise ownership? Why did they choose to go the route they went?’ and monitors their businesses’ sustainability in this sector. Through this, she hopes to determine an updated picture of the conditions of the informal sector and identify the barriers that prevent a business’s survival.

The unemployment rate according to the expanded definition of unemployment was 43.2% in the first quarter of 2021— the highest since the start of the QLFS in 2008, according to Stats SA. Both Catherine’s research and Phaphama’s work serve a vital role: investigating the sustainability of the informal sector and aiding in the success of small businesses, respectively.

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