Informal economy in Mozambique as a determining part of the country’s development

by Maira Vannuchi, StreetNet Organizer

On July 27 and 28, the StreetNet International organizer for the Americas and the Portuguese-speaking African countries, Maíra Vannuchi, made a field visit to the StreetNet affiliate organization in Mozambique, the Informal Economy Association of Mozambique – Aeimo.

Vice-President Albertina Simango and the National Executive Secretary Armindo Chembane received the organizer at its headquarters in the building of the Mozambican Workers’ Organization (OTM) and told of the organization’s history, the advances and challenges faced by the sector in the country.

Aiemo, former Assotsi, present in all 10 provinces of the country was founded in 1999 in a period of Mozambican history in which government enterprises, nationalized since independence (1975), began to be privatized and a process of requalification of the hand of unemployed workforce a large portion of the population that was replaced by younger workers.

These unemployed, many unionized when employed in formal work, began to organize their subsistence activities from the market and street trade. OTM from the outset, following what happened with many of its members excluded from formal production, supported the associative processes that sprang up, so that organizational knowledge was shifted to the informal market and the struggle for recognition and for securing rights in this sector was conducted hand in hand between central trade union and local market associations.

The federal government, which did not recognize the sector, with the exponential increase of informality reacted with truculence and persecution against the street vendors called “Dumaneng,” and among several actions of resistance and struggle for the right to work the government finally recognized the sale of street as a subsistence work.

Aeimo has initiated dialogue initiatives with several relevant actors on the challenges posed for cross-border street trade with countries that exchange products at the border. A partnership with the main Trade Union Confederation Central Única dos Trabalhadores – CUT of Brazil, the AFL-CIO and the Solidarity Center, a project that works on capacity building aimed at expanding membership, training, strengthening and developing collective bargaining skills. Structured in the principles of internal democracy, reflected in the structure of the OTM, Aeimo has been operating youth committees and women committees within its constituency.

The organization was fundamental for the achievement of one of the governmental measures that has attracted the attention of the informal sector in the region, a partnership with the National Institute of Social Security – INSS, which after much pressure recognized and included the 60% working population in the economy informal, called Self Employed Workers – TCP. Within the understanding that the sector is responsible for a large part of the Mozambican economy and for this reason greatly contributes to the development of the country, in 2017, Aimo signed a memorandum with the Tax Authority establishing a system in which TCPs, paying a rate of 7% of the base minimum wage, becomes covered by social security. After the signing of the federal memorandum, the agreement is being carried out, and with the active participation of Aeimo, 7 of the 10 provincial delegates of the country have already signed the document with the INSS.

Still seeking to implement ILO Recommendation 204, a simplified procedure for issuing permits for commercial activities in the informal economy was implemented at the Single Service Desk, an integrated government service, to any informal economy worker seeking to regulate before the government with the payment of an annual single rate. Aeimo has been giving its members information on the benefits of joining formalization. Dialogues with the government also enabled a system of access to credit.

In Mozambique, the municipal council is responsible for the use of public space, and even in formal markets it collects rates that vary by location. In 2014, during a collective bargaining process with the City Council they were able to agree to the liberation of important avenues of Maputo, which expanded the possibilities and conditions of work of the sellers of the capital’s informal economy.

Among the markets visited, the organizer was brought to meet the diverse and colorful market attached to the wholesaler of Zimpeto, one of the largest in the country, where we were introduced to Aiemo’s core base heads. The organizational experience of the Mozambican organization represented at the International StreetNet for recognition of the informal sector and implementation of ILO Recommendation 204 serves as an inspiration for our associative base and points out ways to advocate and participate in the construction of public policies for the sector.