 |
|
| Author |
 Topic  |
|
Janko
Gambia
1267 Posts |
 Posted - 24 Jan 2011 : 01:10:56
|
|
Why do we refer to our national economies, locally produced goods and services as 'informal' and the imported goods and services as 'formal'. What effect does that notion have on economic development and productivity?
|
Clean your house before pointing a finger ... Never be moved by delirious Well-wishers in their ecstasy |
|
|
turk
USA
3356 Posts |
Posted - 24 Jan 2011 : 01:59:24
|
| I do not think I have ever heard 'informal' 'formal' reference. Can you provide reference where, how, when, who refer? |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
 |
|
|
toubab1020
12311 Posts |
Posted - 24 Jan 2011 : 02:25:27
|
turk,even if you havn't heard the terms the meaning of the proposed discussion is clear,just answer the question instead of asking for clarification ,references and kindred stuff. Not me too complicated  you know I like simple things,being a toubab and all that !! |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
|
Edited by - toubab1020 on 24 Jan 2011 02:28:39 |
|
|
|
turk
USA
3356 Posts |
Posted - 24 Jan 2011 : 02:29:21
|
| janko usually talks like a secret service agent. He is probably giving an order for some operation in yakutistan. |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
|
|
|
Momodou
Denmark
11728 Posts |
Posted - 24 Jan 2011 : 09:06:26
|
"Informal" because they are not recorded in any statistics such as those we see from the IMF, HDI etc. I was watching the video "Diaspora Conversations" and it was mentioned that about 70% of the economic activities in most of our countries are "informal". Money that exchanges hands does not go through the banks
|
A clear conscience fears no accusation - proverb from Sierra Leone |
|
|
|
toubab1020
12311 Posts |
Posted - 24 Jan 2011 : 11:17:35
|
| That's helpful in getting this topic moving Momodou,I think that we all had a pretty good idea of the very high figure that was probably involved, although it is impossible to acertain the true extent, how can you collect information on activities that are supposed not to exist in a regulated society? this informal way of doing things deprives the administration of tax money,it also exposes transactions that have been made in this way to problems if things go wrong at a later date because the payment in many cases is untraceable,Oh yes the bit that is paramount in SOME informal dealings, corruption which is endemic in MANY African countries. |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
|
|
|
|
Janko
Gambia
1267 Posts |
Posted - 27 Jan 2011 : 11:43:23
|
Thanks Momodou and toubab for bringing us back on track
The notion - ‘informal economy’ has many schools of thought. Here it refers explicitly to that part of the economy that is not incorporated, regulated, or protected by the state. Despite its incredible resourcefulness and creativity it operates outside the regulatory mechanism of the state. It is responsible for a very big portion of the total economy, sometimes up to 80%. It creates enclaves of production and consumption that gives zero revenue to the state. Hence there are no records it is excluded from the GDP.
What does that tell us about the circumstance of nation-states in Africa? Despite arguments of colonialism and the involuntary nature of how they were created Africa today is composed of nation- states. Therefore should take full responsibility in creating her economic arena and its players. The irreconcilable difference of formal/informal economic perception has reduced the ‘normal market’ from the central role it plays in everyday livelihood and places it outside the state apparatus. In this sense the categorization creates a hierarchy that places imported goods on top of the ladder not only in terms of consumption but also in generating revenue for the state. And a company that has its focus on importing goods has a better chance to acquire a bank loan than the one focusing its business on local production.
For decades there have been efforts to deliver life-saving and income-generating ideas to communities, for ex. NGOs, throughout Africa. Part of the causes most projects don’t sustain themselves is the lack of interest or ability from the state to foster and incorporate them in the administrative structure and mechanism of governance and partly because those who design these projects are far removed from the everyday reality of the people they are meant to benefit.
The question that comes to mind is why governments are reluctant or unconcern about regulating, incorporating and protecting informal (normal market) economies that have the local potential and are legitimate micro-enterprises that employ more workers than the state. How do we bridge this gap? How do we incorporate, regulate and protect these businesses, in other words how do we formalize these informal economies to finance infrastructural needs, education, healthcare etc. |
Clean your house before pointing a finger ... Never be moved by delirious Well-wishers in their ecstasy |
Edited by - Janko on 27 Jan 2011 13:35:29 |
|
|
|
toubab1020
12311 Posts |
Posted - 27 Jan 2011 : 13:38:24
|
| Janko you have explained your concerns very clearly in your last post,I must admit that I was previously at a loss before Momodou made his helpful posting (turk was also !)I feel that one problem is a matter of confidence in the financial infrastructure that you address as being a concern,what is meant by confidence in this context? I think a better word would be trust,MOST people do not trust African financial institutions to look after their money and give them a fair return on that invested money,they would prefer to have cash in their hands to control and take the risk of that cash losing its buying power ,financial institutions are looked upon not as savings vehicles where your money can be looked after and grow but places where loans can be obtained that SOMETIMES do not fulfill prudent lending (sorry, I know Gordon Brown used that word a great deal but he did have a valid point in this regard !) These loans are SOMETIMES channeled into uses that they were not given for,MAYBE buying a vast mansion for the owner or other senior people in a company,what happens then? the loan that was meant to enhance the company performance was not used for that purpose,the company fails,people are out of work,the whole pack of cards collapses.There have been Bank failures in the past due to very risky lending by the banks. |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
|
|
|
|
turk
USA
3356 Posts |
Posted - 27 Jan 2011 : 14:17:08
|
It takes time and technology and money to formalize the informal economy so it can be part of formal economy so that banks provide loan and support the business. After the 1980 coup in Turkey, the liberal PM Turgut Ozal made tremendous effort to liberalize the Turkish Economy. One of his targets was taxing informal economy. Until then, the payroll, income and direct tax were only income tax resources for the country. While they are useful, there are other forms to collect tax. It was VAT. He introduce VAT to formalize and generate tax for the government from informal economy. But it ain't easy to just start collecting tax. Basically, it is not 'habit' of farmer to make official transaction for selling its produce in his or her corner store. It is unpractical to issue a receipt for the sale. They choose 10 percent so it is easy to calculate. Right? The government introduced Cash Register. Basically, the cash register would add i.e. 10 percent to the sale. That would goes to government. Where is the cash register. It was not even being produced in Turkey. It took 5 years to realization of cash register and actually, Turkish companies started producing cash register. The other problem was if something is 10 pounds and with the VAT, it would be 11. So there was unofficial agreement between buyers and seller. If there is not official transaction, the business would sell the product at 10 pounds, so buyer do not have to pay extra one so it is cheaper. So government introduced tax return for VAT. Basically if buyers get a receipt and send to government, they would receive i.e 70 % of it. This made buyers to insist sales transaction receipts. It took almost 20 years. I remember when I was in early school years in 80s, my father was advising me to get a receipt for everything I purchased. Now, there is no VAT return. Also, business would get VAT tax return for the their purchases from other business.
There is a benefit to support informal economy even there is no tax benefits for the government. It helps families, local economy to be dynamic and live. But limited resources i.e. finance, technology, know-how, time are the biggest obstacle to make the support of informal, small business to the reality. I think this is very important topics and this should be the things opposition talk, not usual Jammeh bashing. |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
Edited by - turk on 27 Jan 2011 14:43:43 |
|
|
|
toubab1020
12311 Posts |
Posted - 27 Jan 2011 : 14:51:01
|
Turk,good idea,BUT I think that you are forgetting an important difference between Gambia and Turkey,a country that has made great strides in becoming an economic power and changing traditional methods of doing business.The available money that the AVERAGE Gambian has is only for survival,even shopkeepers only JUST survive on what profit they make,who will BUY your registers if there is NO MONEY to buy the register? One thing that MAY work is a system involving THE MOBILE PHONE something that MOST Gambians make a priority to have,I am certain that Q cell Gamcell and Africell can be forced to devise a common system programme that would allow the administration to collect tax,just an idea.
quote:
Originally posted by turk
It takes time and technology and money to formalize the informal economy so it can be part of formal economy so that banks provide loan and support the business. After the 1980 coup in Turkey, the liberal PM Turgut Ozal made tremendous effort to liberalize the Turkish Economy. One of his targets was taxing informal economy. Until then, the payroll, income and direct tax were only income tax resources for the country. While they are useful, there are other forms to collect tax. It was VAT.
|
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
|
|
|
|
turk
USA
3356 Posts |
Posted - 27 Jan 2011 : 15:17:42
|
| Actually, I did not mean to compare Gambia and Turkey. I do understand the differences. My example was all about how difficult/complex to implement vat which that helps to formalize informal economy. |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
|
|
|
turk
USA
3356 Posts |
Posted - 27 Jan 2011 : 15:21:42
|
There is already initiative to introduce VAT in gambia within a few years. And they are getting prepared. Do you think Janko is smarter than Jammeh?
p.s. lol |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
|
|
|
toubab1020
12311 Posts |
Posted - 27 Jan 2011 : 16:56:23
|
Turk,I do not know Janko or Jammeh personally ,so how can I answer that?.
I am only interested in Gambia and Gambians not politics I am happy to be here and give my opinion, I am not a politician, and dislike politics, but posting and replying other than politics on bantaba in cyberspace at the moment is difficult, many have fled,  hopefully they may return one day and talk about beans and pepper soup  |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
|
Edited by - toubab1020 on 27 Jan 2011 16:57:50 |
|
|
|
Janko
Gambia
1267 Posts |
Posted - 02 Apr 2011 : 01:24:13
|
| So, perceiving our home grown economies as informal is like looking for your dalasi where there is light, when you actually dropped it in darkness a thousand miles away. |
Clean your house before pointing a finger ... Never be moved by delirious Well-wishers in their ecstasy |
|
|
|
toubab1020
12311 Posts |
Posted - 02 Apr 2011 : 13:21:06
|
Janko,you can find your Dalasi again,but you must have a very very strong light show you the way  Gambia at the present time is still relying on candles for light,not much good in 2011 |
"Simple is good" & I strongly dislike politics. You cannot defend the indefensible.
|
Edited by - toubab1020 on 02 Apr 2011 13:22:58 |
|
|
|
turk
USA
3356 Posts |
Posted - 02 Apr 2011 : 15:22:54
|
Janko
Do you mean, me, 'a light' in Gambia and Turkey is in 'darkness', since I left. Thanks for the compliment. |
diaspora! Too many Chiefs and Very Few Indians.
Halifa Salah: PDOIS is however realistic. It is fully aware that the Gambian voters are yet to reach a level of political consciousness that they rely on to vote on the basis of Principles, policies and programmes and practices. |
|
|
|
Topic |
|
|
|
| Bantaba in Cyberspace |
© 2005-2024 Nijii |
|
|
|
Topic Locked
