The Informal Sector of the Ethiopian Economy

t is evident that through time what prevails today may be a thing of the past tomorrow. This is an historical truth; but, what appeals to the mind correct and what seems healthy is to see a formal model in the place of the informal one.
We have been talking for many years now about the informal sector of our economy. But, before we conclude our talk should we be surprised if the topic we discuss about is already taking some shape to some extent?
It is true that there is a slow move towards formalization of the economy and this is, of course, for the good of society. But, generally speaking, the informal sector of the economy is a maze or intricate direction of business life that needs constant attention by those who are concerned directly.
When we talk about the informal sector of the economy, we always need to consider the consumer. Of course, among the many criteria that distinguish the informal sector from the formal one, registration, location and size could be cited as the most important factors according to economists.
This segment of the economy requires constant vigilance, deliberate thinking, and rational decision of the new mind set. Perhaps, if the informal sector is formalized under a unified direction, there is no question that it will be an additional source of state revenue through taxation and meaningful employment.
Of course, some scattered businesses in Mercato or similar places in Addis or elsewhere in the country as a whole may be working under licenses. But, should society be satisfied with that measure alone? How about the consumer and its preferences?
The poor consumer may run to the dealer that moves from place to place without license to satisfy his/her requirement. This may be one factor that may prolong the life of the unlicensed dealer in his/her present status-quo, because the consumer gets a good buy without tax levy added to one’s expense—but wrongly. Nonetheless, in order to regulate the informal sector, regulating the buying habit of the consumer may be timely. Again, this requires concerted action and rational decision.
Sure, if the informal sector is formalized, there is the opportunity to direct them into forming a kind of associations or groupings into a sort of cartel so that they come to agreement to form companies and perhaps to start processing their commodities for better commercial use. If the majority of teff or say pepper dealers form associations of some sort and start processing their product technically, they’re sure to sell teff flour or pepper instead of the raw materials; and to sell it in small packs instead of quintals.
The consumer on the other hand would equally have convenience to buy a pack of flour and according to the strength of one’s purse instead of cracking one’s head whether to buy a quintal, half a quintal, or a quarter of it at a time when prices have gone up to astronomical height. Not only that the consumers do now have to look around for mills for grinding the raw material.
Of course, in this way, there will be more employment, more revenue, and more improved economy in the society. Peoples’ styles of life will change for the better with the formalization of the informal sector of the economy. However, those in the informal sector and those who have entered the formal sector but who have not yet formed associations towards higher forms of business should be first of all sensitized over the matter. At the same time price control mechanism should be in place to give a chance for free economic system to penetrate gradually in the minds of both the business man and the consumer.