Theme/Relevant Ministry:

INFORMAL ECONOMY/ KHOKHA MARKETS:
Ehsaas Programme; ICT Administration; CDA; PM Office

Project Brief:

The study aims to provide an economic analysis of the street economy in the twin cities of Pakistan. The survey-based analysis of 1,863 fixed street vendors working in twin cities shows that lack of formal education and unemployment inclined individuals to choose street vending business as a profession. The analysis reveals formal-informal solid economic linkages, beneficial for shop owners and street vendors. The formal business (shops) benefits from the pedestrian traffic street vendors attract by selling low-cost products. At the same time, street vendors use the formal sector to buy a product and use storage spaces. The average monthly revenue of street vendors is Rs. 114,708 (US$ 740) and, on average, earns a significant profit amounted to US$ 212 per month (29% of total monthly revenue). The street vendor made, on average, US$ 571 investment to run vending business and around 60% of SVs use their own money to start a street vending business. A street vendor pays around US$ 107 monthly as an operational cost, and more than 51% of the total operating cost incurred by the street vendors falls under the category of rent paid to the owner of the shop. The total number of street vendors in Pakistan is 753,690, and the annual national contribution of street vendors in the GDP of Pakistan is Rs.1,037.45 billion (US$6.69 Billion) based on revenue data we collected from our survey, which is still underreported due to the nature of the informality of the sector. The lack of legal protection is one of the significant challenges faced by street vendors. We find that 98% of SVs operate without any legal protection in the market. The reported economic loss due to informality constitutes around 62% of monthly revenue, 215% of net monthly profits. The multidimensional vulnerability index (MVI) shows that approximately 21% of street vendors are acute vulnerable, while more than 25% of SVs are vulnerable. The multivariate analysis shows that socioeconomic vulnerability has a negative and significant impact on monthly profits. Around 57% of SVs fall below the poverty line, being treated as poor.

Public Policy Relevance:

The study proposes policy solutions for the integration of the street economy into the formal economy. The baseline socioeconomic and demographic characteristics of the micro- entrepreneurs helps to formulate policy interventions to formalize the street economy.

Status:
COMPLETED 100%

Final Research Report, Policy Brief and Journal article can be downloaded from the link: https://pide.org.pk/rasta/publications-cgp-1-0/