Supporting Women in the Informal Sector in Jigjiga, Ethiopia

In Ethiopia’s Somali Regional State, the economy is driven by the informal sector. In Jigjiga – the regional state’s capital and the major city along the border of Ethiopia and Somalia – informal business is the main source of employment and income for a considerable number of women, particularly those under the age of 30. For some, operating in the informal sector is the only viable economic option; in Jigjiga, many women cite a lack of alternative employment opportunities as well as low income from formal employment as key factors leading them to engage in the informal economy. Across the board, burdensome business registration requirements and tax responsibilities continue to incentivize informal work.

Women in the informal sector face a unique set of challenges. In Jigjiga, women are up against a lack of consistent access to working space, difficulty acquiring credit to expand their businesses, and significant security challenges. Many have also noted that despite the vital role played by informal businesses, they are still considered illegal – a classification that many women in Jigjiga’s informal sector push back on. What is more, the COVID-19 pandemic has placed increasing strain on individuals providing for themselves and their families, driving even more women into the informal sector and exacerbating existing challenges. As the main source of employment for such a substantial section of the region’s labor force, it is crucial that future economic policy changes are inclusive of women in the informal sector.

The Solution

In order to better understand and constructively address the challenges and opportunities facing women in Jigjiga’s informal sector, CIPE supported a public-private dialogue forum in collaboration with the Somali Chamber of Commerce and Sectoral Association (SCCSA) and Jigjiga University in January. A locally-produced comparative study of 109 women in formal and informal businesses in three Kebeles in Jigjiga provided the foundation for the dialogue forum, which brought together stakeholders from the private sector, civil society, and four key government agencies.

The findings of the study confirmed the significance of the informal sector in Jigjiga’s economic landscape and revealed several policy gaps that exacerbate the burdens on those in the informal sector. Among other gaps, the study underscored the current government emphasis on the illegality of the informal sector, cumbersome registration and formalization processes, and the exclusion of the informal sector from poverty alleviation and development efforts. The study also found that there are already strong linkages between the formal and informal sectors in Jigjiga that are frequently disregarded in the formation of policy related to the business environment, and emphasized the importance of factoring the impact of social capital into the design of policy interventions aiming to support the informal sector.

Continued commitment from both the private sector and relevant government stakeholders will be vital to alleviating strains on women in the informal sector in Jigjiga.

At the dialogue forum, participants were able to advance recommendations to improve the business environment for women in the informal sector that were supported by the study’s findings. Overall, government officials were supportive of the proposed solutions, committing to follow-up discussions with forum participants. Below are several commitments and recommendations made by participants with the goal of fostering a more equitable business environment for women in Jigjiga.

Commitments:

• Government stakeholders from the Trade and Industry Bureau and Women and Children Affairs Bureau underlined the importance of maintaining a channel for discussion between the government and the private sector as well as ensuring that the study and outcomes of the dialogue forum were communicated with the media. The Head of the Trade and Industry Bureau committed to collaboration with other regional government offices to solve the challenges brought forth by the study and dialogue forum.
• The Dean of the College of Business and Economics at Jigjiga University pledged that the University would continue to collaborate with the regional chamber and other BMOs to conduct studies on identified issues facing the private sector in the region.

Recommendations:

• Bureaucracy and the high cost of securing a business license and other formal documents is a major challenge hindering women from shifting from informal to formal work; it is therefore recommended that government focus on alleviating these burdens.
• As support services are developed to address the needs of women in the informal sector, priority should be given to issues raised by the women themselves, including the provision of specific working space and the option of loan services from financial institutions that are in accordance with Islamic principles.
• Within the business community, it was recommended that informal sector women should work towards forming a small-scale cooperative to increase their influence and the impact of their voices.

Continued commitment from both the private sector and relevant government stakeholders will be vital to alleviating strains on women in the informal sector in Jigjiga. Since the dialogue forum in January, the Somali Chamber of Commerce and Sectoral Association (SCCSA) has worked with participants to keep track to commitments and post-event collaboration to ensure accountability and maintain the push towards needed policy change. While still a work in progress, the construction of a path towards a business environment that is responsive to the needs of women in the informal sector is underway in Jigjiga.