Contested Meanings of Informality

Informality is a concept that is widely used to describe small-scale businesses, such as hawkers, spaza shops, takeaway outlets, and Internet cafes, many of which operate outside of formal regulatory frameworks. Traditional perspectives tend to view informality as a binary, in contrast to the formal economy. This oversimplifies complex and sometimes intersecting processes that shape relations between diverse businesses. Such perspectives suggest an inevitable transition into the formal sector, placing regulation as a critical condition, without considering barriers and obstacles that hinder such integration. In this way, this approach overlooks the realities of small-scale entrepreneurs. This chapter provides a discussion of informality drawing on Norbert Elias’s concept of the formality-informality span. Further, this chapter critiques South Africa’s industrial policy which continues to treat informality as a “second economy” and how the country’s industrial policy planning is shaped by rationalities of duality that insist on formalization, falling into a trap of overlooking how these smallholder operations largely form part of the broader network of formal businesses. The chapter argues for a policy shift of South Africa’s industrial policy, that informality must be a method to frame inclusive development instead of the insistence on formalization.