The formal sector consists of modern industries, businesses, commercial activities, and government agencies that use modern techniques from industrialized countries. Manufacturers are usually large, multi-national companies that sell products locally and export internationally. However, in developing Southern African countries less than 25% of city workers are employed in the formal sector. The informal sector includes small, locally-owned workshops, markets, and street vendors that provide work and means of survival for the poor. While informal jobs lack benefits, the sector provides training and cheap goods and services. Governments are now recognizing the importance of the informal sector and providing support through loans, infrastructure, and skills development initiatives.

1. THE FORMAL SECTOR
The formal sector consists of modern activities such as industries, business and
commercial activities as well as government agencies.
All these activities use modem techniques adopted from industrialised countries.
The manufacturers are usually large-scale companies, often multi-nationals which sell
their products locally and sometimes export them to the developed world.
In most developing Southern African countries such as Botswana, Malawi, South
Africa and others, less than one quarter of all workers in the cities are employed in
the formal sector.
The formal sector consists of modern activities such as industries, business and
commercial activities as well as government agencies.
All these activities use modem techniques adopted from industrialised countries.
The manufacturers are usually large-scale companies, often multi-nationals which sell
their products locally and sometimes export them to the developed world.
In most developing Southern African countries such as Botswana, Malawi, South
Africa and others, less than one quarter of all workers in the cities are employed in
the formal sector.

2. THE FORMAL SECTOR CONT.
People who work in the formal sector of the economy are usually educated.
They receive a regular wage or salary over a period of time, be it weekly or
monthly.
Their job is usually protected by employment laws such that their working
conditions are comfortable and they cannot be dismissed without
notice.
Very often they belong to a trade union which protects their interests.
They often use complex technology such as imported machinery,
computers and modem telecommunication systems.
They also work in well-equipped offices, factories, mines and buildings,
and have access to electricity, good road networks, transport and good
water supplies.

3. THE INFORMAL SECTOR
This sector consists of small locally owned workshops and home factories,
fruit and vegetable markets, street vendors and many others.
People in the developing world are often more concerned with survival than
the distant dream of a well-paying job.
Most people in the poorest parts of urban slums and squatter camps
survive by doing jobs such as shining shoes, repairing clothes, cutting
people's hair, craft production and many other forms of self-
employment
And all these small businesses form what we call the informal sector.

4. THE INFORMAL SECTOR
In addition to these forms of enterprises, beggars are also considered to be
part of the informal sector, and so are people involved in criminal
activities such as thieves, drug dealers and prostitutes.
Therefore, people who work in the informal sector have no regular monthly
or weekly wage or salary.
Contracts and working agreements are verbal and can be easily broken or
dishonoured.
Nevertheless, the informal sector of the economy provides work and a
means of survival to the poor people of developing countries.

5. THE INFORMAL SECTOR CONT.
Informal employment helps a country to develop because it provides
training for some jobs like carpentry, shoe mending, tailoring and car
repairing.
It also provides cheap food and market goods for everybody in the city,
and even some casual work like labouring for those who are in the
formal sector of the economy.
Some small informal sector activities have grown into large scale
businesses. Examples are small car repair sheds which have now
become big garages, or individual furniture markets which have
expanded to large furniture factories.
However, these entrepreneurs usually succeed without government
support, and it is difficult to grow from the informal sector to the big
business world of the formal sector.

6. THE INFORMAL SECTOR CONT.
Today governments of many developing countries, Botswana included, are
recognising that people who are struggling to improve themselves and
to build up their businesses need to be helped.
Governments are now trying to help people in the informal sector by
bringing electricity to their small workshops, providing land for small
businesses and helping people to buy tools to start up new economic
activities.
Again, countries like Botswana are today giving loans to citizens to help
interested people so they can become independent.
The value of the informal sector in helping the poor to survive and
providing a training ground for them to learn new skills is nowadays
being recognised.
Initiatives such as Citizen Entrepreneurial Development Agency (CEDA) are
put in place to help finance small and upcoming business men and
women.