Reasons and Legal Framework that Motivates the People to Participate the Informal Sector Urban SNNP Region of Ethiopia: Evidence from Street Vendors
Abebe Markos Sawore *
Department of Economics, Wachemo University, Hossana, Ethiopia.
*Author to whom correspondence should be addressed.
Abstract
The informal sector's contribution to the Ethiopian economy was the primary subject of this study. It clarified the rationale and legal basis guiding their decision to pursue this line of activity. The study's primary data were obtained from 388 street vendors who reside in the Urban SNNP region by using multi-stage sampling procedures that involved systematic and purposeful sampling strategies. Accordingly, thorough interviews with street vendors and accountable government officials were conducted in order to gather both quantitative and qualitative data. In order to examine the data, the study used both descriptive and econometric methods, such as multinomial logistic regression models and descriptive statistics.
The findings indicated that the respondents' entry into the street vending business was primarily motivated by their desire for employment, their desire to avoid paying taxes and registration fees, their desire to make a profit that was reasonable, and their inability to meet the demanding requirements for entry into the formal sector. According to the results of the study's 2 test, some of these factors were statistically significant. The study's findings showed that factors such as age, education level, prior job experience, vending location, transportation options, future plans or prospects, marital status, the number of dependents in the family, customers' status, and the type of goods sold all had a significant impact on someone's decision to enter the street vending business. Additionally, other sources of income, racial background, and initial investment with street vendors had no bearing on their participation in the vending industry.
On the other side, the business performance of street vendors was adversely impacted by education level, harassment, and financial restraints. The study demonstrates how important street vending is to Ethiopia's efforts to combat urban poverty and unemployment in the urban SNNP region. The study also suggests a proactive and advantageous growth approach to support the street vending industry so that it can expand and operate freely.
Keywords: Informal sector, street vendors, multinomial logistic regression, poverty