In Kenya’s capital, the informal sector is closely tied to the formal economy. As the city heads toward world-class status, policymakers will need to make careful decisions about how best to accommodate the informal sector, writes Sheila Kamunyori.
Walking through certain parts of Nairobi, one is struck by the formal elements that highlight the city’s conscious march towards becoming a “world-class city.” Images of the formal or “modernity,” such as the development of public commuter rail, shopping malls with mega supermarkets and organic food outlets, and tall, all-glass skyscrapers that house multinational corporations are, in the imagination of the collective, signs of a city moving aggressively towards world-class status.
Yet, other parts of the city reveal a different picture. Images of the “informal” abound: legal but unregulated economic activity such as vendors selling wares on busy street corners in makeshift kiosks or temporary marketplaces teeming with second-hand, brand-name jeans, sneakers and other clothing, as well as fresh vegetables and fruits.
Image: informal traders (Sheila Kamunyori).
Both images of the formal and the informal have validity and place when describing Nairobi, Kenya’s bustling capital city that generates more than 50% of the country’s annual GDP of USD 33.6 billion. But what does having to accommodate these seemingly mutually exclusive elements do to the city’s personality?
A paradoxical personality
A recent Huffington Post article by Jonathan Kalan, begins to get at defining the city’s personality by describing its attraction to young foreign social entrepreneurs using 4 P’s: Potential, Poverty, Politics and Parties. Of these, “potential” is worth emphasizing. It brings out an aspect of Nairobi’s personality that adds to the image of a 21st century city: the raw energy that seeds organic activity such as software development that has led the global information technology community to call Nairobi the “Silicon Savannah.”
The conceptualization of Konza Techno City, a global technology hub currently under construction a few kilometres outside Nairobi, has added definition and colour to this image of Nairobi as a future 21st century knowledge economy.
While Kalan’s article describes Nairobi’s “potential” with foreign social entrepreneurs in mind, other commentarysuggests that local talent is also plugging into it. Incubators such as iHub and 88mph are playing a critical role in ensuring that local “potential” thrives, creating software communities within a small geographic area in Nairobi which in turn promises knowledge spillovers, the kind that spurred the growth of Silicon Valley.
In addition to the 4 P’s, I would add another “P”– “Paradox.” Despite the mutually exclusive implications of their definitions, formal and informal elements of daily living in Nairobi sit side by side, and residents of the city of approximately 3.5 million constantly move between them.
What’s interesting about this formal-informal traversing is that, unlike other aspects of residential living in the city, it does not maintain the city’s socio-economic divisions. Residents across all classes experience an intertwined state of formal-informal living.
Nairobi’s paradoxical coexistence is seen very clearly in the provision of urban services: transportation and water in particular. Rapid population growth has produced a city that is unable to provide urban services to all its residents, and, as seen in other African cities, the informal economy has stepped in to fill the gap between the needs of Nairobi’s residents and the shortfalls of service delivery from local government.
Commuting in the city
Nairobi’s formal bus system has been neither adequate nor comprehensive over the last few decades. In a city where 5% of the population own cars and 35% rely on public transportation, matatus, 14-seater public minivan taxis, remain Nairobi’s most accessible form of motorised commuting.
Image: Matatu (Timothy West at Flickr).
While law-abiding drivers spend much of their daily commute shaking their fists at the matatu drivers, who terrorize them as they rocket their way up and down their routes to maximize profits, no one would doubt the critical role the lawless minivans play in the absence of a more comprehensive bus system. The paradox of the city is seen here as residents who work in the formal economy depend on this informal mode of public transportation to commute to and from work.
Thanks to a burgeoning middle class, the number of cars on the road has increased. But for those who do commute by car, the city’s traffic jams have become the material of war stories, told over dinner or drinks, after another day sitting in traffic.
Image: Nairobi traffic (Sheila Kamunyori).
The government is taking steps to meet the demand for formal service delivery. Two policies shape the direction of this response: Vision 2030, the country’s long-term development blueprint that aims to transform Kenya into a middle-income country by 2030, and the complementary Metro 2030 Strategy, which seeks to build Nairobi to “a world class African metropolis by 2030.”
A priority in the Vision 2030 is the expansion of the road network, and it has spurred a recent frenzy of road construction along various arteries in the city. Many of the main arteries will be expanded into dual carriageways over the next few years. These include the major east-west arteries Ngong Road and Lang’ata Road (which is about halfway done).
There are also plans to make the main North-South artery, Uhuru Highway, which joins Mombasa Road and leads to the international airport, into a double-decker highway. Link roads that have been planned for decades are finally getting completed.
This frenzied construction makes for dusty, congested, adventurous commutes where cars, bicycles and pedestrians imaginatively share what space is left on the roads. But Nairobians are waiting patiently and optimistically. The long-term impact of improved roads is well understood.
The public transportation system is also being upgraded and a new commuter rail service runs now between the city centre and Syokimau, a suburb 16.5 km east of the city. The train takes about 30 minutes, while a car ride can take up to two hours during rush hour traffic.
Different faces of water provision
Provision of water, too, displays the characteristics of paradoxical coexistence. In lower-income and unplanned neighbourhoods with limited water infrastructure, informal vendors use carts pulled by hand or by beasts of burden to deliver water, ferrying it in bright blue and yellow 20-litre jerrycans.
Image: informal water vendors (Sheila Kamunyori).
Similar informal water service delivery takes place in the planned areas of Nairobi, where water infrastructure is expected to assure that water is delivered to households. Even in such ‘formal’ neighbourhoods, daily water delivery is not guaranteed. Residents and property owners have resorted to filling the gap themselves through measures such as buying storage tanks to store extra water when it is available, and buying water from private vendors, some of whom are not regulated.
The water sector, however, has seen positive changes, due to ongoing reforms since the implementation of theWater Act 2002. This Act and the National Water Services Strategy 2007-2015 guide the construction of water infrastructure to accommodate the urban population. Government projects that include extending water services to underserved populations are underway, and development partners are also strongly supporting this service provision into informal settlements.
Informal economy remains critical
Given the focus on development in the formal economy, do informal public transport and water provision, along with other informal economy activities that have thus far supported Nairobi’s populace, have any place in Nairobi’s world-class future?
Government-collected statistics indicate that the informal economy is critical. Year on year economic surveys show the informal economy has been doing what the formal economy has failed to do – create new jobs every year. The latest report, completed in 2012, states that in 2011 six jobs were created in the informal economy for every one job in the formal economy, and the informal economy accounts for about 80% of total employment.
In fact, some academics and policymakers have argued that the informal economy “keeps the social peace” because it provides a safety valve for citizens to release the pressure from frustrations related to joblessness.
Even with the country’s economy projected to grow by 5% annually over the next three years, the demand for jobs in the formal economy will continue to outstrip the supply in the medium term.
For a city where 45% of the population is between 18-35 years of age (higher than the country’s 36%) and therefore the population bracket with highest productivity, supporting the informal economy will be key to strengthening Nairobi as an engine of economic growth to support any long-term development goals.
Where does that leave policymakers in a city like Nairobi? Evidently, policymakers need to remain pragmatic and take the elements of informality that work and weave them in with the formal.
Recognition exists, even at the international level, that the positive aspects of the informal economy need to be maintained. The International Labour Organization has stated that the transition to formality “calls for the development of a comprehensive and integrated strategy cutting across a range of policy areas that eliminates the negative aspects of informality while preserving the significant job-creation and income-generation potential of the informal economy.”
Negative aspects of informality are clear. Informal work can be exploitative and, in particular, employees in thematatu industry tend not to work under good conditions. Gangs and vigilante groups exist in both the matatuindustry and the informal water provision sector. Informality also means that the city suffers from a smaller tax base.
A way forward
To develop an integrated strategy, Nairobi policymakers could take a two-pronged approach. Firstly, they need to understand what government policies and practices have worked over the last couple of decades to include the informal economy in the country’s economic growth. Research to fill this knowledge gap is key.
Secondly, policymakers could adopt an experimental, pilot project-like method. A window of experimentation may have opened up with the recent devolution of the country’s governance focal points from an epicentre based in Nairobi to 47 county centres spread throughout the country.
With its own legislative assembly, Nairobi has an opportunity to experiment with what works for its geographic space, and create hybrid service delivery systems.
Nairobi, as the biggest, richest county, holds a lot of promise and residents are watching keenly to see improvements in urban services and public goods provisions, particularly security, an improved transport system, and water and sanitation.
If service disruption does take place during the transition to county government, the informal economy will only step in to fill the gap between people’s expectations and actual delivery as it has done in the past. This could be an opportunity for Nairobi to capitalize on past experience, and proactively incorporate, regulate, and consequently motivate the upgrade of informal service delivery.
While there is strong evidence that Nairobi will continue to move confidently towards becoming a regional economic hub, the city’s large youth bracket and the country’s Gini coefficient of 0.59 (indicating very high inequality in the country) show that it will be important for policymakers to plan this transition in a way that takes the whole city along for the journey.
This inclusion will also help the Vision 2030 be “a vision not a fiction” as cautioned in the UN-Habitat’s 2010/11 State of the Cities report.
Accepting the city’s multiple elements can reshape the desired vision of “modernity” into a world-class, yet home-grown, personality that is more in keeping with Nairobi’s context. In the meantime, Nairobians will continue to use the paradoxical coexistence to support their daily living, weaving back and forth between formal and informal modes of the city. Residents have shown how fluid the coexistence can be. Policy can follow suit.
Sheila Kamunyori is an urban consultant based in Nairobi. She is also a PhD student at the London School of Economics and Political Science (LSE). She is the co-founder of Naipolitans, an urban forum that aims to provide Nairobi residents with opportunities to engage with Nairobi’s rapidly changing environment.
This article forms part of Urban Africa‘s urban reporting series and originally appeared on 3 June 2013 at Urban Africa.
Headline image: water kiosk in Kibera (Victoria Hickman at flickr).