Determinants of Economic Informality and Its Impact on Household Livelihood in Ethiopia; The case of street vendors in Bahir Dar

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Addis Ababa University


Having seen its desperate importance, this study examined the cause and impact of informal economic activities specifically street vending sector. Concerning the methodology, quantitative and qualitative approaches of a research was employed. Both primary and secondary sources of data were used. Purposive and convenience sampling techniques were used to select two sectors, 222 business operators and 100 users for the study. Data collection was effected by use of structured questionnaire and interview. Both descriptive and inferential statistical techniques were used in data analysis. Propensity Score Matching was also employed to examine the impact of economic informality on household livelihood in terms of livelihood index. It was identified that people get involved in street vending activities due to Social and economic factors. The study further investigated that harassment and eviction, lack of capital, absence of working place, and access to credit are among the challenges face street vendors in the study area. The results of the study also reveal that accessibility to buyers, having more dependents and low price of products/service encouraged people to choose street vendors over normal shop and small and micro enterprises. Finally the study revealed that participation in informal economic activity (street vending) has the power to decrease livelihood index of households from -0.191 to -0.220. In light of the above findings and in order to improve street vending sector, the study suggests that policy makers considers legalizing street vending and planning for appropriate location in urban areas, build capacity of street vendors, formulate a street vending policy and strengthen stakeholder relationship. Key words: Informal Sector, Street Vendor, Livelihood, Economic Informality



Informal Sector, Street Vendor, Livelihood, Economic Informality