THE CONSTRAINTS FACING WOMEN MICRO-ENTREPRENEURS IN LUANDA

by

HELENA PRECIOSA FERNANDES GASPAR

Submitted in partial fulfilment of the requirements the degree

Magister Commercii

in

Economics

in the

Faculty of Economic and Financial Sciences

at the

University of Johannesburg

Supervisor: Professor Ronald Mears

November 2011

Johannesburg

i
 ACKNOWLEDGEMENTS

I would like to express my gratitude to the Faculty of Economics and Financial Sciences,
University of Johannesburg, for the assistance received during the execution of this research.

I owe sincere gratitude to my supervisor, Professor Ronald Mears, for his support and guidance
in writing up this mini-dissertation. His critical and insightful comments steered me in the right
direction.

I would like to thank Mr Richard Devey from Statistical Consultation Services (STATKON) for
his assistance with the data capturing and analysis. I would also like to thank the women micro-
entrepreneurs in Luanda who responded to the field research.

I am grateful to all my relatives and friends for the moral support. Special thanks go to Aloyo
Naum who helped and gave insightful research techniques that significantly led to improving the
quality of this work.

This dissertation is dedicated to the exceptional people in my life. My mom, Maria Suzette
Fernandes Gaspar, my dad, Mateus Manuel Gaspar, my brother, Hingo Sorge Fernandes Gaspar,
my sister, Bernardeth Fernandes Gaspar and Sonia Motha. The completion of this work would
not have been possible without their understanding and in-kind support. They make each day
special to me and we always shed the tears of joy and sorrow together.

Lastly, I would like to acknowledge the Almighty God. He gave me the will and guidance to see
this journey through together with his angels and saints. Amen.

ii
 DECLARATION

TO WHOM IT MAY CONCERN

This serves to confirm that I, Helena Preciosa Fernandes Gaspar, enrolled for the
Qualification of Magister Commercii in Economics in the Faculty of Economic and Financial
Sciences.

Herewith I declare that the title is my own work and that it is in line with the Plagiarism Policy
of the University of Johannesburg which I am familiar with.

I further declare that the work presented in the dissertation is authentic and original unless
clearly indicated otherwise and in such instances full reference to the source is acknowledged. I
do not pretend to receive any credit for such acknowledged quotations, and that there is no
copyright infringement in my work.

I declare that no unethical research practices are used or material gained through dishonesty.

I understand that plagiarism is a serious offence and that should I contravene the Plagiarism
Policy notwithstanding signing this affidavit, I may be found guilty of a serious criminal offence
(perjury) that would amongst other consequences compel the UJ to inform all other tertiary
institutions of the offence and to issue a corresponding certificate of reprehensible academic
conduct to whomever requests such a certificate from the institution.

iii
 TABLE OF CONTENTS

CONTENTS PAGE

Acknowledgements ii

Declaration iii

Table of contents iv

List of tables viii

List of figures viii

List of abbreviations and acronyms ix

Abstract xi

CHAPTER 1: THE PROBLEM AND ITS SETTING 1

1.1 Introduction 1

1.2 Problem statement 2

1.3 The aim and research objectives 3

1.4 Hypothesis and research questions 3

1.5 Research methodology and design 3

1.6 Clarification of terms used 4

1.7 Report structure and layout of chapters 6

CHAPTER 2: EXPLAINING THE DRIVERS OF POVERTY AMONGST WOMEN

MICRO-ENTREPRENEURS IN THE INFORMAL SECTOR 8

2.1 Introduction 8

2.2 Explaining poverty in the informal sector in developing countries 8

2.2.1 The nature of self-employment activities 8

2.2.2 Poor living conditions of micro-entrepreneurs 9

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2.3 Causes of poverty in the informal sector in developing countries 10

2.3.1 Necessity or survival strategy 10

2.3.2 Rural-urban migration 11

2.3.3 Lack of product differentiation 12

2.3.4 Poor health as cause of poverty in the informal sector 13

2.3.5 Low level of education in the informal sector 13

2.3.6 Gender inequality 15

2.4 Constraints faced by women micro-entrepreneurs in developing countries 15

2.4.1 Bureaucracy in the registration process of the micro-enterprise 15

2.4.2 Lack enterprise cluster and isolation of business activities 16

2.4.3 Isolationist approach in seeking credit 17

2.5 Constraints hindering women from accessing credit from microfinance institutions 18

2.5.1 Overcoming loan repayment difficulties 19

2.6 Causes of poverty amongst women micro-entrepreneurs in Luanda, Angola 21

2.6.1 Lack of access to credit in post-conflict Luanda 21

2.6.2 Gender disparities in the informal sector in Luanda 22

2.6.3 Bureaucracy in legalising the micro-enterprises 22

2.6.4 Migrations from rural areas to Luanda 23

2.6.5 Inadequate provision of water and electricity in the slums 24

2.7 Summary of main findings and conclusions 25

CHAPTER 3: RESEARCH METHODOLOGY 30

3.1 Introduction 30

3.2 Research design 30

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3.3 Sampling method and sampling group 31

3.4 Research instruments: Questionnaire 32

3.4.1 Construction of the questionnaire 32

3.5 Analysis of data collected 33

3.6 Questionnaire limitations 34

3.7 Summary of the main findings and conclusions 35

CHAPTER 4: CONSTRAINTS EXPERIENCED BY WOMEN MICRO-

ENTREPRENEURS BASED ON DATA CAPTURED IN LUANDA 37

4.1 Introduction 37

4.2 Characteristics of the respondents and their micro-enterprises 37

4.2.1 Location of one-women business trade and the structure of markets in Luanda 37

4.2.1.1 The lay-out of the fish markets 37

4.2.1.2 The structure of the open-field markets 39

4.2.1.3 The structure of the newly renovated markets 41

4.2.1.4 Street traders 43

4.2.2 Types of self-employment activities 43

4.2.3 Years of experience of respondents 44

4.2.4 Age profile of the respondents 46

4.2.5 Marital status of the respondents 48

4.2.6 Literacy profile of the respondents 48

4.2.7 Housing of the respondents 50

4.3 Constraints experienced by respondents 50

4.3.1 Occupational risks and injuries 51

4.3.2 The reasons that push respondents into

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 subsistence activities 52

4.3.3 Sources of stock for trading and modes of transport used

by respondents in their self-employment activities 54

4.3.3.1 Sources of stock for trading 54

4.3.3.2 Transportation means for stock replacement 56

4.4 The financial profile of the respondents 57

4.4.1 Source of capital or finance 57

4.4.2 Finance from rotating savings and credit associations (ROSCAs) 58

4.4.3 The estimated total income of the respondents 60

4.4.4 Household expenditures of the respondents per activity category 62

4.4.5 Business-related expenditure 65

4.5 The constraints of MFI’s in Luanda 66

4.6 Summary of the main findings and conclusions 67

CHAPTER 5: SUMMARY OF THE MAIN FINDINGS AND CONCLUSIONS,

RECOMMENDATIONS AND SUGGESTIONS FOR FUTURE RESEARCH 70

5.1 Introduction 70

5.2 Summary of the main findings and conclusions for the different objectives 70

5.2.1 Objective 1: the drivers of poverty amongst women micro-entrepreneurs 70

5.2.2 Objective 2: the constraints facing women micro-entrepreneurs in Luanda 73

5.2.3 Objective 3: the effect of constraints on demand for micro-credit 75

5.3 Recommendations 76

5.3.1 Recommendations for the microfinance institutions MFIs 76

5.3.2 Recommendations to the government 77

5.3.3 Recommendations to the traders 77

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5.4 Limitation of this research 78

5.5 Suggestions for future research 78

LIST OF TABLES

Table 4.1: The period that the micro-enterprise has been in existence 46

Table 4.2: The distribution of the respondents by age group 47

Table 4.3: The literacy rate of the respondents 48

Table 4.4: The level of education of the respondents 49

Table 4.5: Occupational injuries sustained by the respondents 51

Table 4.6: The factors that motivate subsistence activities and the reasons

respondents are not in men dominated activities 53

Table 4.7: The sources and location for purchasing of stock and the transport

used to move the stock 55

Table 4.8: The finance earned by the respondents per activity category

from ROSCAs in Rand 59

Table 4.9: The average income earned by respondents from the micro-enterprise

in Rand in September 2009 60

Table 4.10: The average household expenditure of respondents on selected items

in Rand in September 2009 63

Table 4.11: The average business-related expenditures of respondents in Rand

in September 2009 65

LIST OF FIGURES

Figure 4.1: The self-employment activity of the respondents 43

Figure 4.2: The period respondents have been self-employed 45

viii
Figure 4.3: Age distribution of the respondents 46

Figure 4.4: The relationship between age of respondents and the number of children 48

Figure 4.5: The source of start-up capital for informal women traders in Luanda 57

ANNEXURES

References 80

Appendix 1: Micro-entrepreneurs in Luanda: characteristics and activities questionnaire 94

List of abbreviations and acronyms

ANGOMENHA Association of Water Truck Operators

BNA Angola National Bank

(Banco Nacional de Angola)

CSO Central Statistics Office of Botswana

DWA Development Workshop Angola

EDEL Electricity Company of Luanda

(Empresa de Electricidade de Luanda)

ENE National Company of Electricity

(Empresa Nacional de Electricidade)

EPAL Water Company of Luanda

(Empresa de Agua de Luanda)

ERS Espirito Santo Research

IDPs Internally displaced persons

ILO International Labour Organisation

IT Information Technology

MFIs Microfinance Institutions

ix
NGOs Non-Governmental Organisations

ROSCAs Rotating Savings and Credit Associations

SARB South African Reserve Bank

UNDP United Nations Development Programme

UNESCO United Nations Educational, Scientific and Cultural Organisation

x
THE CONSTRAINTS FACING WOMEN MICRO-ENTREPRENEURS IN LUANDA

Student: Helena Preciosa Fernandes Gaspar

Degree: Magister Commercii in Economics

Department: Economics and Econometrics

Supervisor: Professor Ronald Mears

ABSTRACT

Women micro-entrepreneurs in Luanda constitute 47 percent of the people that are engaged as
employees or as micro-enterprise owners in informal sector activities. These women have
resorted to informal employment and businesses or micro-enterprises out of the necessity to
sustain their families. They face significant poverty and seem to be trapped in subsistence
activities. Using self-administered questionnaires, this research sought to determine the
constraints that face women micro-entrepreneurs in Luanda. It was found that certain conditions
and attributes of these women micro-entrepreneurs, such as their low levels of education, lack of
cooperation amongst them, lack of access to credit despite the presence of microfinance
institutions (MFIs) in Luanda and bureaucratic requirements, prevent these women from
enlarging their businesses. These constraints make them unable to generate significant income
and hence they are trapped in poverty. This research can help policymakers in Luanda as well as
microfinance institutions to devise ways to increase the viability of the women-owned micro-
enterprises. It can also help these women owners of small businesses to adopt better ways of
running their businesses in a sustainable way. The research is also a source of information that
academics can draw on to develop new literature on the subject of poverty facing urban women
running micro-enterprises.

Keywords: women, micro-entrepreneurs, micro-enterprises, informal sector, developing

countries, Angola, Luanda.

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 CHAPTER 1

THE PROBLEM AND ITS SETTING

1.1 Introduction

Women in developing countries are affected significantly by poverty. This is evident from the
increasing number of women headed households in developing countries. In Botswana,
according to the CSO (2004: 6), 46.4 percent of households are headed by women. In Cambodia
25.6 percent of households are headed by women (Statistics Bureau, 2008: 5). The UNDP
(2005a: 7) referred to this phenomenon as the feminisation of poverty. In Angola, a country
engulfed in a vicious civil war spanning three decades, the situation is even worse. Women, who
were forced to flee to urban areas to escape rural instability, soon faced poverty in the urban
areas. These women resorted to self-employment as a means to earn income and pull themselves
out of poverty (Von Itter, 2003: 4). Today, most of these women own and operate micro-
enterprises in the informal sector (De Vletter, 2002: 21).

The informal nature of these enterprises hinders their easy access to financial support or credit
schemes that could finance their expansion. As such, the Angolan government and NGOs such as
the Development Workshop Angola (DWA) have adopted a bottom-up approach of micro-credit
to assist the poor micro-entrepreneurs who face financial constraints (Cain, 2007: 374).

Microcredit schemes have been introduced successfully by Professor Muhammad Yunus to

finance micro-entrepreneurial activities of poor women in Bangladesh. According to Yunus
(1997: 26-27), the inability to access credit is a significant hindrance to women micro-
entrepreneurs from extricating themselves out of poverty. Furthermore, the lack of collateral
prevents women micro-entrepreneurs from accessing loans. Credit can be provided even without
the mandatory collateral through group-lending schemes (Yunus, 1997: 26-27). Other scholars,
such as Schultz, Maccawi, El-Faith (2006: 63) have also noted that if the financial constraint is
removed, women micro-enterprises can thrive.

Financial constraint is not the only factor limiting the growth of poor women micro-enterprises
in developing countries. Small business owners in developing countries, the majority of whom
are women, are faced with other obstacles such as the lack of education and skills as well as poor

1
health and nutrition (ILO, 2002: 23; Woller and Woodworth, 2001: 277). These constraints
should be addressed before credit extension schemes can be effectively introduced and applied to
tackle the poverty affecting women micro-entrepreneurs (Rankin, 2001: 32; Meyer, 2002: 366).
Thus, microfinance institutions (MFIs) require a more integrated approach to deal with the many
challenges that poor women micro-entrepreneurs face. Governments and MFIs have to recognise
the impact of other constraints on the growth of micro-enterprises run mainly by poor women in
developing countries. An integrated approach is seen as an effective means for the micro-
entrepreneurs to maximise the benefits of microfinance and pull themselves out of poverty
(Woller and Woodworth, 2001: 277).

1.1 Problem statement

According to the Human Poverty Index, Angola is ranked 118th out of 135 countries in the 2009
Human Development Report (UNDP, 2009). Estimates show that 38.5 percent of the Angolan
population will not survive to the age of 40. In addition, 32.6 percent of the adult population is
illiterate, 49 percent of the population do not have access to clean water and 31 percent of
children under the age of 5 are underweight (UNDP, 2009). Poverty in Angola is most prominent
amongst women, the majority of whom are engaged in small and micro-businesses in the
informal sector. The UNDP (cited in De Vletter, 2001: 21) estimates that the informal sector in
Angola currently employs 37 percent of the economically active population. Women, in
particular, own 47 percent of the informal enterprises and their scores are often lower than the
average for Angola as discussed above.

In Angola the main sources of micro-credit are the Angolan government and NGOs. For instance
the Development Workshop Angola (DWA) is an NGO that has a microfinance programme with
a client base of 14 000 small enterprises (Cain, 2007: 376). Despite the availability of
microfinance programmes micro-entrepreneurs in Angola are still poor. Moreover, they rely
mostly on informal sector financing such as rotating savings and credit associations (ROSCAs)
or kixikilas to finance their informal sector activities (De Vletter, 2001: 19).

Although, De Vletter (2002: 19), Lopes (2006a: 164) and Wilson (2002: 83) expound on the
opportunities for microfinance and challenges that face women micro-entrepreneurs in Angola,
they do not fully explain what the constraints of micro-entrepreneurs in Luanda entail.

2
This study poses two questions. Firstly, what are the other constraints apart from financial
constraint that poor women micro-entrepreneurs in Luanda still face? Secondly, why are
microfinance institutions ineffective in serving women micro-entrepreneurs in Luanda?

1.3 The aim and research objectives

The aim of this research is to identify the constraints that poor women micro-entrepreneurs in
Luanda experience. Identifying the constraints that women micro-entrepreneurs in Luanda
experience will assist existing and potential microfinance institutions in providing microfinance
that maximise effectiveness.

In order to achieve this aim the research is guided by the following objectives. Firstly, the
research provides an economic rationale, based on sound economic theory, to capture the drivers
of poverty as well as other constraints facing women micro-entrepreneurs in Luanda. Among the
constraints to be analysed are the low levels of education, gender inequality and factors limiting
the growth of women operated micro-enterprises. Secondly, it analyses the influence of these
constraints on the ability of microfinance institutions to reach the women in Luanda.

1.4 Hypothesis and research questions

The hypothesis to be tested in this dissertation is that the constraints facing women micro-
entrepreneurs in Luanda have a negative effect on their business. This research identifies the
constraints that women traders in Luanda experience in order to understand their demands,
financial strategies, position in society, gender inequality as well as the effect of the constraints
on the demand for micro-credit.

The research is guided by the following three questions. Firstly, what are the characteristics of
women micro-entrepreneurs in Luanda? Secondly, what constraints do women micro-
entrepreneurs in Luanda experience? Finally, the extent and nature of income and expenditure of
women micro-entrepreneurs in Luanda are analysed.

1.5 Research methodology and design

Little is known about the influence of the constraints faced by women micro-entrepreneurs in
Luanda and of the effectiveness of microfinance institutions (MFIs). This prevents MFIs from

3
realising their potential as an instrument for poverty alleviation. This research attempts to fill this
knowledge gap by adopting both a literature study and a mix of quantitative and qualitative
approach. The mixed approach enables the in-depth analysis of the characteristics, constraints
and the environment that these women operate in.

Academic journals, books and Internet sources were some of the literature reviewed. The
literature review illustrated the characteristics of women micro-entrepreneurs in developing
countries and the constraints they face.

The literature study was supplemented with a mixed approach and empirical research that relied
on self-administered questionnaires. The self-administered questionnaire was chosen because it
was considered easier to administer to the respondents as they were personally approached in the
market and streets of Luanda by the researcher. The respondents would have found it difficult to
respond effectively to the questionnaire due to their low level of education (Neuman, 2003: 298;
Baptista, Ramalho and Silva, 2006: 227). Being born in Luanda the researcher was able to
understand and interpret the answers of respondents, which contributed to the reliability and
accuracy of the research.

The target population was women micro-entrepreneurs in Luanda, Angola. The field study
focuses on Luanda not only because it houses a variety of markets, but also because the markets
employ the vast majority of women micro-entrepreneurs (Von Itter, 2003: 4). The questionnaires
were administered to a total of 130 women respondents. This sample was 130 or 10 more than
the 120 micro-entrepreneurs surveyed by Baptista et al. (2006: 229) in their study of the
characteristics of micro-entrepreneurs in Cape Verde.

1.6 Clarification of the terms used

A clarification of the important terms used in the study is carried out below to define them and to
give clarity of what it entails in this dissertation.

1.6.1 Micro-entrepreneurs or subsistence traders

The terms micro-entrepreneurs and subsistence traders are used interchangeable in this research.
These are self-employed people that engage in low income activities, for the subsistence of the
household (Charmes, 1999: 73).

4
1.6.2 Women-owned micro-enterprises

The definition of women-owned micro-enterprises used in this research is derived from

Barahona’s (1995: 146) definition of women-owned micro-enterprises in Costa Rica. In such
enterprises, the woman owner is the only employee and she uses a simple production process that
is related to her domestic activities and experiences. The women are limited to the local market
which includes their neighbourhood, streets or in the market where they trade.

1.6.3 ROSCAs or kixikila

In this research the terms kixikila and ROSCAs are used interchangeable. Kixikila is the term
used by the subsistence traders in Luanda to refer to ROSCAs. ROSCAs are group saving
schemes each comprising of 5 to 50 members. The members pool their funds in the ROSCAs on
a weekly or daily basis and the funds are extended to members in a rotating basis (Todaro and
Smith, 2009: 760). This is similar to stokvels used in South Africa.

1.6.4 Informal sector

The informal sector is compiled of income producing activities outside the formal or waged
sector. These activities are small scale and labour-intensive. In addition, little capital, equipment
and productivity is required to start an informal business. Furthermore, there is ease of entry and
the labourers have low skills and earn a low income (Charmes, 1999: 71). The main
disadvantage is that many of these enterprises do the same things, which leads to a low income
earned in these micro-enterprises.

1.6.5 IDPs or internally displaced persons

According to Haynes (2009: 8) IDPs are people that flee their homes due to armed conflict,
violation, and natural or manmade disasters. The IDPs flee to areas within the borders of the
country as opposed to fleeing to areas across international borders.

1.6.6 Chafariz or standpipes

Chafariz is the Portuguese term for standpipes and the term is used to indicate where safe water
is available in Luanda. Standpipes are installed by the Water Company of Luanda (EPAL) to

5
provide water to the population in the slums who do not have access to running water in their
homes (Cain and Mulenga, 2009: 22).

1.6.7 Fiscais or local authorities

The local authorities ensure that the street traders have the legal documentation to trade in a
particular location in the streets or outside the markets. The fiscais can confiscate the goods from
the traders if they do not have the correct documentation (DWA, 2009: 4).

1.6.8 Kilapi or informal credit

This informal source of credit is used by micro-entrepreneurs in Angola in order to buy stock for
the micro-enterprise. The idea behind this form of credit is that the micro-entrepreneurs obtain
stock from traders that buy it in bulk. The micro-entrepreneurs pay for the stock after they sell it,
and obtain short-term credit from the financiers or traders they buy it from (De Vletter, 2002:
30).

1.7 Report structure and layout of chapters

Chapter 2 discusses the literature review on the constraints faced by women micro-entrepreneurs
in developing countries and Luanda. This chapter analyses the nature of self-employment
activities and poor living conditions of the micro-entrepreneurs. It explains the causes of poverty
in the informal sector and the constraints hindering their access to credit from microfinance
institutions. It also focuses on the causes of poverty amongst women micro-entrepreneurs in
Luanda.

Chapter 3 discusses the research methodology and design. It explains the research design, survey
method, sampling method and sampling group used to collect data from the micro-entrepreneurs
in Luanda. This chapter also explains the design of the questionnaire, the methods used to
analyse the data collected and identifies limitations of the questionnaire and addressing the
limitations.

Chapter 4 presents the analysis of data collected. This chapter provides a description of the
markets in Luanda analyses the characteristics of micro-entrepreneurs and the micro-enterprises

6
and explores the constraints of micro-entrepreneurs, their financial environment and the short-
comings of microfinance institutions.

Chapter 5 summarises the main findings and the conclusion of the research objectives. This
chapter also provides tentative recommendations for microfinance institutions (MFIs), traders
and government, including suggestions for further areas of research.

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 CHAPTER 2

THE DRIVERS OF POVERTY AMONGST WOMEN MICRO-ENTREPRENEURS IN

THE INFORMAL SECTOR

2.1 Introduction

The aim of this chapter is essentially to analyse the poverty of women micro-entrepreneurs in
developing countries and specifically Luanda, Angola. Firstly, this chapter provides specific
evidence of poverty in the informal sector of developing countries. Secondly, it discusses the
causes of poverty amongst female micro-entrepreneurs in developing countries. Thirdly, this
chapter discusses the constraints facing female micro-entrepreneurs in developing countries.
Fourthly, this chapter discusses the challenges experienced by female micro-entrepreneurs in
accessing financing from microfinance institutions. Lastly, poverty amongst the female micro-
entrepreneurs in Luanda is discussed.

2.2 Explaining poverty in the informal sector in developing countries

2.2.1 The nature of self-employment activities

Self-employment activities such as petty trading, street hawking and food catering are mainly
performed by women as well as poor and marginalised families, who find it difficult to obtain
formal employment (Lobsy, Else, Kingslow, Edgcomb and Malm, 2002: 11). The ILO (2002:
20) estimates that self-employment constituted 70 percent of all the informal sector employment
in Sub-Saharan Africa between 1994 and 2000. In the same period, self-employment accounted
for 62 percent, 60 percent and 59 percent of informal employment in North Africa, Latin
America and Asia respectively. The ILO (2002: 23) estimates that roughly 50 percent of women
compared to 35 percent of men were self-employed in Latin America and Africa between 1990
and 2000.

Income from informal sector activities can be supplementary or the only source of income in the
household. The supplementary income of micro-enterprises usually provides less than half of the
household income. Mead (1999: 62) observed that a third of the micro-enterprises’ income in
Eastern and Southern African countries was supplementary. He also observed that a significant
number of the households, that is more than half depends solely on the income from the informal

8
sector activities. Households that depend on the informal sector activities as the only source of
income are also more likely to be poor. The average income of households that depend on the
informal sector is often lower than the minimum wage of an unskilled worker in the formal
sector (Chen, Vanek and Heintz, 2006: 2135). The market wage in the informal sector
employment is set so low that most families would find it difficult to live solely on such an
income (Mead, 1999: 63).

However, to assume that all informal sector activities are low-income activities is to
underestimate the income-generating potential and earning dynamics of this sector. A
consideration should also be given to the employers or owners of micro-enterprises in the
informal sector. Chen, Vanek, and Heintz (2006: 2135) observe that the owners of micro-
enterprises in India and Colombia earn a higher monthly income than self-employed traders.
They observe that self-employed traders earn more than waged employees of micro-enterprises.
In Tunisia some of the owners of micro-enterprises earn four times more than the minimum
wage and two times higher than salaried workers in the formal sector.

Furthermore, the earnings differential in the informal sector is calculated on the basis of men-
and women-operated micro-enterprises. The hourly earnings of women in self-employment
activities in El Salvador are below those of men (Chen et al. 2006: 2135). In Eastern and
Southern Africa male-owned self-employment enterprises generate higher income than those
owned by women (Mead, 1999: 63). The low income earned by women in self-employment
activities reflects the poverty facing women in the informal sector.

2.2.2 Poor living conditions of micro-entrepreneurs

A significant portion of micro-entrepreneurs reside in urban slums for different reasons. Owusu,
Agyei-Mensah and Lund (2008: 183) state that poor households, many of which work in the
informal sector, have access to friends and relatives in the slums that they can turn to for support.
Todaro and Smith (2009: 327) cite obsolete building codes as being some of the reasons people
opt for illegal urban housing in the slums. Moreover, according to a study by the United Nations
Human Settlements Programme (2003: 31) people enter urban slums because they cannot afford
the official housing market. Conditions in the slums lead to even poorer service delivery, because
of overpopulation.

9
The overcrowded slum living conditions in developing countries are often illegal, and therefore
government limits the provision of basic services (Tannerfeldt and Ljung, 2006: 83; Baker, 2008:
7). The slum residents have to make use of alternative sources of basic services, such as sourcing
water from water vendors, using public taps and public toilets. Moreover, the overcrowded
environment in slums is fertile for infectious diseases. Seabrook (2007: 121-122) explains that
inadequate provision of water and sanitation in slums results in contaminated water being
supplied to the residents. The lack of adequate sewage systems leads to the accumulation of dirty
water which is a fertile breeding ground for insects that spread diseases such as malaria and
dengue fever (Seabrook, 2007: 122). These poor conditions affect the health of the micro-
entrepreneurs that reside in the slums and hinder their ability to operate their businesses
productively.

2.3 Causes of poverty in the informal sector in developing countries

2.3.1 Necessity or survival strategy

Women micro-entrepreneurs in self-employment activities are motivated by the need to survive.

According to Roy (2004: 11) urban micro-entrepreneurs are motivated by basic needs that are
not satisfied. Physiological needs such as food, water, shelter, warmth, safety needs of security
and stability are some of the factors that induce people into self-employment activities. The fact
that the needs of urban micro-entrepreneurs are inadequately met is the main reason for them to
earn an income to sustain their families. The urban micro-entrepreneurs are not interested in
making profit or attaining financial independence, but rather in earning enough money to survive
(Bewayo, 1999: 4).

The women micro-entrepreneurs work for long hours and earn little income in a sector where
few of the self-employed manage to move from survival activities to activities that create
employment. The study by Eversole (2004: 136) on the women owned micro-enterprises in
Sucre, Bolivia, estimates that 85 percent of women engage in subsistence activities, that include
selling produce, meat, cooked food, clothing, shoes and school supplies. These women are
limited to the subsistence activities because they are constrained by external forces and limited
resources (Eversole, 2003: 114). They have to cope with a weak local economy and poor
transport infrastructure. Women micro-entrepreneurs have limited knowledge and information

10
about markets. They are also risk-averse while women micro-traders are furthermore limited by
the saturated local markets and the homogenous goods they sell.

The subsistence traders in developing countries are flexible in the trading activities. In Bolivia,
Peru and Guatemala the micro-entrepreneurs take advantage of seasonal demands. For example,
during special holidays, such as Christmas they sell candles. In winter the micro-entrepreneurs
sell hot liquid desserts, while in summer they sell cool drinks (Eversole, 2003: 109). The
problem with adapting to seasonal demands is that a micro-entrepreneur that does not have
enough knowledge of market demands can experience losses. This is often the case with women
micro-entrepreneurs in the Central regions of Malawi. According to Johnson (2005: 234) the
Central regions of Malawi is based on agriculture and the subsistence activities of women
depend on the seasons. A greengrocer experiencing reduced demand quickly shifts to a new
business opportunity, before the influx of the other traders into the same opportunity causes
prices and profits to decrease. The problem arises when the micro-entrepreneur that has ventured
into the new market does not understand the market fluctuations and how to obtain new stock.
The micro-entrepreneur can quickly lead the new venture to losses, because of a lack of
knowledge and experience of a chosen activity.

Competition in subsistence activities also aggravates poverty amongst subsistence traders.

Subsistence trade in developing countries is a survival strategy for rural-urban migrants and
formal sector workers that are unemployed. Women are increasingly moving to the urban areas
as a survival strategy (Awumbila and Ardayfio-Schandrof, 2008: 173; Acharya and Cervantes,
2009: 23). However, many migrants are unable to find employment in the formal sector of the
economy in the urban areas. They engage in the urban informal sector to sustain themselves and
their families (Charmes, 1998: 3). The influx of migrants to informal sector activities increases
competition in the sector.

2.3.2 Rural-urban migration

Timalsina (2007: 21) defines migration as the permanent and semi-permanent movement of
people in order to improve their lives, while rural-urban migration is the internal movement of
people from rural areas to urban areas, mainly in the same country. Todaro and Smith (2009:
345) state that an individual makes the rational decision to migrate despite the visibility of urban

11
unemployment. Migration is the response to the difference in expected income rather than actual
earnings. The individual migrant compares gains in the urban areas over time with present rural
income. They migrate when the expected urban income exceeds present rural income. Hence, the
individual migrant has the expectation of earning more by being employed in the urban areas
than in the rural areas. The individual migrant also weighs the probability of being unemployed
in the urban areas. If unemployment in the urban areas is below 50 percent, the probability of
being unemployed is less than the probability of being employed. These motivations for
migration can then encourage rural to urban migration. A situation where the rural to urban
migration process continues despite the visibility of unemployment in the urban areas then
occurs. This happens because migrants expect to be employed and well compensated in the
future. Therefore, they are willing to engage in minimal jobs or risk being unemployed to wait
for better job opportunities (Timalsina, 2007: 24).

Microeconomic causes for migration also lead to urban unemployment. Lee (cited in Timalsina,
2007: 27) divides the causes of migration into positive and negative pull-push factors. The
positive factors that induce rural-urban migration are job or income opportunities at the
destination. The opportunities of attaining a job or income pull people to the urban areas so that
they can settle and work. The negative push factors such as poverty and unemployment push
people away from their home in the rural areas through rural-urban migration. In the urban areas
the migrants often engage in self-employment activities, while waiting for formal employment.

The self-employment activities create employment opportunities and income for migrants in the
interim, but this may also be for a period or permanently in many cases. According to Timalsina
(2007: 28) the ability to be employed and have an income gives migrants access to resources.
The resources include roads to commute, education, skills, training, health and savings. The
migrants use the resources to participate in the labour market and as a means of survival to
sustain their families. However, the absorption of more migrants into self-employment activities
reduces the income and can push them further into poverty.

2.3.3 Lack of product differentiation

According to Roy (2004: 20) micro-entrepreneurs do not differentiate between the products they
sell. The micro-entrepreneurs often buy and sell similar goods, with the same price, quality and

12
quantity. The similarity in products then increases competition and reduces the price of the goods
sold. The reduced price lowers the profits and the income of the micro-entrepreneurs in the
informal sector (Timalsina, 2007: 113).

2.3.4 Poor health as cause of poverty in the informal sector

Poor health reduces productivity, which reduces income earned, because poor health lowers the
number of hours dedicated to work (Szirmai, 2005: 204). The poor health of women micro-
entrepreneurs is linked to occupational risks and environmental hazards (Forastieri, 1999: 2;
Sinha, 2007: 121). Pick, Ross and Dada (2002: 202) state that traders’ poor health reflects the
nature of their activities. Women who engage in self-employment that involve cooking, often
experience injuries such as cuts and burns. The activities of women micro-entrepreneurs also
contribute to poor health. Micro-entrepreneurs engage in selling street food, use coal and/or gas
for cooking (Bowao, 2008: 18). The use of these substances generate hazardous pollutants such
as carbon monoxide, nitrogen dioxide and other harmful gases that increase the risk of
respiratory infections and pulmonary disorders (Montgomery, 2009: 13).

Women whose activities involve lifting heavy objects suffer from musculoskeletal problems
such as fractures and sprains. Rogel (2007: 7-9) states that poor infrastructure in the market can
create an environment conducive for water borne diseases. Rogel (2007: 9) affirms that in
Zambia vendors of Chisokone market situated in Kitwe are prone to water borne diseases. This is
because the market lacks an appropriate drainage system.

Acho-Chi (2002: 145) claims that women traders in the Province of Kumba, Cameroon, leave
food and organic waste to decay in the market and streets, which then produces an unhealthy
environment.

2.3.5 Low level of education in the informal sector

Women micro-entrepreneurs have low levels of education and are more likely to partake in
informal sector activities that are harmful to themselves, their families and their environment. In
developing countries women often have low levels of education. The low level of education
amongst women in developing countries is mainly because a greater percentage of girls who are
of primary school age are not attending school. UNESCO (2005: 19) estimates that between

13
2001 and 2002 the percentage of girls without primary education was 58 percent in the Middle
East and North Africa. In Southern Africa the estimate was 51 percent. The fact that women in
developing countries have low levels of education limits them to informal sector activities. The
micro-entrepreneurs do not have the education levels to be absorbed in the formal sector and it
affects their running of the micro-enterprises. Mead (1999: 66-67) asserts that the owners of
micro-enterprises who have completed primary education are able to grow even in an economic
downturn. Women owners of micro-enterprises in Nepal that lack primary education do not
understand information regarding government regulations and future policies. These women also
have difficulties using information for the success of their micro-enterprises (Bushell, 2008:
556).

Education linked with years of experience plays a critical role in the ability of micro-
entrepreneurs to survive in saturated markets. According to Mead (1999: 67) micro-enterprises
that survive in a saturated market have a given set of characteristics. Roy (2004: 19) states that
experienced and educated micro-entrepreneurs have a better understanding of the market. These
micro-entrepreneurs are then more likely to diversify to reduce risks.

According to Hafkin and Taggart (2001: 23) low levels of education are an obstacle to the access
of information technology (IT). Women in developing countries of Asia, Africa, Latin America
and the Middle East lack basic literacy and numeracy skills needed to access the internet (Hafkin
and Taggart, 2001: 23). They argue that the inability to access IT, disadvantages women micro-
entrepreneurs, because usage of information technology contributes to their empowerment and
increases productivity. Women who can use the technology, such as the internet or mobile
phones are able to obtain more information about market opportunities and usually do better in
business (Jiyane, 2010: 54).

The lack of basic education by women in the informal sector also makes them risk averse.
According to Roy (2004: 21) to be risk-averse means that they are unwilling to differentiate
between different merchandise as they mainly trade in similar goods and charge similar price.
The similarity of the goods sold creates a competitive environment that erodes their income.
Micro-entrepreneurs adopt an octopus organisation form in order to diversify and reduce risk.
The octopus organisation form is a costly method of diversifying risk, because micro-
entrepreneurs engage in several unrelated micro-enterprise ventures at once. An unsuccessful

14
micro-enterprise becomes difficult to liquidate and the micro-entrepreneurs close the venture and
reactivate it when there is better market demand (Kiggundu, 2002: 247).

2.3.6 Gender inequality

Gender inequality limits the ability of women micro-entrepreneurs to own property. Terry (2007:
88-89) asserts that women in developing countries have limited property rights and are
discriminated against in property and inheritance laws. This prevents women from owning the
land where they live and work.

Johnson (2005: 227) describes gender inequality in the informal sector through a concept know
as male social capital. She asserts that the presence of male social capital in Cameroon prevents
women micro-entrepreneurs from expanding their micro-enterprises. The micro-entrepreneurs in
the informal markets have to cope with gender segregation, whereby physical market space and
marketing structures are subject to gender bias.

Pick et al. (2002: 195) explain that discrimination against women micro-entrepreneurs limits
them to low income activities. Sometimes women micro-entrepreneurs engage in activities such
as washing clothes that were previously occupied by men but which men have since abandoned
as they became less lucrative.

The UNDP (2005a: 7) notes that gender inequality of women results in women being involved in
household activities such as cooking, cleaning and looking after the children. Clunies-Ross,
Forsyth and Huq (2009: 439) state that because women are time constrained, they have opted for
low income micro-entrepreneurial activities with low demands. This is mainly because women
micro-entrepreneurs do not have enough time to dedicate to the running of their micro-
enterprises and household responsibilities to improve their situation.

2.4 Constraints faced by women micro-entrepreneurs in developing countries

2.4.1 Bureaucracy in the registration process of the micro-enterprise

Micro-entrepreneurs experience excessive bureaucracy when registering their micro-enterprises.

Strict regulation enforces a complex registration process that micro-entrepreneurs have to adhere
to. The ILO (2003: 34) compiled a research of 120 registered micro-entrepreneurs from Zambia

15
in the capital city of Lusaka and the province of Kitwe in 2002. The research shows that micro-
entrepreneurs have to complete forms written in legal terms they hardly understand. They also
have to queue at different government departments in order to attain correct documentation. The
result of the strict regulation process is longer delays, higher costs of public service, higher
corruption and less investment (Becker, 2004: 23). The cumbersome registration process also
interferes with the operations of micro-enterprises.

The micro-entrepreneurs spend more time trying to register micro-enterprises as opposed to

operating them (Elkan, 1988: 177). The time cost deters micro-entrepreneurs from legalising
their business. Then again, unregistered micro-entrepreneurs are continuously harassed by local
authorities, who fine them or confiscate their stock until they are able to pay the fines (Acho-Chi,
2002: 136; Rogel, 2007: 7).

2.4.2 Lack of enterprise clusters and isolation of business activities

Enterprise clustering takes place when similar enterprises operate in one location (Ramachandran
and Ray, 2008: 154). The benefit of an enterprise cluster is that enterprises can cooperate with
each other through networks. Cooperation means that enterprises share information about
potential markets and resources. The micro-entrepreneurs operate in close proximity of each
other in the market or in the streets and they can benefit from an enterprise cluster (McCormick,
1999: 132).

However, women micro-entrepreneurs have failed to take advantage of clusters. Kiggundu

(2002: 246) notes that in Africa, small micro-enterprises are often unable to cope with risks after
joining a network of entrepreneurs. Kiggundu (2002: 246) states that only a few firms have
effective joint actions, such as standardisation, quality control, labour training or common
marketing in Africa.

The inability of micro-entrepreneurs to take advantage of enterprise clusters arises from the lack
of trust amongst micro-entrepreneurs. This lack of trust develops because entrepreneurs are
afraid to be cheated off their money by other traders (Roy, 2004: 28). In addition, traders of
different ethnic communities are reluctant to trade with each other due to ethnic diversity
(McCormick, 1999: 137). Furthermore, ethnic conflicts or civil conflicts destroy the social fabric
of a country and hamper development of trust in communities (Colletta and Cullen, 2000: 3).

16
The failure of micro-entrepreneurs to take advantage of enterprise clusters reduces their
productivity. This is mainly because there is no division of labour. The micro-entrepreneurs have
to deal with all the activities pertaining to the operation of their micro-enterprises (Roy, 2004:
29). Furthermore, micro-entrepreneurs that do not take advantage of enterprise clusters lose out
on potential market opportunities (Kiggundu, 2002: 247).

Ramachandran and Shah (1999: 73) analyse the performance of entrepreneurs, from Asian and
European decent located in Kenya, Zambia, Zimbabwe and Tanzania. They further compare
them with the performance of local entrepreneurs in these countries. Entrepreneurs from
minority Asian and European descent often outperform the indigenous people. This is mainly
because the minority entrepreneurs capitalise on the cluster for network trust. Ramachandran and
Shah (1999: 73) argue that the clusters allow the minority entrepreneurs to spread risk, access
information, attain favourable terms of credit and make available a pool of talent to choose from
for management positions.

2.4.3 Isolationist approach in seeking credit

When microfinance institutions provide credit to micro-entrepreneurs they adopt an individual

approach to credit provision or a group-lending scheme. In the group-lending scheme micro-
entrepreneurs have joint-liabilities which mean that everyone in the group is liable for any debt
default. In the case where a member of the group defaults in the repayment the whole group is
denied future loans from the microfinance institution (Sengupta and Aubuchon, 2008: 12). Joint-
liabilities replace mandatory collateral that is required by banks and ensures repayment of loans
(Sengupta and Aubuchon, 2008: 12).

However, the concept of group-lending is not taken favourably by the micro-entrepreneurs.

Group-lending or joint-liabilities are based on the concept of trust. This trust allows them to
access micro-credit, since the groups are self-selected and the members are jointly liable for the
repayment of the loan (Sengupta and Aubuchon, 2008: 12).

Problems of loan repayment arise in the group because of the free-rider incentive. The incentive
for free-riding occurs in a large group of women who have different levels of income and who
are not sensitive to social sanctions. In a group size of 20 members or more where the members
are not sensitive to social sanctions such as shame, guilt and stigma the incentive to free-riding

17
increases (Impavido, 1998: 254). This is mainly because a process of cross-subsidisation occurs.
This happens when members that have financial means subsidise the members that cannot afford
to repay the loans (Devereux and Fishe, 1993: 106). Failure to repay loans means that the group
cannot borrow again from the microfinance institution (Abbink, Irenbusch and Renner, 2006:
615). In an environment of limited trust amongst micro-entrepreneurs group-lending deters
women from seeking financial assistance from microfinance institutions.

Amoako-Tuffour (2002: 6-7) states that micro-entrepreneurs in Ghana prefer to borrow from
informal sources such, as ROSCAs for a variety of reasons, mainly because there is no formal
collateral needed. This includes that there are only a few conditions attached to the repayment of
loans, the small amounts of loans and the short-term nature of the loans. ROSCAs are flexible
enough to adapt to changing economic conditions. In the case of post-conflict countries such as
Angola, ROSCAs are the only group scheme that survived the conflict (Hudon and Siebel, 2007:
15). These features of ROSCAs suit and attract women micro-entrepreneurs in developing
countries, because of its informal nature and structure.

2.5 Constraints hindering women from accessing credit from microfinance institutions
(MFIs)

The issue of whether MFIs should adopt a minimalist or an integrative approach to microfinance
plays an important role in how microfinance services are delivered to micro-entrepreneurs. A
minimalist approach is based on the idea that poverty is reduced through financial support such
as micro-credit, micro-savings and insurance. The integrative approach identifies more than
financial constraints as the causes of poverty (Woller and Woodworth, 2001: 227)

Institutions that fail to understand the reality faced by micro-entrepreneurs cannot adequately
improve the lives of these people. Some MFIs such as the Grameen Bank, have demonstrated
that the poor are bankable. Matin, Hulme and Rutherford (2002: 291) argue that the key to the
effectiveness of MFIs is through the understanding of the needs and the preferences of the target
market. A minimalist approach whereby only financial services are provided cannot realise the
benefits for women micro-entrepreneurs as some of their services are not understood (Baptista,
Ramalho and da Silva, 2006: 239). Furthermore, gender dynamics relevant to women in

18
developing countries are often ignored by institutions pursuing the minimalist approach. Hence,
the objective of women empowerment is often not achieved by such MFIs (Johnson, 2005: 224).

One of the objectives of MFIs is to empower poor women by fostering financial independence,
as the women use the additional finances to support their families. However, many development
practitioners overlook the issue of gender dynamics in empowerment issues (Johnson, 2005:
227-228). An ethnographic study of a community on the impact of microfinance indicates that
microfinance in Nepal is ineffective in the empowerment of women, because the influence of
gender inequality was not recognised. This is because, although women may obtain credit, their
husbands manage the additional finances (Rankin, 2001: 32).

The benefits of microfinance are often limited to those women entrepreneurs with established
businesses. This issue was highlighted by Milgram (2001: 218) who found that only women
entrepreneurs with existing businesses in the Philippines benefited from micro-financing as they
used the extra finance to diversify their business, while women farmers were reluctant to invest
their loans. This situation also creates inequality amongst women. This is evident in Senegal
where women with greater means can afford to take up extra debt, while the very poor women
who are unable to repay the loans are harassed by creditors (Guèrin, 2006: 550).

2.5.1 Overcoming loan repayment difficulties

The inability to repay the loan impacts negatively on the women as it contributes to them
dropping out of a microfinance programme. In Bangladesh the field workers maintain a good
repayment record to avoid being harassed by MFIs to repay the loans (Ahmad, 2003: 70).

Lack of flexibility of repayment dead-lines creates hostility between the field workers and their
MFIs. The hostility results in clients often leaving the microfinance for other institutions that are
more flexible, but that may be less focused on empowerment and poverty reduction. Milgram
(2001: 215) defines this power over the poor women-entrepreneurs as an unquestionable
procedure in the MFIs. This is exhibited in ways such as the demand for weekly repayments.
This procedure is mainly applied in the Caribbean where the poor repayment culture has resulted
in high default rates (Lashley, 2004: 92). This stems from the ineffectiveness of MFIs to consider
the other constraints facing micro-entrepreneurs as the institutions tend to pursue the minimalist
approach.

19
Women micro-entrepreneurs cooperate to attain finance for their micro-enterprises. Women
mainly make use of informal financing activities such as rotating savings and credit associations
(ROSCAs) (Snyder, 2000: 87). The ROSCAs allow women micro-entrepreneurs to access start-
up capital and finance for the micro-enterprise without any interest charges being involved. The
micro-entrepreneurs in Zambia prefer to rely on each other for finance, because it is the easiest
and cheapest form of financing (ILO, 2003: 34). Women micro-entrepreneurs complain that
loans from microfinance institutions (MFIs) are too small, interest charged is high and the
repayment period is too short.

In the Philippines women in craft businesses, who are members of the Central Cordillera
Agricultural Programme, depend on the income from tourists that visit the village at seasonal
times as well as social networks to repay the loans (Milgram, 2001: 217). Members of the
Bulako Farmers’ Group in Uganda adopted the same strategy to cope with the loan repayment to
MFIs. Relatives and friends assist the members when the loans are due to be repaid to the
microfinance institution. Then the members from the Bulako Farmers’ Group pay back the loans
to friends and relatives at no interest when possible (Mosley and Rock, 2004: 491).

Micro-entrepreneurs adopt multi-loan-taking to cope with repayment. The increased competition

among MFIs in Uganda resulted in reduced repayment performance by the clients as the clients
took up loans from one institution to repay another (McIntosh, De Janvry and Sadoulet, 2005:
1002). The loans were supposed to be used to generate income from productive activities, but
instead the loans were used as a source of repayment. Since, MFIs are focused on trying to
attract clients and are often too inflexible, their clients had to resort to multiple borrowing.

Group-lending also affects repayment. The idea of group-lending is to facilitate repayment and
also to substitute for physical capital. However, group-lending can negatively impact on the
development of micro-entrepreneurs due to the free-riding problem that can occur depending on
the group-size (Abbink, Irlenbusch and Renner, 2006: 615) and due to the group heterogeneity
(Hetelahti and Linden, 2006: 309).

2.6 Causes of poverty amongst women micro-entrepreneurs in Luanda, Angola

2.6.1 Lack of access to credit in post-conflict Luanda

20
A study conducted by the National Institute of Statistics estimated that 530 000 micro and small
enterprises in Angola demand credit and loans which are in most cases unmet (UNDP, 2005b: 3)
in 2000. The banks in Angola are only interested in supplying credit to big businesses with the
necessary collateral (UNDP, 2005b: 10). Many NGOs distribute micro-credit to micro-
entrepreneurs in the informal sector. De Vletter (2002: 72) has listed the following programmes
that provide micro-credit in Luanda, namely the Development Workshop Angola (DWA), CARE
International, Banco Sol, Christian Children’s Fund and African Humanitarian Action. These
institutions provide micro-credit to micro-entrepreneurs as individual loans or group-lending
schemes. Cain (2007: 375) states that since its inception in 2002 the DWA has distributed micro-
credit to 5 000 individuals and 300 group-lending schemes, with a repayment rate of 98 percent.
The number of clients has increased to 14 000 by 2007. However, in a market of 530 000 micro-
entrepreneurs, the DWA has only 14 000 micro-entrepreneurs as clients (Cain, 2007: 376).

The micro-entrepreneurs in Angola use the social network to make sure that they do not default
in the repayment of the micro-credit. Lemos (2007: 49) states that members of the DWA group-
lending scheme located in Huambo in Angola, form ROSCAs to finance medical or funeral
expenses of family members so that they do not rely on micro-credit to finance such expenses.
This shows that some loans made for business purposes are used for personal matters.

The micro-entrepreneurs in Angola prefer informal sources of credit such as kixikilas or

ROSCAs to credit from MFIs. Micro-entrepreneurs form ROSCAs and cooperate to create self-
lending schemes (Wilson, 2002: 33). The difficulty with this source of credit is that the micro-
entrepreneurs who are allocated the lump sum continue to pay the contributions until the last
member in the group has received the lump sum (Lemos, 2007: 49).

The other form of credit which is available to the micro-entrepreneurs is kilapi defined in section
1.6.8. The problem with this type of credit on purchases is that when it matures and the time
comes to pay the traders from which the merchandise was bought, some micro-entrepreneurs do
not have sufficient money to pay (Lemos, 2007: 51).

2.6.2 Gender disparities in the informal sector in Luanda

According to De Vletter (2002: 36-37) gender inequality in the informal sector is subtle. The
women micro-entrepreneurs in Angola engage in less lucrative self-employment activities

21
compared to men. Women are predominantly in petty businesses such as selling clothes, bread,
fish, charcoal, pots and shoes. Men adopt activities such as selling CDs and electronic equipment
and are skilled in activities such as mechanics, carpentry, construction and electricians. These
employment opportunities require skills that are deemed not accessible to women. Men have also
begun to engage in activities previously dominated by women such as selling second-hand
clothes and foreign exchange dealers, thus pushing women out of such business and causing
more poverty amongst women (De Vletter, 2002: 38). The poor women are then forced to take
up washing and ironing of clothes.

In Luanda, women micro-entrepreneurs engage in activities that are similar to subsistence

activities they perform in rural areas. The rural activities include cooking, cleaning and caring for
children. The micro-entrepreneurs keep the income they earn from informal sector activities,
which indicates financial independence (De Vletter, 2002: 37). However, micro-entrepreneurs
still work for long hours and make relatively low returns. This is because the informal sector
activities in Luanda are volatile. The income fluctuates according to daily market activities and
the expenditures relate to both the personal and professional needs of the micro-entrepreneurs
(Guèrin, 2006: 552).

2.6.3 Bureaucracy in legalising the micro-enterprises

Micro-entrepreneurs also have to cope with bureaucracy and corruption to register their micro-
enterprises. De Vletter (2002: 50) states that the process of legalising a business is complex and
complicated in Angola. He affirms that micro-entrepreneurs have to submit a string of
documents which are costly to obtain. For a car mechanic in the province of Namibe to register
the workshop and legalise the business he has to spend between US$250 and $350 in 2009. In
Luanda a business man was reported to have spent US $800 to have an agent deal with the
registration process of his business (De Vletter, 2002: 50). The micro-entrepreneurs that do not
have money to spend in obtaining documentation required to register the micro-enterprise, obtain
a temporary licence and paid US$25 a month (De Vletter, 2002: 50). The cost of registering a
business for micro-entrepreneurs deters them from legalising their businesses. For example,
street traders have to operate from a permanent place to have their businesses registered (DWA,
2009: 11).

22
Unregistered micro-entrepreneurs are continuously harassed by local authorities and do not have
title deeds to their properties. The lack of title deeds means that micro-entrepreneurs do not
possess collateral to obtain credit from banks (De Vletter, 2002: 52). The micro-entrepreneurs
that reside in slums of Luanda without title deeds to their property also face the risk of
expropriation by commercial developers or the State (Cain, 2007: 366). Amongst the micro-
entrepreneurs in the informal sector and resident in the slums of Luanda are migrants from rural
areas.

2.6.4 Migrations from rural areas to Luanda

The migrations to Luanda have been caused by the combination of push and pull factors. The 30
years of conflict in the country that lasted until 2002, is the single most significant push factor.
The expected income opportunities’ in Luanda is an example of the pull factors (Timalsina,
2007: 27; Ammassari, 2005: 31).

The end of the conflict created opportunities for income and employment in urban areas due to
the need to rebuild the country. The process of reconstruction and development that government
embarked upon and the growth of other sectors contributed to the demand for labour. In Luanda,
the building construction and development involved in the building of residential homes, hotels
and office buildings (Last, 2009: 2). This attracted migrants from rural areas in search of jobs
and income opportunities in urban areas. Migration of people from the rural areas to Luanda was
facilitated by the opening of roads and better mobility to the capital (Cain, 2004: 3).

The income earned in the informal sector in Luanda was higher than the minimum salary in the
public sector in the 1990s. The UNDP (2000) (cited in De Vletter, 2002: 24) compiled a study
which revealed that income earned by women micro-entrepreneurs in Luanda was higher than
the minimum salary earned by an unskilled labourer in the formal sector. The reasons for the
income difference were the high level of inflation, high demands for informal sector goods and
services and the flexibility of micro-entrepreneurs. During the period between 1993 and 1996
Angola experienced hyper-inflation, which eroded the real value of salaries (Pereira, 2004: 7).
Micro-entrepreneurs in Luanda adapted quickly to changes in price and demand. In this way
demand for their products did not reduce as much as that of the formal sector (De Vletter, 2002:
24).

23
However, post-conflict Angola marked the beginning of macroeconomic stability and reduced
inflation, which favoured the public sector minimum salary and formal sector. The country
entered the initial stages of development where entrepreneurial activities are negatively related to
economic development. The developing countries at the early stage of development find that
entrepreneurs are motivated by the necessity and not the opportunity for making profit (Acs,
2006: 101). The micro-entrepreneurs are not interested in attaining financial independence. They
just want to make enough money to survive. Moreover, the micro-entrepreneurs would prefer to
be employed in the formal sector as opposed to the informal sector (Acs, 2006: 102).

Income earned from self-employment activities decreased when the opportunity for high
earnings in the informal sector attracted migrants to self-employment activities. This is because
the influx of migrants into the informal sector increased competition. The increased competition
in self-employment activities eroded the earnings of micro-entrepreneurs, sinking them further
into poverty (Timalsina, 2007: 97).

The influx of migrants into Luanda resulted in high growth of slums and shantytowns (Von Itter,
2003: 5). The growth of informal housing in Luanda is marked by the inability of the public
sector to cope with the inflow of migrants, which led to overcrowding and densely populated
areas. The informal housing areas in Luanda are characterised by inadequate provision of public
services, such as the supply of electricity, water and sanitation (Von Itter, 2003: 4-5).

2.6.5 Inadequate provision of water and electricity in the slums

The availability of electricity in Luanda is limited to the urban areas and only 20 percent of the
population have access to electricity, with frequent blackouts (ESR, 2009: 7). This is because the
country has suffered from several years of civil conflict that caused the destruction of water
storage dams located in the provinces and the electricity system dates from the colonial era,
which is unable to cope with the increased demand. The electricity services depend on poor
institutions and poor management (DWA, 2009: 50). The price of electricity and fuel in Angola
are subsidised by the government (World Bank Angola, 2005: 7). The people in the slums prefer
to use generators because it is reliable.

The price of water is subsidised by the government. However, the supply of piped water in
Angola is very limited. The DWA (2009: 16) reports that it is easier for micro-entrepreneurs in

24
Luanda to have access to electricity than piped water. Their report estimates that 2 percent of
micro-entrepreneurs have access to piped water and no electricity in Luanda, whereas 48 percent
of micro-entrepreneurs have access to electricity and no piped water.

The inadequate provision of water to households in the slums of Luanda has given rise to an
informal sector market for water. Houses in slums lack piped water and depend on private sellers
of water. The water is pumped from the River Bengo on the outskirts of Luanda and transported
to households in cisterns. This system provides water to households in Luanda, but health risks
arise. Water from private sellers is often not treated and risks of continuation exist (Cain, 2007:
368). The cistern owners in Luanda form part of ANGOMENHA and source up the water in the
ANGOMENHA Girafas or filling stations located in Kifangondo (Cain and Mulenga, 2009: 24).
However, the water sourced from this filling station is not treated. Cain and Mulenga (2009: 26)
argue that this problem occurs because there is no system in the filling station to enforce that the
water is treated. Water is sold in buckets to people who cannot afford to fill their own
underground storage tanks or who do not have storage tanks in the slums. The micro-
entrepreneurs in Luanda have to cope with such poor living conditions, which reduce health and
lead to lower productivity.

2.7 Summary of main findings and conclusions

Self-employment activities in developing countries are significant sources of employment. It

provides employment to 70 percent of the population in Sub-Saharan Africa, 62 percent in North
Africa, 60 percent in Latin America and 59 percent in Asia. The majority of the people that
engage in self-employment activities are women. The income which they earn from self-
employment activities is the only source of income, which is less than the income of an unskilled
labourer in the formal sector.

The informal sector also provides income for owners of micro-enterprises and people that are
employed in micro-enterprises. The income earned by owners of micro-enterprises in the formal
sector is generally higher than the income of a self-employed micro-entrepreneur in the informal
sector. The income differential is also present between self-employed men and women. The
research estimates that men that are self-employed earn higher wages than those of self-
employed women. This reflects the poverty and gender inequality in the informal sector.

25
In the informal sector poverty has different causes. These include survival strategies, rural to
urban migration, poor health, levels of education and gender inequality. The self-employment
activities are survival strategies adopted by rural to urban migrants, because there are no barriers
and little capital and skills are required to start trading. The influx of people to the informal
sector increase competition and aggravate the poverty of the subsistence traders already in the
informal sector. This is mainly because people adapt similar activities in the same location,
which reduce the prices and profits. Income of the micro-entrepreneurs is small because the
number of hours that they dedicate to the micro-enterprise is reduced. Another factor which
reduces the number of hours that micro-entrepreneurs dedicate to the micro-enterprise is poor
market infrastructure, the subsistence activities such as cooking for sale and hygienic practises in
location of trade. The micro-entrepreneurs lack access to resources and information about
different markets and they are afraid to venture into a market that they do not understand. As
such, the micro-entrepreneurs are limited to a saturated local market with a weak economy and
poor transport infrastructure.

The process of rural to urban migration led to the rapid growth of the informal sector in the urban
areas. The influence of migration on the informal sector is explained by Todaro’s theory of
migration. He states that the expectations of rural migrants to have a better life in the urban areas
have led to their migration. The migrants who are unable to find employment in the formal sector
are pushed to informal sector activities. The unplanned semi or permanent movement of people
into the urban areas also results in the growth of slums where people live in overcrowded
conditions. The overcrowded environment is a fertile ground for infectious diseases, which
affects the health of the micro-entrepreneurs and leads to a reduced income.

The low levels of education amongst women micro-entrepreneurs negatively affect the
productivity and operation of their businesses or micro-enterprises. Accordingly, they are
unwilling to differentiate, they do not understand the information that is available to them in
terms of the government regulations and how it applies to them. The micro-entrepreneurs cannot
take advantage of the years of experience and enter a niche market which limits them to a
saturated and competitive market in the informal sector. They find it difficult to access and make
use of technology to the benefit of the micro-enterprise. The access and use of technology is also
limited by gender inequality.

26
Gender inequality also limits the women to low income activities in the informal sector. This is
mainly because the traders have limited ownership to property, they are time constrained and
they have to cope with male social capital. The male social capital means that the micro-
entrepreneurs have to cope with gender segregation and a marketing structure that is subject to
gender bias.

Micro-entrepreneurs face various constraints in the operation of their businesses. The micro-
entrepreneurs experience bureaucracy in the registration of the micro-enterprise in the form of
obtaining documentation. The micro-entrepreneurs have reported that registering the micro-
enterprise is a time consuming, a cumbersome and expensive process and that they often choose
not to register. The problem is that unregistered traders are constantly harassed by the local
authorities, which negatively affects their productivity and income.

Another constraint is that the micro-entrepreneurs do not cooperate. This means that they do not
take advantage of division of labour and of networking. This can lead to access to favourable
terms of credit, a better talent pool and the spreading of risks.

The micro-entrepreneurs form rotating credit and savings associations (ROSCAs) to access
finance. The women prefer to rely on each other through ROSCAs, because it is flexible whereas
MFIs are inflexible and too strict. MFIs can adapt an integrated or a minimalist approach. The
minimalist approach assumes that the only problem experienced by micro-entrepreneurs is credit.
Once the micro-entrepreneurs are given credit they can expand their micro-enterprises. This
credit is provided through group-lending schemes and the women make regular repayments. The
problem with this approach is that the micro-entrepreneurs experience gender inequality and lack
of education which limits the expansion of the micro-enterprises and affects regular repayments
required by the MFIs.

The micro-entrepreneurs solve the problem of regular repayments by relying on social capital
and multiple-loan taking. These solutions defeat the purpose of empowerment of the micro-
entrepreneurs. This is because the micro-entrepreneurs create a web of debt that pushes them
further into poverty. The problem of multiple-loan taking to repay the loans is the solution for
micro-entrepreneurs that participate in MFIs that are minimalist and the group formed by the
micro-entrepreneurs are large.

27
The MFIs in Angola are minimalist and they supply micro-credit to micro-entrepreneurs in
group-lending schemes and individual loans. In Angola there are an estimated 530 000 small and
micro-entrepreneurs that demand credit. However, the MFIs do not supply credit to the entire
market. The micro-entrepreneurs rather rely on informal sources of credit such as ROSCAs and
kilapis to satisfy the demand for credit. The micro-entrepreneurs in Huambo that participate in
MFIs participate in ROSCAs to ensure that they do not default from the repayments in the case
of unpleasant eventualities. This does not benefit the micro-entrepreneurs, because they finance
debt with loans which contributes to poverty.

During the civil conflict in Angola, income earned from self-employment activities in the
informal sector was higher than salaries in the formal sector. The main reason for high returns in
the informal sector was hyper-inflation that eroded the purchasing power of formal sector
salaries. The fact that there were disparities in earning made it easy to find employees from the
formal sector also involved in the informal sector. The end of the conflict in Angola and macro-
economic stability caused the earnings in self-employment activities to reduce. After the civil
conflict micro-entrepreneurs in Luanda were faced with a decrease in inflation and competition
from the rural areas’ migrants.

In Angola internal migrations to Luanda has combined push and pull factors, which has resulted
in the rapid expansion of the informal sector and growth in the slum areas. During the civil
conflict people migrated to the coastal areas where it was safe and a significant number of
internally displaced persons (IDPs) migrated to Luanda. IDPs adopted their strategies for
survival to provide for housing and employment. IDPs engaged in self-employment activities in
the informal sector and began squatting on unoccupied land, which later grew into slums that are
overcrowded and lack basic services.

In Angola gender inequality is present in the level of education. That is, the women have lower
levels of education and lower levels of literacy than men. Gender inequality also reflects the fact
that women are not equipped with men dominated skills, such as carpentry and electrician
training. The women are equipped with skills which parallel the survival activities in rural areas.
This limits women to less lucrative activities and to lower income.

28
Bureaucracy in the registration process is another factor that micro-entrepreneurs have to face.
The bureaucracy involves complex procedures to register the micro-enterprise and high costs,
which deter micro-entrepreneurs from registration. The micro-entrepreneurs who are not
registered have lower productivity, because they are continuously harassed by the local
authorities. The street traders are most vulnerable because they do not have a fixed location to do
business and they cannot register their businesses.

The discussion in this section has failed to pinpoint other relevant issues that prevent the
wellbeing of micro-entrepreneurs in Luanda. The literature is silent on issues such as health
standards of women micro-entrepreneurs in Luanda. Poor health of micro-entrepreneurs is linked
to occupational risks, environmental hazards, poor infrastructure in the market and the micro-
entrepreneurs unhygienic practices. Literature failed to present a link between the health and
productivity of micro-entrepreneurs.

Micro-entrepreneurs in Luanda experience gender inequality in a subtle manner. However,

research has failed to reveal whether gender inequality limits women to less lucrative activities in
the informal sector. Research and literature about poverty of micro-entrepreneurs in Luanda also
fails to quantify the income earned by micro-entrepreneurs in Luanda and their expenditure
patterns.

Access to IT such as mobile phones and the internet can contribute to the empowerment of
micro-entrepreneurs in developing countries. Research has failed to explain whether accessibility
to IT for micro-entrepreneurs in Luanda is affected by the education levels and gender
inequality.

29
 CHAPTER 3

RESEARCH METHODOLOGY

3.1 Introduction

This section attempts to address the methods used to answer the research questions and the
research problem. The discussion in Chapter 2 revealed gaps that need to be filled by a primary
research. The literature review did not link poor health and productivity of the micro-
entrepreneurs in Luanda, address whether gender inequality limits them to informal sector
activities and to the access of information technology (IT). The literature review did not quantify
the income earned and expenditures of women micro-entrepreneurs in Luanda in order to explain
their poverty. To address this knowledge gap a survey was conducted of women micro-
entrepreneurs in Luanda. This method is used because it provides unbiased representation of
women micro-entrepreneurs and the same information can be collected from the micro-
entrepreneurs and used to complement existing data from secondary sources (Owens, 2002: 2).
This chapter discusses the research methodology and design that was used to fill these gaps. The
chapter also elaborates on the sampling method, research instruments and how the collected data
was analysed. The data collected includes the characteristics of micro-entrepreneurs and micro-
enterprises in the urban areas of Luanda and the financial practices of micro-entrepreneurs.

3.2 Research design

The survey uses a combination of quantitative and qualitative approach. The qualitative approach
makes it possible to describe the micro-entrepreneurs and their micro-enterprises in terms of
place of trade, type of subsistence activities, years of experience, their level of education, marital
status and the housing arrangements. It further makes it possible to identify constraints such as
occupational injuries and risks, the reasons that pushed them into informal sector activities and
whether they take advantage of an enterprise cluster.

The quantitative approach explored the financial profile of women micro-entrepreneurs in

Luanda. This included weekly income from business, rotating savings and credit associations
(ROSCAs), transfers, pensions and rent as well as expenditure on household and business-related

30
expenditures. The expenditures include food, water, electricity, school fees, airtime, restocking
for the enterprise and ROSCAs contributions.

3.3 Sampling method and sampling group

Non-probability random sampling was used in this study. This sampling method is used because
micro-entrepreneurs in Luanda are a large group of women and it makes it possible to choose the
respondents without having to be restrictive. In the non-probability random sampling the sample
size is decided by the researcher (Taylor-Powell, 1998a: 6). The sample size can also be
established from similar research sample sizes. Baptista, Ramalho and da Silva (2006: 229) used
a sample size of 120 to survey micro-entrepreneurs in the Cape-Verde markets. This study used a
sample of 130 as recommended by Taylor-Powell (1998a: 10). According to Taylor-Powell
(1998a: 10) a population size of 100 000 should be surveyed by a sample size of between 100
and 398. In Luanda the population size of women micro-entrepreneurs was estimated at 441 000
(DWA, 2009: 20). However, due to previous research a smaller sample of 130 was chosen.

Respondents were randomly selected from the market and the street traders in Luanda. A total of
8 markets were visited. These markets are São Paulo, Congolenses, Katinton, Golfe, Trapalhões,
Asa Branca, Praça da Independente and Mabunda. The respondents were selected on condition
that they were the owners of the informal enterprises, they were the sole employees of the
business owned by women and their activities reflect the definition of the informal sector
highlighted in Section 1.6.3. These conditions ensured a fair representation of women urban
micro-entrepreneurs in Luanda. Micro-enterprises owned by women who are the only employees
of the businesses and who engage in activities that are easy to access are the majority of micro-
enterprises in Angola (De Vletter, 2002: 20).

During the sampling process sample bias was expected to affect the sample design. This bias
occurs when respondents do not answer all the questions in the questionnaire and the researcher
is left with incomplete questionnaires. To reduce this bias, careful editing of the questionnaires
were done to compare the characteristics of respondents that completed the questionnaires with
those of respondents that did not complete the questionnaires. This was done to detect any
suspected differences (Westat, Frierson, Hood and Hughes, 2002: 26). All the questionnaires
completed were usable, but questions in the questionnaire that were not completed were rendered

31
unusable. For example 2 respondents did not answer their age, 21 their average income and 12
the average expenditure on bread and 62 on electricity.

3.4 Research instrument: Questionnaire

The questionnaire sought to capture the perceptions, behaviour and attributes of micro-
entrepreneurs in Luanda as well as the characteristics of the women-owned micro-enterprises.

3.4.1 Construction of the questionnaire

The questionnaire used had a combination of open and close-ended questions. The open-ended
questions allowed the micro-entrepreneurs to provide their own answers and describe the
financial environment. They provide information on income earned and spent on a daily or
weekly basis and the expenditure patterns of the household’s basic needs and business-related
expenditures (See Annexure 1 for the questionnaire).

Close-ended questions were exhaustive and mutually exclusive in order to identify the
characteristics of micro-entrepreneurs and micro-enterprises in Luanda. The characteristics range
from demographic characteristics such as age, to gender inequality, cut or sprains sustained
while operating the micro-enterprise and places where they buy merchandise for the micro-
enterprise.

The questionnaire was subdivided into 5 sections, marked A-E. In Section A the aim was to
identify attributes of micro-entrepreneurs in Luanda which included the location of the micro-
enterprises and the type of activity. Other characteristics considered were years of experience,
age, civil status, number of children, literacy levels, level of education and number of
dependants.

Section B aimed to identify occupational health issues, such as injuries incurred at the place of
business and accessibility to medical care concerning women micro-entrepreneurs. The
respondents were also asked if they had consulted a health centre after injuries and whether their
experiences at the health centre was positive or negative.

Section C analysed other factors that motivated self-employment activities, aside from low levels
of education and migration. On the first part of Section C the traders were surveyed on the

32
motive for engaging in the self-employment activities. In the second part of Section C the traders
were asked to select the motive(s) for not engaging in the self-employment activities that are
dominated by men. These activities include taxi drivers, construction, tailors, carpentry and other
activities such as hairdressing and retail agents.

Section D explored the networking activities of micro-entrepreneurs in Luanda. Networking is

explored through facets of micro-entrepreneurial activities in Luanda. The respondents were
surveyed on the formal or informal nature of financing and the presence of cooperatives in the
informal sector. They were also asked what form of cooperatives they mostly used. Micro-
entrepreneurs were also questioned on the benefits of being in a cooperative, be it financial or
otherwise.

Networking also inquired about the restocking activities of micro-entrepreneurs. The respondents
were surveyed on how they buy stock, why they buy the stock in this manner and which form of
transportation is used to attain the stock. The aim was to establish whether the respondents
cooperate in certain aspects of running their businesses or whether they operate the micro-
enterprise in complete isolation.

Section E, analysed the financial environment in the informal sector in Luanda. It examined the
income of the micro-entrepreneurs and their expenditure pattern. The income that micro-
entrepreneurs earn is examined from income earned on different self-employment activities. The
aim was to investigate whether micro-entrepreneurs supplement their income from different self-
employment activities. It also explores whether the octopus organisation form is present in the
micro-entrepreneurial activities (See Annexure 1 for the questionnaire). The expenditure patterns
was categorised into household expenditures and business-related expenditures. The household
expenditure included food, water, electricity, school fees and money allocated to purchasing
airtime for mobile-phones. Business-related expenditures included restocking, bank loan and
micro-credit repayments, deposit in a savings account and ROSCAs.

3.5 Analysis of the data

The data was analysed using graphs, tables and descriptive statistics that depict the
characteristics of micro-entrepreneurs and micro-enterprises and the operational constraints of
the respondents. Moreover, it explained whether the respondents supplement household

33
expenditure with the extra finance from ROSCAs or invest in the micro-enterprise by purchasing
stock. The income earned from self-employment activities underlines the earnings on a daily or
weekly basis from a single informal sector activity or different unrelated informal sector
activities. In the quantitative data analysis there is the possibility that responses are unlikely or
out of line. In such cases it may be necessary to eliminate the item or items from the data to be
analysed (Westat et al. 2002: 34).

The income and expenditure amounts of the micro-entrepreneurs are in monthly aggregates. This
is done by multiplying the daily income and expenditures amounts by 22 and the weekly income
and expenditures amounts by 4.3 in cases where daily or weekly income and expenditure was
reported.

The amounts on income, expenditures and finance from rotating savings and credit associations
(ROSCAs) are also converted from US dollars and the Angolan currency called the Kwanza into
the South African Rand. The currency conversions are necessary as the primary data was in US
dollars and Angolan Kwanza, the main currencies used in Angola. The exchange rate for
Rand/Angolan Kwanza at that time was Kz 10.36 and was obtained from Angolan National Bank
(BNA 2009). The US dollar/Rand was estimated at R7.82 and was sourced from the South
African Reserve Bank (SARB 2009).

3.6 Questionnaire limitations

In Section E of the questionnaire the micro-entrepreneurs had to provide their average income
from different sources. Many of the respondents obtain income from only one source, mainly the
micro-enterprise and do not record the income earned from the micro-enterprise. The
respondents could only provide an estimate of the lowest and highest daily income. As such, all
the data was collected and carefully arranged in order to calculate the average income earned by
the micro-entrepreneurs in their category activity.

Some questions were ambiguous which led respondents to understand and respond to some
questions differently. For example, when the respondents were asked to provide information on
the expenditure of basic needs such as food and clothing, it was not specified the type of food
and clothes they purchase. Also, it was not specified whether the respondents accessed electricity
from the municipal provider Company of Electricity in Luanda (EDEL) or private generators as

34
expenditure on both would differ. Similarly, it was not specified as to whether the respondents
accessed water from private individuals, government-provided standpipes (chafariz) or from the
local municipality Water Company of Luanda (EPAL) that distributes running water (DWA,
2007: 4-5). In the case of expenditure on school fees, the level of education and whether school
fees were for the micro-entrepreneur or her children was not stipulated.

In order to reduce the limitation of ambiguity, some of the questions can be restructured and
others eliminated after the pilot study (Taylor-Powell, 1998b: 2). For the average household
expenditure on food the respondents were asked to provide information on daily expenditure of
bread, to have a standard measure for food. This is mainly because bread is the cheapest and
most affordable staple food in Angola. To have a measure for electricity expenditure, those that
depended on generators as a source of electricity were asked to provide information on their
daily expenditure on fuel for the generator. In the case of expenditure on school fees the
respondents were asked to provide information regarding the average school fees for children in
primary and secondary school. In the case of expenditure on clothing, furniture and equipment
for the micro-enterprises, no data was collected for these categories. This was because these are
irrelevant items that do not provide information on the expenditure of the micro-entrepreneurs.

3.7 Summary of the main findings and conclusions

The research adopted a mixed approach of qualitative and quantitative studies in order to
determine the constraints that micro-entrepreneurs in Luanda experience in the day-to-day
trading. The mixed approach was used because the results from the qualitative and quantitative
studies reinforce each other and make it possible to include both open-ended and close-ended
questions in a questionnaire. The data that is collected make it possible to provide the
distributional characteristics of the micro-entrepreneurs and their micro-enterprises and to
describe their constraints.

A total of 130 women micro-entrepreneurs and their micro-enterprises were surveyed through a
self-administered questionnaire in Luanda. The survey provides information of the type of
activities that they engage in, how long have they been in the activities, level of education, age,
number of dependants, marital status and informal housing in the slums. Moreover, the survey
provides data on the injuries that micro-entrepreneurs sustained while operating the micro-

35
enterprises, risks suffered, the ability of micro-entrepreneurs to cooperate with each other and
reasons that pushed them into informal sector activities. It also provides data on their financial
activities and allows income and expenditures to be calculated.

36
 CHAPTER 4

CONSTRAINTS EXPERIENCED BY WOMEN MICRO-ENTREPRENEURS

BASED ON THE DATA CAPTURED IN LUANDA

4.1 Introduction

The aim of this chapter is to analyse the data of respondents on their micro-enterprises and the
financial environment. This is done to determine the constraints that they experience in their
operations and trading. The chapter is divided into four parts. Firstly, it describes the
characteristics of the respondents and their micro-enterprises. This includes the location of the
businesses and the structure of the markets, types of self-employment activities as well as the
years of experience, age profile, marital status, literacy levels and housing arrangements of the
respondents. Secondly, it analyses some of the constraints facing women-owned micro-
enterprises. Thirdly, this chapter focuses on the sources of finance of the micro-entrepreneurs.
Finally, this chapter analyses the shortcomings and constraints of microfinance institutions
(MFIs) in Luanda. Although this chapter analyses the data of the questionnaire it is supported by
previous data to make the point or to support it.

4.2 Characteristics of the respondents and their micro-enterprises

4.2.1 Location of one-woman business trade and the structure of markets in Luanda

The research established that most of the informal trading in Luanda takes place mainly in the
streets and in the markets. There are 15 large markets in Luanda, 8 of which were surveyed.
These markets were Mabunda, Trapalhões, Katinton, Golfe, Asa Branca, Congolenses, São
Paulo and Praça da Independente. The data was collected from 130 respondents. Of the 130
respondents, 95 or 73 percent were located in the markets (Survey data 2009). The informal
sector traders source and sell their merchandise from the same markets.

4.2.1.1 The lay-out of the fish markets

Mabunda is an informal fish market that is located adjacent to the coastline where the fishermen
dock their boats in the harbour of Samba. This market houses an estimated 200 traders that sell
fish and other products (Manuel, 2009a: 2). The fishmongers are placed on the South of the
coastline and the rest of the traders are stationed to the North along the coastline. The
37
fishmongers display the fish they are selling on the sand and the rest of the traders use makeshift
tents and improvised wooden stands.

The fishmongers sell a variety of fresh fish in this market. Some include dried and salted cod,
croakers, groupers, moonfish, prawns, horse mackerel, scabbard fish and sole, sardine and small
octopus. The prices for fish in this informal market are quite affordable and reasonable which
attracts many buyers to the market (Manuel, 2009a: 1). During the weekend the market is
buzzing with activity as the locals descend on the market. Traders shout out different prices and
quantities to try to attract buyers. The problem with this market is that the activities of the traders
and the people that buy fish in this location pollute the area. Manuel (2009a: 2) states that more
than five thousand people use this market on a daily basis. The people that visit the fish market
include fishmongers and people that buy the fish. They all produce garbage that pollutes the
coastline. In the fish market there are boys who gut fish and throw the fish guts into the ocean.
This contributes to the already polluted waters of the coastline. Their activities also contribute to
the rubbish in the market and the strong stench from fish dumps. There are other traders in the
market that engage in activities such as selling different products. These include vegetables,
meat, coal and petroleum, second-hand clothes and shoes (Manuel, 2009a: 2).

Another fish market visited was Trapalhões. This market is located in a designated trading area
and not adjacent to the coastline. This market has an estimated 100 traders engaging in different
activities, such as fishmongers, restaurant owners, greengrocers and sellers of groceries such as
beans, rice, sugar, and cooking oil (ANGOP, 2004: 1; Lopes, 2006b: 7).

At the front of the market there are fishmongers selling fresh fish of different sizes and shapes.
There are also greengrocers, sellers of groceries and sellers of alcoholic and non-alcoholic
beverages inside the market. This market has restaurants that are housed in makeshift tents made
out of dried grass. These restaurants are called barracas in Luanda. There are about 25 such
restaurants in the market that sell meals (ANGOP, 2004: 1).

The problem with the Trapalhões market is that it is in a poor state. This market was established
in the 1980’s, has no roofing and there are not many stands for the traders to display and sell
their goods (ANGOP, 2004: 1). The greengrocers display their food on the floor or make use of

38
dilapidated stands. As such, this market has been earmarked for closure to allow further
reconstruction to increase its capacity and improve the infrastructure.

4.2.1.2 The structures of the open-field markets

Katinton is an open-field market with a capacity for 4871 traders (Lopes, 2007: 41). The traders
are divided according to the products that they sell. The traders sell fruit and vegetables, meat,
groceries, alcoholic and non-alcoholic beverages, clothes and shoes, electrical appliances such as
televisions, radios, computers, grocery bags, hair products and accessories. The market also has
restaurants or barracas, which serve daily meals (DWA, 2009: 26-29). The truck drivers unload
fresh vegetable produce from the interior and the Southern provinces of Angola in this market,
where it is purchased by the traders in sack loads to sell in other markets (DWA, 2009: 3).

In the section for the sellers of groceries, the traders make use of individual stands. The traders
display different groceries for sale such as mayonnaise, margarine, pasta, milk powder,
condensed milk, tomato paste, olives, beans, sugar, cooking oil and chorizo which is a spicy pork
sausage (DWA, 2009: 27). In the section for the greengrocers the traders display their stock on
the floor or on old wooden stands. The vegetables such as lettuce are displayed on the vegetable
sacks in an upright position on the floor. In the case of potatoes the women lay the vegetable
sack on the floor and spread out the potatoes. The tomatoes and the garlic are displayed in
medium-sized plastic buckets on the floor. Traders can sell one type of vegetable such as lettuce
or they can sell different kinds of vegetables such as tomatoes, potatoes and garlic (DWA, 2009:
26-29). The prices, especially of vegetable produce, in the Katinton market are reasonable or
affordable. This is mainly because the trucks unload at this market and the prices charged are
wholesale prices (DWA, 2009: 3). The affordable prices in the market attract thousands of
people on a daily basis, which creates a busy atmosphere in the market.

The market has a section for traders that sell footwear such as shoes and slippers and second-
hand clothes. These clothes include jeans, t-shirts, dresses, skirts, shorts, blouses, socks, trousers
and children’s clothing (Gaspar, 2009). The second-hand clothes sold by the traders are imported
from countries such as the United States of America, Canada and Belgium (Dias, 2008: 1). Some
of the traders buy the second-hand clothes from warehouses in Luanda. The traders are located in

39
makeshift tents made out of dried grass and the traders display the different clothes on hangers
suspended on the sides.

The selling of electronic equipment in the market is dominated by men. They sell radios,
computer equipment, televisions, batteries and wrist watches in the stands (Lopes, 2007: 43; De
Vletter, 2002: 37).

The other open-field market visited was Golfe with a capacity of 2240 traders (Lopes, 2007: 42).
The prices in the market for the different products are reasonable and affordable and the market
is busy. At the front of the market are traders in makeshift tents selling different items, such as
different sizes and colours of washbasins and buckets, crockery, cutlery and beverages (DWA,
2009: 25). Mainly male traders sell radios, televisions, computers and spare parts for electrical
appliances. Also at the front of the market, but to the right-hand side there are mechanics that sell
spare parts and repair cars (Lopes, 2006b: 7). Inside the market the traders are divided according
to the goods they sell. In one section there are greengrocers that use makeshift tents and beach
umbrellas as protection against the sun. In another section there are traders selling groceries and
in other sections traders who sell red meat and poultry.

The traders of meat and poultry display their produce on top of old wooden stands. The women
have black plastic car covers as roofing to provide shade and protect themselves and the meat
from the scorching sun (DWA, 2009: 31; Mann, 2008: 3). Nonetheless, the red meat is exposed
to other elements such as dust and flies. The traders use cleavers and small machetes to cut the
meat into the quantity that is demanded by the consumer (Gaspar, 2009).

Praça da Independente is another open-field market visited. This market has an old infrastructure
and no roofing. The traders are organised according to their activities. The most prominent
activities in this market are restaurants, greengrocers and meat sellers. The restaurants in the
market are not like those found in the markets of Golfe and Trapalhões. These are made of brick
and lined up one next to the other (Gaspar, 2009).

Many markets in Luanda are open-air with poor infrastructure. The Provincial Government of
Luanda initiated the Programme for Public Investments in 2006/2007 to upgrade the markets and
improve on the infrastructure (ANGOP, 2007a: 1). Newly renovated markets that were visited
include São Paulo, Congolenses and Asa Branca.

40
4.2.1.3 The structures of the newly renovated markets

The São Paulo market reopened in February 2008. The market has been renovated with 180
small stores and 846 stands. There are separate toilets for men and women and a refrigerating
chamber to preserve meat and vegetable produce. The market is also fitted with a 50 000 litres
water tank and parking space (ANGOP, 2008: 1). The capacity of vendors in the market has
increased from 750 to 1010 traders. An upper level has also been added at the market. These
renovations benefit the traders, because they are located in a secure and safe area that is hygienic.
The market has roofing to protect the traders and the traders are divided according to the produce
that they sell (ANGOP, 2008: 1).

The lower level of the market has two rows of stands and each row has 25 long stands. At the
front of the market the traders sell ornaments such as earrings, bracelets and necklaces.
Fishmongers are located to the left of the front stand. Then there are the greengrocers that
occupy 4 stands in each row. The rest of the stands are occupied by traders selling traditional
medicine, catholic rosaries, crockery, washbasins and buckets of different shapes and colours
(ANGOP, 2008: 1; Gaspar, 2009).

The sellers of imported articles of clothing such as evening dresses, wedding dresses, formal
wear, day to day clothes and shoes are situated in the lower level of the market at the back. These
traders buy the clothes and footwear from countries such as South Africa, Namibia, Dubai,
Brazil and the United States of America (DWA, 2009: 48; Rodrigues, 2010: 2). The traders are
also located on the West wing of the market in the stands. On the East wing of the market are
men selling electrical equipment and CDs. The traders on both the far sides of the market make
use of plastic covers for roofing or protection.

The traders on the upper level of the market sell clothes, shoes and relevant accessories. There
are 5 small stores on the upper level of the market allocated to sellers of imported clothes and
shoes (ANGOP, 2007b: 1; Gaspar, 2009). They display their clothes on garment racks and the
shoes are neatly lined on the floor. In the stores the traders sell shoes and children’s toys.

The other newly renovated market visited is Congolenses that is fitted with 1010 stands, 73 small
stores and 28 medium size stores. This market was reopened in February 2008. It has 5 stores
allocated for the sale of flowers and relevant accessories. The market has 5 toilets, storage space,

41
a refrigerator chamber and parking space (ANGOP, 2008: 1). It has the capacity for 1625 traders
and has roofing to protect the traders (ANGOP, 2007b: 1).

In the stands there are 725 traders organised according to the products that they sell. The stands
are occupied by greengrocers, fishmongers and traders that sell groceries (Manuel, 2009b: 1).
There are 5 medium size stores that have been occupied by traders who serve daily meals and
sell beverages (Domingos, 2010: 1). However, not all the stores and the stands in the market are
occupied (Manuel, 2009b: 1). This is because the traders still prefer to trade outside the market.
The traders outside the market state that it is easier to sell outside the market instead of inside the
market. This is mainly because customers prefer the convenience of buying outside the market
instead of having to go inside the market (Domingos, 2010: 1). The traders inside the market
state that the traders outside are taking their clientele and lowering their income (Manuel, 2009b:
1).

The other newly renovated market visited is Asa Branca which has been renovated to increase
and improve the stands and the number of shops. The market has a roof, 88 shops and 1312
stands with a capacity for 1400 traders (ANGOP, 2007b: 1). These traders are located in the area
of the market that has a roof and stands.

However, there are 3800 registered traders in the market (Lopes, 2007: 42). The extra traders are
located in the shops and at the back of the market which is an open-field where they have erected
makeshift tents to protect themselves from the scorching sun. In the open-field sections of the
market there are traders using stands and trade on the floor. The traders in the stands, the
majority of whom are men, sell CDs, electronic equipment such as radios, computer equipment
and household appliances (Domingos, 2010: 1). The women traders sell children’s toys and
school material. The rest of the traders that are not in the stands engage in the sale of second-
hand clothes. The traders display their clothes in different ways. Some traders lay the clothes
neatly on the ground on top of bed sheets. Some make use of garment racks and hangers to
display their clothes. Moreover, some traders pile their clothes, often creating a mini mountain of
clothes on the floor (Sapo, 2011: 1-2). The people who want to buy pick and choose the clothes
from the heaps and it is not well-displayed. Not all the traders surveyed are located within the
structure of the market, as there are traders outside the walls of the market in the street.

42
4.2.1.4 Street traders

In this research the street traders surveyed were located outside the markets of São Paulo,
Congolenses and Praça da Madeira. In the research, 35 of the 130 or 26.9 percent of the
respondents surveyed are street traders (Survey data 2009). There is no clear estimate of how
many street traders are located in Luanda and how many outside these markets. However, the
space inside the markets is insufficient to house all of the street traders (DWA, 2009: 34).

4.2.2 Types of self-employment activities

Figure 4.1 shows the different types of self-employment activities and the percentage of
respondents that participate in the activities. It shows that 26.9 percent of the respondents are
street traders. The street traders sell different products such as fruit and vegetables, second-hand
clothing, school materials, toiletries, groceries and cooked food such as meat kebabs and
sandwiches. They also sell household items such as pots, plastic containers, buckets, basins,
crockery, cutlery and bed linen.

Figure 4.1: The self-employment activity of the respondents

30 26.9%
25
20%
Percentage

20
14.6%
15 13.1%

10 7.7% 8.5%
5.4%
5 3.8%

Type of activity

Source: Survey data 2009

43
Of the total street traders’ surveyed, 4 sell building materials, 5 sell coal and petroleum products,
3 sell second-hand clothes, 2 sell grilled or prepared food, one sells cookies and biscuits and one
sells cooking gas cylinders. The rest of the street traders sell household items, second-hand
clothes, school materials, toiletries and groceries. The street traders are flexible and they sell
according to seasonal demand. During the Easter holidays the street traders sell fresh and dried
fish and Easter chocolates. During winter they sell jackets, socks, long sleeved t-shirts, blankets
and boots. In the dry seasons of June to September they sell vegetables and fruit brought from
the south and central provinces of Angola (Josè, 2010: 5). The problem with adjusting to
seasonal demands arises when respondents do not understand the new market fluctuations or
how to obtain stock. The lack of experience also contributes to reduced income from the new
venture (Johnson, 2005: 234).

Figure 4.1 also shows that 20 percent of the respondents are greengrocers. The research surveyed
26 greengrocers that are mainly located inside the markets, such as Katinton, São Paulo and
Congolenses. Figure 4.1 also shows that 8.5 percent of respondents sell groceries, 7.7 percent
sell fish and 3.8 percent sell meat, 5.4 percent are restaurant owners and 14.6 percent of the
respondents sell clothes and footwear.

The 10 respondents who sell second-hand clothes are located in the markets of Katinton and Asa
Branca. There are 7 traders who sell imported articles in São Paulo and 2 who sell footwear.
One trader sells shoes and one sells beach slippers in Congolenses.

Figure 4.1 also shows that 13.1 percent of the respondents employed are in other activities. Their
activities include foreign exchange dealings as well as selling of cigarettes, traditional medicine,
plastic bags, car covers, crockery and pots. Other products sold are beverages, sweets, hair
products, accessories and grilled meat.

4.2.3 Years of experience of respondents

Question 1.3 inquired about how many years the respondents had been in business. The data
collected shows that 36.2 percent of the respondents have been in the informal sector for more
than 11 years. They engage in commercial activities such as selling of groceries, meat, fish,
catering, greengroceries, second-hand clothes and imported articles.

44
Figure 4.2: The period respondents have been self-employed

40 36.2%
35
30
24.6%
Percentage

25
20
15 12.3%
10%
10 6.9% 6.9%
5 3.1%
0
less than a 1-2 years 3-4 years 5-6 years 7-8 years 9-10 years 11 years
year and longer
Number of years

Source: Survey data 2009

The number of years that respondents have been in the informal sector is a reflection of their
years of experience and success in their business. The years of experience together with
education, plays a role in the growth of the micro-enterprises (Mead, 1999: 66). The years of
experience are often not related to their level of education, because respondents have not
managed to shift from survivalist self-employment activities to profit making micro-enterprises
that create employment.

Table 4.1 shows that 47 or 36.2 percent of the micro-enterprises have been operating for more
than 11 years. It also shows that 32 or 24.6 percent of the respondents manage to operate the
micro-enterprise for 3-4 years. This is the average longevity of micro-enterprises in Luanda
(DWA, 2009: 10). There are 9 respondents who have operated the micro-enterprise for 1-2 years,
16 for 5-6 years, 9 for 7-8 years and 13 for 9-10 years.

45
 Table 4.1: The period that the micro-enterprise has
been in existence
Number of years Number Percentage
Less than a year 4 3.1
1-2 years 9 6.9
3-4 years 32 24.6
5-6 years 16 12.3
7-8 years 9 6.9
9-10 years 13 10.0
11 years and longer 47 36.2
Total 130 100
Source: Survey data 2009

4.2.4 Age profile of the respondents

Question 1.4 investigates the age of the respondents and 128 respondents answered this question.
Two of the respondents did not answer the question, because they were unwilling to disclose
their age or see this data as sensitive. Figure 4.3 shows the age distribution of the respondents. It
shows that both old and young respondents are represented in the informal sector as the age of
the respondents ranges from 17 to 64 years.

Figure 4.3: Age distribution of the respondents

Source: Survey data 2009

46
Table 4.2 shows the age categories of the respondents, with the number of respondents in the age
category and the percentages.

Table 4.2: The distribution of respondents by

age group
Age group Number Percentage
17-19 4 3.1
20-29 31 23.8
30-39 39 30.0
40-49 41 31.5
50-57 11 8.5
60 1 0.8
64 1 0.8
Missing 2 1.5
Total 130 100
Source: Survey data 2009

The average age of the respondents is 36 years and the most common age group of the
respondents is the category 40 to 49. This is because 41 or 32 percent of the respondents are aged
40 to 49. Figure 4.4 compares the age of respondents to the number of children that they have.
The scatter diagram depicted in Figure 4.4 shows that there is a positive relationship between the
age of the respondents and the number of children that they have. Although, Figure 4.4 depicts
one respondent aged 42 with 10 children, generally the older a respondent is the more children
she has. Survey data shows that one respondent aged 64 has 9 children and a respondent aged 27
has two children. This relationship is reflected in the Pearson product movement correlation
coefficient, which depicts the relationship between two interval-level variables (Fielding and
Gilbert, 2000: 167). A coefficient of +1 indicates a perfect positive correlation, between two
variables. This means that an increase in one variable leads to the proportionate increase in the
other variable. The Pearson product movement correlation coefficient is +1 for the relationship
between the age of the respondents and the number of children they have.

47
Figure 4.4: The relationship between age of respondents and the number of children

10
9
Number of children

8
7
6
5
4
3
2
1
0
17 21 25 29 33 37 41 45 49 53 57 61

Age

Source: Survey data 2009

4.2.5 Marital status of the respondents

There are 81 or 62.3 percent of the respondents that cohabitate, which means that they live
together with male partners without being officially married. Another 42 or 32.3 percent of the
respondents indicate that they were married, while 6 or 4.6 percent are widowed and one or 0.8
percent of the total is divorced.

4.2.6 Literacy profile of the respondents

Questions 1.7 and 1.8 ask the respondents about their literacy level and the highest level of
education completed. Table 4.3 shows the literacy rate of the respondents and Table 4.4 shows
the level of education of the respondents.

Table 4.3: The literacy rate of the respondents

Questions and answers N % N % Total
1.7 Can you read and Yes No
write?
Number and % 91 70 39 30 130
Source: Survey data 2009

48
Table 4.3 shows that 91 or 70 percent of the 130 respondents can read and write while 39 or 30
percent of the respondents cannot read and write.

Table 4.4: The level of education of the respondents

Questions and answers N % N % N % N % Total
1.8 What is the highest level None Primary Secondary Tertiary
of education attained?
Number and % 22 16.9 77 59.2 30 23.1 1 0.8 130
Source: Survey data 2009

The education system in Angola is structured into basic education level, pre-university level and
tertiary level. The basic education is further divided into 3 levels, level 1 from Grade 1 to 6, level
2 from Grade 7 to 8 and level 3 from Grade 9 to 10. Pre-university is from Grade 11 to 12
(Torres, 2002: 40).

Table 4.4 shows that 77 or 59.2 percent of the respondents completed primary education which is
level 1. There are 30 or 23.1 percent of the respondents who have secondary education. Of these
respondents, 28 completed only level 2 of secondary education and 2 respondents completed
Grade 11 to 12. Only one respondent completed tertiary education. This respondent used to be a
nurse and she now sells imported goods in São Paulo. She stated that she left the nursing
profession in the formal sector, because there is higher income and more opportunities for
growth in the informal sector (Survey data 2009).

Table 4.3 shows that 30 percent of the respondents cannot read and write and Table 4.4 shows
that 16.9 percent of the respondents have no education. This means that a total of 30 percent of
the respondents are illiterate. Section 2.3.5 shows that respondents’ with low education in an
economic downturn struggle to manage their micro-enterprise. This is because a downturn
causes market demand to decrease, which means a decrease in the number of customers and
income (Mead, 1999: 66; Roy, 2004: 30). The income of these respondents also decreases,
because of increased competition in the informal sector due to unemployment and migration.
Moreover, income is reduced because these respondents are risk averse, which means that they
are unwilling to differentiate or are uninformed about market opportunities (Roy, 2004: 21).
They often sell similar goods in the same location and charge similar prices for the goods that
they sell (De Vletter, 2002: 29). The respondents who never went to school do not understand

49
microfinance institutions (MFIs) services such as micro-credit. These respondents are then
uncertain about participating in MFIs and that prevents them from approaching these institutions
for credit.

The low level of education of the respondents limits their ability to be absorbed into the formal
sector. This is because the formal sector demands that individuals should have completed
secondary and tertiary education (Todaro and Smith, 2009: 388). This pushes women with
primary education and those who have not completed secondary and tertiary education into
subsistence activities, where they work for long hours and earn little income. The level of
education completed by the respondents limits the growth of the micro-enterprise. That is
because the micro-entrepreneurs have limited knowledge to identify opportunities in other
markets, cannot bridge into a niche markets and are limited to a local market that is competitive
and saturated (Eversole, 2003: 114).

4.2.7 Housing of the respondents

Question 1.9 inquired about the respondents’ housing. The aim of this question was to determine
the type of accommodation that the respondents use. The data collected estimates that 87 or 66.9
percent of the respondents live on their own property in the slums. The data also shows that 39 or
30 percent of the respondents live in rented housing or pay rent. There are 4 or 3.1 percent of the
respondent who live in Wendy houses located in the yard of a house owned by a family member
or the parents. These traders often do not pay rent for this type of accommodation
(Encyclopaedia Britannica, 2011: 1). As discussed in Section 2.6.5 the conditions in the slums
are poor and inadequate.

4.3 Constraints experienced by the respondents

The constraints experienced by the respondents were surveyed based on occupational risks and
injuries, motive for subsistence activities and networking activities. The respondents were
surveyed on these aspects to determine the constraints they experience in the self-employment
activities. This is needed to determine whether these constraints hinder the growth of the micro-
enterprise or limit them to subsistence activities in the informal sector.

50
4.3.1 Occupational risks and injuries

The aim of this section was to identify the occupational risk and injuries sustained by the
respondents in the operation of the micro-enterprise and the effects on productivity. Of the 130
respondents, 14 reported having suffered occupational injuries such as being hit by a car, cuts,
fractured limbs, a heart attack and a gunshot wound. The occupational risks include theft, poor
market infrastructure and harassment by the local authorities in charge of clearing the area
outside the newly renovated markets from street vendors (DWA, 2009: 13).

The occupational injuries sustained by the respondents lower their productivity because they
were not able to operate the micro-enterprise while being treated for their injuries. Table 4.5
shows the injuries sustained by the respondents. It shows that 7 respondents have sustained cuts
and injuries related to their occupations. This type of injury is common amongst fishmongers,
respondents that cook and a street trader. Three fishmongers, one seller of grilled meat, one
restaurant owner, one meat seller and one street trader reported having suffered such injuries.
The restaurant owner and the street trader reported that they had to attend clinic. The other
respondents did not report their injuries and stated that the injuries were not serious.

Table 4.5: Occupational injuries sustained by the respondents

Questions and answers N % N % N % N % Total
2.2 What type of injuries Cuts Fracture, Road-related Other injuries
have you sustained sprains accidents
Number and % 7 50.0 2 14.3 3 21.4 2 14.3 14
Source: Survey data 2009

Table 4.5 also shows that two respondents sustained fracture limbs. These respondents are a
foreign exchange dealer and a street trader. The street trader sustained a fractured leg while
trying to escape from the local authorities and the forex dealer sustained a fractured arm while
trying to escape from being robbed. Both of the traders went to health facilities, hospitals or
clinics. Moreover, three respondents were involved in road-related accidents. These were all
street traders who were hit by a car while doing business. Table 4.5 shows that two respondents
sustained other injuries. One respondent sustained a gunshot wound and the other respondent
suffered a heart attack. The research estimates that 116 respondents did not report injuries related
to their occupation. These respondents are mainly located in the newly renovated markets

51
(Survey data 2009). Although only 10.8 percent sustained injuries the occupational risk is still
high.

The occupational risks experienced by the respondents affect their health and lower their
productivity (Forastieri, 1999: 2; Sinha, 2007: 121). The street traders are at risk of being hit by
moving vehicles or are constantly harassed by the local authorities. The forex dealers cannot be
protected from theft. The fishmongers suffer minor cuts when they gut the fish without
protection, risking infection of their cuts (Survey data 2009). The infrastructure is poor in the
older and not yet renovated markets such as Katinton, Praça da Independente, Golfe, Trapahões
and Mabunda. These markets do not have roofing to protect the traders from the sun and the rain,
which means that during the rainy season the traders are at the mercy of the weather (Gaspar,
2009). Many of these markets do not have a proper sewage system, which means that when it
rains, pools of water build up and become fertile grounds for disease vectors such as mosquitoes
that spread malaria. In Section 2.3.4 a similar situation is highlighted by Rogel (2007: 9) for
vendors in the Chisokone market in Zambia.

4.3.2 The reasons that push respondents into subsistence activities

This section discusses 2 questions. Question 3.1 asks the respondents why they have decided to
engage in this particular business, while Question 3.2 asks them why they have not decided to
engage in other male dominated activities. Table 4.6 shows the questions and the answers of the
respondents.

52
 Table 4.6: The factors that motivate subsistence activities and the reasons
respondents are not in men dominated activities
Categories of N % N % N % N % N % Total
questions and
answers
3.1 Why have you Little Ease and A specific Necessity Others
decided to engage capital or not skill is not
in this activity? equipment mentally required
is required challenging
Number and % 1 0.8 8 6.2 24 18.5 74 56.9 23 17.7 130
3.2 Why have you Men's work Difficult Lack of Tradition Lack of
not decided to registration finance skills
engage in another
activity such as
3.2.1 taxi driver 48 36.9 0 6 4.6 0 76 58.5 130
3.2.2 cart carriers 56 43.1 0 5 3.8 0 69 53.1 130
3.2.3 construction 52 40.0 0 5 3.8 0 73 56.2 130
3.2.4 tailor 8 6.2 0 6 4.6 0 116 89.2 130
3.2.5 hairdresser 7 5.4 0 6 4.6 0 117 90.0 130
3.2.6 carpentry 10 7.7 0 7 5.4 0 113 86.9 130
3.2.7 retail agents 10 7.7 0 17 13.1 0 103 79.2 130
Source: Survey data 2009

Table 4.6 shows that the necessity or the urge to survive motivated 74 or 56.9 percent of the
respondents to engage in self-employment activities. This means that many only try to survive
and are not able to make profits or to attain financial independence. Moreover, a specific skill is
not required to engage in informal sector activities, which explains the motive of 24 or 18.5
percent of the respondents. Table 4.6 also shows that 8 or 6.2 percent of the respondents engage
in subsistence activities, because it is not mentally or physically challenging. These respondents
state in the questionnaire that they lack sufficient education to engage in another activity and/or
that the subsistence activities are easy to undertake. Table 4.6 also shows that 23 or 17.7 percent
of the respondents have other motives for engaging in subsistence activities. The other motives
that the respondents provide in the questionnaire include retrenchment, lack of employment, the
only livelihood they know and profitability (Survey data 2009).

Table 4.6 also shows the factors that deter respondents from male dominated activities. It shows
that the respondents considered the physically demanding activities such as cart driving, taxi
driving and construction work to be men’s work. Other respondents stated that they lack the
necessary skills to participate in these activities. In some activities such as carpentry,
hairdressing and tailoring their lack of skills is the main deterrent. In Luanda tailoring is an

53
activity dominated by mainly immigrant men from the neighbouring Democratic Republic of
Congo (DRC). The respondents are not particularly interested in acquiring this skill, because
they perceive tailoring as low wage employment and without a daily inflow of money. A small
number and percentage of the respondents report a lack of finance as the reason why they do not
engage in male dominated activities. Most of the respondents do not perceive tradition and
difficulties to register as a deterrent to engage in male dominated activities.

4.3.3 Sources of stock for trading and modes of transport used by respondents in their
self-employment activities

In this section the aim was to access the networking activities of the respondents. Question 4.5
asked where respondents obtain the merchandise, while Question 4.6 asked why they obtain the
merchandise from the location identified in Question 4.5. Question 4.7 inquires about the mode
of transport used to move their merchandise (Survey data 2009).

4.3.3.1 Sources of stock for trading

Table 4.7 shows that 77 or 59.2 percent of the respondents obtain their stock mainly from large
wholesale markets in Luanda. These markets include Roque Santeiro, Katinton, Rocha, Kwanzas
and Kabala. The respondents that source their merchandise from the wholesale markets are
mainly greengrocers who purchase their stock in large quantities to sell in other markets such as
Asa Branca, Congolenses, São Paulo and Golfe. The respondents state that they buy their stock
from these markets because of the availability and convenience (Survey data 2009).

54
Table 4.7: The sources and locations for purchasing of stock and the transport
used to move the stock
Categories of N % N % N % N % N % N % Total
questions and
answers
4.5 How do you Distributor Wholesale Wholesale Family Self-support Others
source your or suppliers warehouses markets member group
merchandise?
Number and % 14 10.8 32 24.6 77 59.2 0 0 0 0 7 5.5 130
4.6 Why do you Cheaper Near home Close to Obtain on Availability Others
source your the place credit
merchandise from of trade
this place?
Number and % 37 28.5 5 3.8 22 16.9 0 0 55 42.3 11 8.5 130
4.7 What Car hire in Car hire in a Taxis Walk Handcart Others
transport is used isolation group carriers
to move the
merchandise?
Number and % 9 6.9 9 6.9 74 56.9 20 15.4 8 6.2 10 7.7 130
Source: Survey data 2009

Table 4.7 also shows that 32 or 24.6 percent of the respondents buy their stock from wholesale
warehouses, because it is cheaper, available and closer to their business. Another 14 or 10.8
percent of the respondents purchase their stock directly from the suppliers or distributors. These
are mainly fishmongers that purchase their stock from the fishermen’s boat, because of the
freshness, price and availability.

Another 7 respondents source their stock from other sources. These are mainly sellers of
imported articles. They purchase stock from countries such as Brazil, Namibia, Dubai and South
Africa, because it is cheaper and the quality is better than in Angola.

This shows that most micro-entrepreneurs do not have access to transport and purchase the stock
available close to the place of trade. There are 28 traders that walk and/or use hand-cart carriers
to purchase stock close to the place of trade. Of these traders 22 purchase stock close to the place
of trade, the other six traders still have to walk quite a distance to purchase stock for the micro-
enterprise.

55
4.3.3.2 Transportation means for stock replacement

A table 4.7 shows that taxis are the most popular means of transport. An estimated 74 or 56.9
percent use taxis, as this form of transportation is mostly used by street traders and greengrocers.
The research shows that 14 greengrocers and 22 street traders rely on taxis (Survey data 2009).

Table 4.7 also shows that 9 or 6.9 percent of the respondents hire transport such as a truck in a
group. These are mainly greengrocers that have been active for more than 10 years. They
organise themselves in groups to share the cost. It also shows that 9 respondents organise
transport individually. Of these 4 are fishmongers, 3 greengrocers and 2 are street traders
(Survey data 2009).

Moreover, there are 20 or 15.4 percent of the respondents that walk to purchase their stock.
These respondents restock from the same location that they trade in. Another 8 or 6.2 percent of
the respondents use a handcart or porters. This is manual labour peformed by young men who
transport the trading stock such as boxes, sacks of vegetables, beans, rice and flour from one side
of the market to the other side usings handcarts or wheelbarrows (DWA, 2009: 32). The
repondents rely on handcart porters because it is cheap to move the goods and the prices they
charge are negotiable (Lopes, 2006a: 175). However, this form of transport is not useful for long
distance purchases. There are 10 or 7.7 percent of the respondents who rely on other transport
means. This includes 6 traders that sell imported clothes as they have to catch an aeroplane to
acquire their stock. Moreover, 2 restaurant owners each own a car and the suppliers or
distributors of 2 respondents provide the transportation (Survey data 2009).

Most of the respondents do not cooperate with each other in the purchasing of stock. The
respondents prefer to be in charge of the operation of the micro-enterprise when it concerns the
movement and purchase of the stock. Section 2.4.2 shows that lack of cooperation amongst
entrepreneurs stems from the fear of being cheated, ethnic diversity and civil conflict which
destroys the social fabric of a country. It confirms that the lack of cooperation does not benefit
micro-entrepreneurs, because they do not take advantage of joint action, networking and shared
information (Kiggundu, 2002: 246; McCormick, 1999: 132). Moreover, the respodents do not
take advatnage of enterprise clusters that often takes place when enterprises operate in a similar
location (Ramachandran and Ray, 2008: 154). The failure to make use or take advantage of

56
enterprise clusters mainly reduce productivity, because there is no division of labour as the
respondents are responsible for all their activities in the micro-enterprises (Roy, 2004: 29). Table
4.7 shows that none of the respondents buy their stock from family members who own a
distribution store or from members in the self-support group such as ROSCAs, which further
strengthens the argument that micro-entrepreneurs do not cooperate in the operation of the
micro-enterprise.

4.4 The financial profile of the respondents

The aim of this section is to determine the respondents’ source of start-up capital, finance from
ROSCAs, income earned and expenditures incurred on their enterprises and household. This
section in the questionnaire consists of two questions. Question 5.1 requires that the respondents
specify from which sources they have earned income and how much was earned from each
source. Question 5.2 inquires how much the respondents spend each week or day on selected
items for their households and how much on their business (Survey data 2009).

4.4.1 Source of capital or finance

Figure 4.5 show that the respondents obtain start-up capital mainly from informal sources, such
as friends or family members. This form of finance was chosen by 112 respondents or 86.2
percent of the total.

Figure 4.5: The sources of start-up capital for informal women traders in Luanda

100 86.2%
80
Percentage

60
40
20 12.3%
0.8% 0.8%
0
Informal sector Savings Bank Loans Retirement
benefits

Source: Survey data 2009

57
A small percentage of the respondents reported that they have used formal sources of finance,
such as personal savings, bank loans and retirement benefits. An estimated 16 or 12.3 percent use
personal savings or their own money as start-up capital. One woman reported to have used a
bank loan, while another reported to have used her retirement benefits. The fact that the micro-
entrepreneurs do not use formal sources of finance shows that they are not targeted by banks as
highlighted in Section 2.6.1. Banks lend money mainly to big businesses.

4.4.2 Finance from rotating savings and credit associations (ROSCAs)

In post-conflict countries self-supportive groups such as rotating savings and credit associations
(ROSCAs) are the only society groups that managed to survive the conflicts. Hence, people trust
these ROSCAs as a better means of saving and for financing their activities (Hudon and Siebel,
2007: 15). In Angola women in the informal sector form ROSCAs that consist of a president,
vice-president and a treasurer. The president of the group collects the contributions from the
members and allocates the lump sum to a member in the group. The lump sum is allocated to a
member on a weekly, daily or monthly basis, depending on when and how the contributions are
made (Lemos, 2007: 18). The decision on who is allocated the lump sum is made through group
consensus and it is usually the member who needs finance the most (De Sousa, 2009: 18). The
women use funds from ROSCAs to purchase merchandise for their micro-enterprises (De
Vletter, 2002: 33).

The research found that 61 respondents participate in ROSCAs and 69 do not. Most of the
respondents that participate in ROSCAs have been trading for more than 11 years. These
respondents have their own property in the slums or squatter camps and they are aged 25 or
older. They participate in one or more ROSCAs to satisfy their liquidity needs and to save. They
make contributions to the ROSCAs on a daily, weekly or monthly basis depending on the
scheme they choose. ROSCAs vary in size from 5 to 60 members (Survey data 2009).

The respondents inside the newly renovated markets, such as São Paulo, Congolenses and Asa
Branca have a strong presence of ROSCAs. These respondents have organised themselves into
groups to obtain credit. In the old and open-field markets with poor infrastructure there is less
participation in ROSCAs. The respondents that participate in ROSCAs are either trader in the
neighbourhood or from other markets adjacent to the ROSCA (Survey data 2009). Table 4.8

58
shows the contributions by the respondents in their category activity to the ROSCAs, frequency
of the contributions and the average finance received from the ROSCAs on their receipt date.

Table 4.8: The finance earned by the respondents per activity category from ROSCAs in
Rand
Activity Number Frequency of Contributions Finance range Average
categories contributions range from ROSCAs finance
Sellers of 8 Daily and weekly 48.26-289.57 1109.98-5984.86 2974.24
second-hand
clothes and
footwear
Sellers of 2 Monthly 4826.25-13685.00 4826.25-13685.00 9255.63
imported
clothes
Meat sellers 3 Daily 48.26-289.57 965.30-5791.40 2783.09
Street traders 20 Daily and weekly 19.31-337.84 193.10-9652.50 2125.54
Sellers of 5 Daily and weekly 96.53-289.57 2220.19-6032.75 3716.28
groceries
Greengrocers 10 Daily and weekly 48.26-482.63 772.24-17664 5868.79
Fishmongers 4 Weekly 289.58-868.73 2895.80-13030.89 8120.72
Restaurant 1 Weekly 289.58 4922.86 4922.78
owners
Other activities 5 Daily 96.53 1158.36-5791.80 2548.39
Respondents in 3
more than one _ _ _ _
ROSCA group
Total 61 _ _ _ _
Source: Survey data 2009

Table 4.8 shows that these traders make these contributions on a daily, weekly or monthly basis
and earn an average finance that depends on the category or type of activity. These traders use
the finance received from the ROSCAs to purchase stock for the micro-enterprise (De Vletter,
2002: 30). Of the 130 households 61 or 46.9 percent make use of ROSCAs.

Table 4.8 shows that 3 traders participate in more than one ROSCA. These are a meat seller and
2 fishmongers. The meat seller participates in 4 ROSCAs, where she makes contributions on a
daily and monthly basis. Her total expenditure on the ROSCAs contributions is R9170.10 per
month. Depending on when the lump sum is allocated to her, this micro-entrepreneur receives
different lump sums from the different ROSCAs she participates. In a ROSCAs group of 35
members she receives R6756.75, and of 23 members she receives R2220.19, with 32 members
the finance is R3088.96 and of 15 members it is R10135.20 (Survey data 2009). This respondent
uses income from the micro-enterprise and the network of friends and family members to make

59
the ROSCAs contributions and the money which she receives from the ROSCAs she uses to buy
meat for the micro-enterprise and pay for the household expenses.

Each of the fishmongers participates in 2 ROSCAs. Similarly depending on when the lump sum
is allocated to them, they receive different lump sums from the ROSCAs groups they participate.
One fishmonger receives finance of R965.30 and R2799.27 in groups of 10 and 29 members
respectively. The money is used to buy merchandise for the micro-enterprise. She makes daily
contributions and her total expenditure on contributions is R4247.32 per month. The other
fishmonger makes weekly contributions and receives R3185.38 in a group of 11 members and
R4826.30 in a group of 10 members. Her total expenditure on ROSCAs contributions is
R3320.50 per month (Survey data 2009).

4.4.3 The estimated total income of the respondents

In this section of the questionnaire the respondents are asked to specify how much income is
earned from the micro-enterprise. Table 4.9 shows how much income was earned from the
micro-enterprise in September 2009.

Table 4.9: The average income earned by respondents from the micro-enterprise in Rand in
September 2009
Activity Second- Imported Sellers of Green Street Meat Fish Restaur- Other
categories hand clothes groceries grocers traders sellers mon- ant activit-
clothes gers owners ies
and
footwear
Average 1633.47 13629.84 1746.03 1761.42 1747.85 2011.58 2589.17 2426.00 1827.10
income
Maximum 4247.10 33626.00 3185.33 6370.66 15640.00 2905.41 4150.58 4150.58 6370.66
income
Minimum 415.06 415.06 830.12 415.06 415.06 1245.17 539.58 579.15 415.06
income
Total 11 6 9 20 30 5 8 3 17
answered
No 1 1 2 6 5 0 2 4 0
response
Total 12 7 11 26 35 5 10 7 17
Source: Survey data 2009

A seller of imported articles on average earns a monthly income of R13629.84. This income is
used to pay for the household expenses which are estimated in Table 4.10. However, the average

60
income earned is often not sufficient to cover contributions to ROSCAs and for the
replenishment of stock. Thus, respondents adopt other strategies of finance as discussed in
Section 4.4.3 to cover these expenses. The maximum income earned in this activity is R33626.00
and the minimum income is R415.06.

A total of 21 respondents did not answer this question. The respondents did not know how much
income they earn and state that it is mainly because income earned is only enough to cover the
household’s daily expenses. The respondents also stated that their income depends on the
number of customers per day. A respondent stated that on one day she can earn an income of
R62.94 and the next day depending on the market demand she earns between R255.75 and
R383.63. In another case, a fishmonger stated that in a good week she can earn R1278.77 and
earn nothing in the following week (Survey data 2009). These cases imply that income from
micro-enterprise activities is volatile. In a particularly good day when the demand for goods is
high, they make enough money to take home for dinner. On a day when demand is low, they do
not manage to sell anything and suffer losses.

The income of respondents is less than minimum salaries in the public sector. The minimum
salary in Angola is measured as the minimum amount that a person needs to survive. Section
2.6.4 shows that the minimum salary in Angola was stabilised post-conflict. The public sector
minimum salary is estimated at R880.27 per month (CEIC, 2008: 84). Table 4.9 shows that only
the meat sellers earn a minimum income which is more than the public sector’s minimum salary.
For the rest of the traders the minimum income is less. The low income is explained by
competition in the informal sector and different reasons are given to explain this. The
respondents are risk averse, which means that they are afraid to differentiate. They often engage
in similar activities and sell similar quality goods at the same price and the same location (Roy,
2004: 20; De Vletter, 2002: 29). The rural to urban migration to Luanda as a result of the push
and pull factors has increased the inflow of people to informal sector activities. This is mainly
because migrants who cannot find employment in the formal sector of the economy engage in
informal sector activities as a livelihood (De Vletter, 2002: 25). A characteristic of the informal
sector in Luanda is that there are no barriers to entry (De Vletter, 2002: 20). This means that men
can engage in informal sector activities previously dominated by women, such as sellers of
second-hand clothes and foreign exchange dealers.

61
The low income explains the negative perception that respondents have of their activities. The
respondents described their activities as survivalist activities, low income activities and volatile.
They are unhappy about their informal sector activities and would rather be employed in the
formal sector (Survey data 2009).

The business-related expenditures in Table 4.11 show that the income of the micro-entrepreneurs
is not sufficient to buy merchandise for the micro-enterprise and to pay for the ROSCAs
contributions. This is mainly because, after paying the household expenses, most of the
respondents do not have enough money to pay for the business-related expenses. The research
found that only 13 respondents use the income from the micro-enterprises to contribute to the
ROSCAs. The rest of the respondents rely on the network of friends and family to contribute (de
Sousa, 2009: 17). The research also shows that only 3 respondents rely solely on the income
from the micro-enterprise to buy stock for the micro-enterprise. The rest of the respondents’ have
to supplement income from the micro-enterprise with informal sources to buy stock for the
micro-enterprise. Section 2.6.1 explains the problems associated with the different informal
sources of credit. The respondents that participate in ROSCAs use the lump sum amount of the
contributions received from the ROSCAs to purchase the stock for the micro-enterprise. The
respondents that do not participate in ROSCAs use an informal source of credit called kilapi in
Angola. This credit means that respondents obtain their stock from traders that buy in bulk from
wholesale warehouses. The respondents then pay for the stock in instalments with the money
earned from the sale of the goods (Lemos, 2007: 59). Figure 4.5 shows that the respondents rely
on family members and friends for most of their start-up capital. The respondents that use such
sources of finance must make sure that the stock does not run out before they stock up again.

4.4.4 Household expenditures of the respondents per activity category

Many of the respondents did not answer the question on how much they spend on water,
electricity, school fees, bread and airtime when asked about the household expenditure. Some
respondent did not want or refused to provide data for the expenditure categories for different
reasons. In the case of electricity, there are respondents who either live on rented property where
the cost is included in the rental bill or they live in houses without electricity. For airtime
purchases most of the respondents do not buy on a regular basis, but only when money is
available or in an emergency. Therefore, they do not know how much they spend per week, day

62
or a month as it can vary significantly. On the expenditure category of school fees, these are
respondents that do not pay, mainly because basic level public education is free in Angola.

Table 4.10 shows the average expenditure for the household on selected items in September 2009.

Table 4.10: The average household expenditures of respondents on selected items in Rand in
September 2009
Activity Bread Water Electricity School fees Airtime Total
categories expenditure
and values N R N R N R N R N R
Sellers of 11 273.61 10 193.97 5 351.35 7 57.00 11 86.87 962.80
second-hand
clothes and
footwear
Sellers of 5 241.89 _ _ 4 244.21 1 782.00 7 373.55 1641.65
imported
articles
Sellers of 10 303.28 10 454.92 7 193.05 2 342.67 20 173.75 1467.67
groceries
Greengrocers 24 302.43 21 382.85 15 401.29 6 337.84 10 130.31 1554.72
Street traders 31 314.21 30 212.36 17 276.80 10 233.85 28 173.75 1210.97
Meat sellers 5 382.24 4 612.94 4 302.85 2 323.36 4 373.55 1994.94
Fishmongers 10 330.50 7 289.58 3 138.58 3 675.68 8 1307.44 2741.78
Restaurant 6 353.92 6 424.71 4 144.79 2 207.53 7 649.06 1780.01
owners
Other 16 309.00 15 381.40 9 401.02 3 415.43 13 293.36 1800.22
activities
Total 118 _ 105 _ 68 _ 36 _ 108 _ _
answered
No 12 _ 25 _ 62 _ 94 _ 22 _ _
responses
Total 130 _ 130 _ 130 _ 130 _ 130 _ _
Source: Survey data 2009

The households’ total expenditures and expenditures per items show how low the income is and
the extent of poverty amongst women traders in Luanda. The total household expenditure of a
greengrocer is estimated at R1554.72 and the average income is estimated at R1761.42. This
leaves only R206.70 left to buy meat, fish, soap and other items. On average a street trader
spends R314.21 monthly to purchase bread. The expenditure on bread depends on the number of
dependants and children they have. The higher the number of children and dependants the more
money they spend on bread. The data shows that the average number of children is 4 and the
number of dependants is one. This means that on average they have 5 people to purchase bread
for on a daily basis. The fact that respondents have to provide for themselves, their children and
dependants further reduces their already low income. The traders’ monthly expenditure on water

63
is less than the monthly expenditure on water for a household in Luanda, which is estimated at
R4183.70 (Cain and Mulenga, 2009: 14). Section 2.6.5 it shows that government subsidises
water, but the low price does not benefit the poor because they consume less water.

The household expenditure on water and electricity explains the different sources that micro-
entrepreneurs use to meet their demand for water and electricity and the prices charged for the
services. For 2 sellers of imported articles the total expenditure on water is R1264.48. The one
seller relies on government standpipes for water for which she spends R106.18 per month. The
other seller relies on private water sellers on which she spends R1158.30 per month. The cost of
water for these respondents reflects an important characteristic in the different prices charged by
the suppliers of water in Luanda. The majority of the respondents obtain water from government
standpipes, as this is the cheapest option. The research shows that only 6 respondents rely on
private sellers to supply them with water (Survey data 2009).

The respondents obtain electricity from two sources, either the municipal provider of electricity
or generators to mitigate the shortage of electricity supply. There are 36 respondents that use
generators as a source of electricity. Their expenditure on electricity is based on the money they
use to purchase gasoline for the generators. There are 32 respondents that access electricity from
the municipality on a monthly basis and pay every 3 or 6 months (Survey data 2009). The
expenditure on these sources of electricity is low because they are subsidised by government as
explained in Section 2.6.5.

The household expenditures on school fees and airtime show that the respondents are not limited
by gender inequality and education and they share the expenditure responsibilities. Table 4.10
shows the average expenditure on school fees. The respondents report that school fees are a joint
responsibility with their living partners for those who cohabitate and the married women share
the responsibility with their spouses. This means that a fishmonger who cohabitates or is married
shares the average cost of R675.68 on school fees. The household expenditure on airtime shows
that the respondents own mobile phones and are not limited to the access of a mobile phone by
low levels of education and gender inequality (Hafkin and Taggart, 2001: 8).

The strategies that micro-entrepreneurs adopt to pay for the business-related expenses show that
they often rely on loans to finance debt. This is similar to micro-entrepreneurs in developing

64
countries that participate in MFIs and rely on social capital or use multiple loans to cope with the
repayment of the micro-credit (Milgram, 2001: 217; McIntosh, De Janvry and Sadoulet, 2005:
1002). These micro-entrepreneurs often live beyond their means which contributes to poverty
because they are caught in a circle of debt.

4.4.5 Business-related expenditure

Table 4.11 shows the average business-related expenditures for respondents in September 2009

Table 4.11: The average business-related expenditures of respondents in

Rand in September 2009
Activity Restocking the ROSCAs ROSCAs as
categories enterprise contributions % of income
N R N R N %
Sellers of second- 11 2356.09 8 1612.57 8 98.72
hand clothes and
footwear
Sellers of 6 14076.00 2 1460.13 2 10.71
imported clothes
Greengrocers 24 2490.35 10 2099.42 10 119.19
Sellers of 11 2075.29 5 1245.17 5 71.31
groceries
Street traders 34 1618.73 20 1061.78 20 60.75
Meat sellers 5 3615.83 4 4247.11 4 211.13
Fishmongers 10 5152.86 6 2997.69 6 115.79
Restaurant owners 7 3559.50 1 1245.17 1 51.33
Other activities 17 1930.00 5 1781.85 5 97.52
Total answered 125 _ 61 _ 61 _
Total did not 5 _ 69 _ 69 _
respond
Total 130 _ 130 _ 130 _
Source: Survey data 2009
In the business-related expenditure some respondents did not answer the question. This is
because they were unsure of the correct figure and were unwilling to disclose such sensitive data.
In the case of ROSCAs’ contributions these are respondents that do not partake in ROSCAs.

The figures of ROSCAs as percentage of income in Table 4.11 confirm that not all micro-
entrepreneurs rely on income from the micro-enterprise for the ROSCAs contributions. It shows
the percentage of income that goes to ROSCAs contributions if the micro-entrepreneurs rely
solely on income of the micro-enterprise. To calculate the ROSCAs contributions as percentage

65
of income, the contributions are divided by the average income from Table 4.9 and multiplied by
100. For example a seller of second-hand clothes with the average ROSCAs contribution of
R1612.57 and an average income of R1633.47, would spend 98.72 percent of her income on the
ROSCAs contribution, which is above her means. The micro-entrepreneurs cannot afford the
cost of the ROSCAs contribution, but need the extra money. They rely on the network of family
or friends or participate in more than one ROSCA to pay their contributions.

The restocking process of the micro-entrepreneurs depends on the quantity of stock that is
needed in the micro-enterprise. A micro-entrepreneur that sells a variety of groceries ranging
from oil, sugar, beans, rice, flour and other items would not wait for all the groceries that she
sells to finish before she buys stock for the micro-enterprise. Some respondents stated that if the
demand for oil is high and the supply of oil is running out the micro-entrepreneur purchases
more oil to replace the supply which is almost finished (Gitman, 2003: 607).

In Question 5.2 the respondents also had to provide expenditures on loan repayment to the bank,
loan repayment to the MFIs and savings deposits. There was only one respondent who reported a
monthly loan repayment to the bank. She sells imported articles and the monthly loan repayment
was R924.64. None of the respondents participate in MFIs or have bank savings deposit accounts
(Survey data 2009).

4.5 The constraints of MFI’s in Luanda

The microfinance institutions in Luanda are limited because they target groups of women in
rotating savings and credit associations, women headed households that engage in activities of
commerce and agriculture, single women with children that live below the poverty line and
people that were misplaced by the conflict (De Vletter, 2002: 72). The microfinance institutions
do not target women that are married or that cohabitate. This means that they fail to understand
the realities of women micro-entrepreneurs concerning the difficulties caused by gender
inequality in the informal sector activities. The inability to account for gender inequality in the
informal sector activities impedes the objective of microfinance institutions to empower women
micro-entrepreneurs.

The microfinance institutions compete with the ROSCAs. The research estimates that 61
respondents partake in ROSCAs, whereas none of the respondents partake in microfinance

66
institutions. The ROSCAs are a prominent feature of finance for the respondents as opposed to
micro-credit for different reasons. The respondents have trust in the ROSCAs as a means to save
and finance their informal sector activities. There are a few conditions attached to the ROSCAs
and they understand the process. The ROSCAs are flexible and adjust to changing economic
conditions to meet their needs (Wilson, 2002: 83; Amoako-Tuffour, 2002: 6-7).

Moreover, there seems to be a lack of communication between respondents and MFIs. The MFIs
are not visible in the areas where there is a concentration of women informal traders. Their
agents are not visible to advertise to the respondents about micro-credit and the respondents are
unaware of micro-credit (Gaspar, 2009). The lack of information and knowledge about MFIs
therefore deters the respondents from participating in this type of finance.

The microfinance institutions provide micro-credit through solidarity group loans adopted from
Grameen Bank in Bangladesh (UNDP, 2005b: 11). The success of group loans is based on trust
and solidarity that micro-entrepreneurs have for each other (Sengupta and Aubuchon, 2008: 12).
In Angola there is a strong preference for solidarity lending, especially through ROSCAs groups
(Wilson, 2002: 89). However, group loans from MFIs have not been an effective tool for
providing micro-credit. This is mainly because the long civil conflict eroded trust amongst
micro-entrepreneurs who are reluctant to borrow together.

4.6 Summary of the main findings and conclusions

This section of the research analysed data on the characteristics of women micro-entrepreneurs,
their micro-enterprises and the constraints they experience in the informal sector. The research
showed that 35 respondents traded in the streets of Luanda while 95 traded inside the markets.
These women engage in subsistence activities such as greengrocers, selling of second-hand
clothes and footwear, fishmongers, meat sellers and catering. The traders have been in the
informal sector for more than 11 years and have not managed to move away from these
subsistence activities. The informal sector activities are a livelihood strategy adapted by women
who are aged from 18 to 64 in Luanda. However, the majority of the women are aged 40 to 49.
These women mainly own their property in the slums and they live with a partner without been
legally married.

67
The micro-entrepreneurs earn a low income, which is used to cover the households’ basic needs.
The research shows that the minimum income of the micro-entrepreneurs is less than the
minimum monthly salary of a public sector worker and the average income is only enough to
cover the households’ expenses. The fact that the micro-entrepreneurs spend their income on the
household expenses confirms how low their income is and the extent of poverty in the informal
sector.

The micro-entrepreneurs experience poverty in the informal sector because they face constraints
which limit them to subsistence activities. The research showed that 74 or 56.9 percent of the
micro-entrepreneurs engage in subsistence activities out of necessity to sustain their families.
They lack skills to engage in male dominated activities and adopt subsistence activities that are
easy to undertake and not mentally challenging.

The micro-entrepreneurs generally have low levels of education, which limits them to low
income activities in the informal sector. This is because the micro-entrepreneurs are risk averse
and unwilling to differentiate in a competitive and saturated local market. They do not take
advantage of the years of experience and market opportunities. The low levels of education also
mean that the micro-entrepreneurs are not absorbed into the formal sector of the economy. To
survive, the micro-entrepreneurs adopt informal sector subsistence activities. The micro-
entrepreneurs also have different levels of education. This prevents them from approaching
micro-finance institutions for group-lending of micro-credit loans. This is mainly because
different levels of education result in misunderstanding in groups and is an incentive to free-
riding.

The micro-entrepreneurs have suffered from occupational injuries and risks while operating the
micro-enterprises. The research estimates that 14 or 10.8 percent of the respondents have been
involved in such accidents. The injuries and risks that respondents sustained contribute to poor
health which lowers their productivity and also the income.

The micro-entrepreneurs prefer to work in isolation when it comes to the purchase and
movement of their merchandise. Except for greengrocers that have been in the informal sector
for more than 10 years and hiring trucks to transport their merchandise, the rest of the micro-
entrepreneurs rely on taxis or hire hand-cart drivers to transport their stock. The problem is that

68
micro-entrepreneurs do not trust each other to cooperate and take advantage of enterprise
clusters. This lack of trust stems from the many years of conflict and lowers their productivity.
This is so because the micro-entrepreneurs do not participate in networking and share
information about potential market opportunities.

The micro-entrepreneurs rely on each other to access informal credit through ROSCAs, which is
the most prominent informal source of credit in the informal sector. The research shows 61
respondents participate in ROSCAs to access loans in order to purchase merchandise for the
micro-enterprise. The problem with this source of credit is that the cost of ROSCAs contribution
is higher than the finance received from ROSCAs group. For example a micro-entrepreneur only
receives a loan if the group decides she needs it. Yet every day, week or month she has to make
the contributions and once she receives the loan she continues to make the contributions.

The business-related expenditures show that respondents do not have enough money to pay for
the business expenses and rely on loans. The research shows that only 3 respondents rely solely
on the income of the micro-enterprise to buy stock for the micro-enterprise. The rest of the
respondents supplement the income of the micro-enterprise with money received from the
ROSCAs, kilapi or informal credit and/or through social ties of family and friends for the start-
up capital. The research shows that 13 respondents rely on the income from the micro-enterprise
to pay the ROSCAs. The rest of the respondents rely on the network of family and friends to help
pay for the contributions. The fact that respondents rely on loans to buy merchandise and pay the
ROSCAs contributions means that they are caught in a circle of debt which pushes them into
poverty.

The respondents do not participate in microfinance institutions (MFIs) to access credit as none of
the respondents who were surveyed reported participation with MFIs. The microfinance
institutions in Luanda that supply micro-credit to micro-entrepreneurs are faced with challenges
which limit their outreach to a wider spectrum of clients in the informal sector. This is mainly
because the MFIs have a limited target group and the micro-entrepreneurs in Luanda prefer to
rely on each other for finance. The microfinance institutions provide micro-credit through the
Grameen Bank style of group loans. The Grameen Bank style of providing micro-credit would
not attract the micro-entrepreneurs, because they lack trust in each other to borrow collectively
and be jointly liable for the loan.

69
 CHAPTER 5

SUMMARY OF THE MAIN FINDINGS AND CONCLUSIONS,

RECOMMENDATIONS AND SUGGESTIONS FOR FUTURE RESEARCH

5.1 Introduction

The aim of this research was to identify and explain the constraints faced by women micro-
entrepreneurs in Luanda. This was done in order to understand the effects of these constraints on
their operations of the micro-enterprise and their demand for micro-credit. This chapter
summarises the main findings and conclusions of the research. This research was guided by 3
main objectives. Firstly, it provided an economic rationale for the drivers of poverty amongst
women micro-entrepreneurs in the informal sector in developing countries. Secondly, it
identified the constraints faced by women micro-entrepreneurs in Luanda. Thirdly, the research
analysed the effect of these constraints on the demand for finance by micro-entrepreneurs in
Luanda.

The volume of literature on the motives for engaging in micro-enterprises and the constraints
faced by the micro-entrepreneurs was discussed to understand the nature of poverty amongst
micro-entrepreneurs in developing countries. The literature on the social and economic dynamics
of the micro-entrepreneurs, such as their migration from rural areas to Luanda, their poor living
conditions, ill health, poor education, gender inequality as well as the access to micro-credit were
also reviewed.

5.2 Summary of the main findings and conclusions for the different objectives

5.2.1 Objective 1: the drivers of poverty amongst women micro-entrepreneurs

The literature review in Chapter 2 explains the drivers and causes of poverty amongst women
micro-entrepreneurs in developing countries. It shows that women micro-entrepreneurs earn
lower incomes than men in the informal sector and reside under poor conditions in the slums.
The micro-entrepreneurs engage in subsistence activities that do not have barriers to entry and
the income from the micro-enterprise is the only source of income. It thus creates a competitive
environment that erodes their income.

70
The micro-entrepreneurs are pushed into informal sector activities out of necessity. This means
that the micro-entrepreneurs do not have to dedicate themselves to the micro-enterprise so that it
grows to make profits and create employment. As long as they make enough at the end of the
day to purchase the basic needs of the household, it is enough. This motivation for micro-
entrepreneurial activities limits them to low income subsistence activities because profit is not
the reason to engage in entrepreneurial activities.

Chapter 2 indicates that the women micro-entrepreneurs migrate from the rural areas to the urban
areas in search of a better life and economic conditions. The women engage in informal sector
activities to sustain their families while they wait for employment in the formal sector. The
problem is that the micro-entrepreneurs do not differentiate and engage in similar activities of
traders already in the informal sector. This increases competition and erodes the income of
traders in similar activities.

Chapter 2 shows the strategy that micro-entrepreneurs adopt in order to counter reduced market
demand that decreases income which is already low. To counter this negative effect the micro-
entrepreneurs start trading in other activities, which is only precarious because they have limited
knowledge and experience in the new market.

The micro-entrepreneurs in developing countries trade under poor conditions in the streets and in
the markets, which lowers their income because the number of hours that they spend dedicated to
trading is reduced. A factor that can contribute to the reduced number of hours operating the
micro-enterprise is the poor health which arises from trading under poor conditions and the
activities of the micro-entrepreneurs themselves. The micro-entrepreneurs engage in activities
that are not good for their health but because they have low levels of education they cannot
engage in other activities.

Chapter 2 shows that the micro-entrepreneurs have low levels of education because a significant
number of girls of primary school age do not attend school. The low levels of education prevent
the micro-entrepreneurs to engage in a niche market and to differentiate. This means that they are
afraid to lose money by venturing into new markets and they prefer to stay in the competitive
and saturated market in which they are currently trading. This preference of the micro-
entrepreneurs erodes their income and again limits them to low income subsistence activities.

71
Chapter 2 explains that micro-entrepreneurs have to cope with gender inequality which
contributes negatively to the operation of the micro-enterprise. The women do not have a choice
of the best location to put their stalls in the markets, because the best location is reserved for the
men. The women also do not have the right to own property where they work or live, because
they do not have collateral to obtain credit from the formal sector. The women are left to engage
in activities that men used to participate in, but abandoned because they were unprofitable. The
women engage in activities that do not take up much time and does not interfere with the
domestic activities. Because of gender inequality women have to carry the burden of household
responsibilities.

Micro-entrepreneurs that network take advantage of information sharing and cooperation. This
should make it easier to access credit, access talented labourers and venture into new markets.
However, the women micro-entrepreneurs do not network. These women prefer to trade in
isolation because they do not trust each other, not even to loan together with the microfinance
institutions. They prefer to participate in rotating savings and credit associations (ROSCAs) in
order to accesses loans. This is because the ROSCAs are flexible and the informal nature of the
loans satisfies the liquidity needs of the women.

The micro-entrepreneurs are prone to using ROSCAs because they experience constraints that
limit their access to micro-credit from microfinance institutions (MFIs). The MFIs assume that
micro-entrepreneurs lack finance which is hindering the expansion of the micro-enterprise and
they supply credit to the micro-entrepreneurs based on this assumption. This assumption
disadvantages the micro-entrepreneurs because the factors that hinder the growth of the micro-
enterprise are beyond lack of finance as highlighted here. The inability of microfinance
institutions to understand the realities of the micro-entrepreneurs and impose stringent repayment
rules causes repayment difficulties. To be able to pay for the loans the micro-entrepreneurs rely
on family and friends or they take up multiple-loans. These strategies adopted by the micro-
entrepreneurs to overcome repayment difficulties defeats the purpose of the microfinance
institutions which is to empower the women by fostering financial independence. Instead the
micro-entrepreneurs drive themselves further into debt as they take up loans to repay loans.

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5.2.2 Objective 2: the constraints facing micro-entrepreneurs in Luanda

The study filled the gap in the literature review by conducting a primary research through a
mixed approach questionnaire. The research found that women micro-entrepreneurs in Luanda
engage in subsistence activities as a last resort to survive and sustain their families. These
women turn to informal sector activities, because only limited skills and capital are needed to
start them. Another motivation is that the businesses are passed on from the old kin. Low levels
of education, lack of employment and retrenchment also push women into micro-entrepreneur or
informal trading activities. These activities include fish mongering as well as selling of
greengroceries, meat, second-hand clothes and imported articles. Some of these traders run food
catering services such as restaurants. These subsistence activities take place in markets and on
the streets outside the markets. The markets are the localities where the distribution, stocking and
supply of goods take place.

The research determined that women micro-entrepreneurs in Luanda have low levels of
education as 30 percent of the micro-entrepreneurs cannot read and write and 16.9 percent never
went to school. An estimated 59.2 percent of them only completed primary education, while only
21. 5 percent of the respondents finished level 2 of secondary education.

The research found that although micro-entrepreneurs in Luanda have many years of experience,
it is not reflected in the growth of their micro-enterprises. Some of these women have been in the
informal sector for more than 11 years, but their activities still comprise of subsistence trading.
This is mainly because a significant number of the micro-entrepreneurs have low levels of
education and has not managed to move away from a saturated market and undifferentiated
activities, because they sell similar goods at the same location and charge similar prices. The
subsistence activities have little or no barriers to entry, which means that rural to urban migrants
can also engage in these activities as a source of livelihood. Likewise, men can also engage in
these activities and this adds to the shrinking of profits and income and hence this increases the
poverty among women entrepreneurs in Luanda.

The micro-entrepreneurs in the streets and in the old markets trade in locations with poor
infrastructure and conditions which expose them to health hazards and injuries that lower their
productivity. The street traders are constantly harassed by the local authorities or fiscais. The

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traders keep running up and down the streets to escape the fiscais. This increases the risk of them
being hit by vehicles on the streets. The fish mongers risk infection when gutting the fish and the
traders in the old and not yet renovated markets experience additional health risks as they are
trading in markets that have no roofing and/or proper sewage systems.

The research established that a significant number of the micro-entrepreneurs are negatively
affected by their lack of skills. This reduces their effectiveness to engage in activities such as
tailoring and carpentry. In the case of physically demanding activities such as taxi driving, cart
carrying by porters and construction, women entrepreneurs perceive that these are mainly men
activities, underpinning the effect of gender disparity.

Gender inequality in Angola is present at different levels. The research showed that there are a
higher percentage of boys than girls that had basic education and who could read and write. The
women micro-entrepreneurs are also not involved in certain activities such as mechanics or
electrical construction, which are left to men. The women micro-entrepreneurs are often in
activities that are less lucrative and volatile.

The micro-entrepreneurs prefer to restock in isolation. However, a small percentage of traders

hire transport together and share the costs. The fact that traders do not cooperate to restock
indicates that the traders do not take advantage of working in clusters. The lack of cooperation
reduces the productivity of the traders, because they lose out on the potential to network with
other traders to improve the management of the micro-enterprises.

The micro-entrepreneurs in Luanda experience bureaucracy when they try to register the micro-
enterprise and because of bureaucratic requirements for registration, most of the street businesses
are unregistered. This is because traders are required to operate from locations with built
structures and suitable conditions and the markets do not have enough space to accommodate all
the street traders in Luanda.

The research found that the income of micro-entrepreneurs in Luanda is less than the public
sector minimum salary. The low income in the informal sector can be attributed to influx of
micro-traders who all sell the same goods, at the same place and charging similar prices.

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The income from the micro-enterprises is used to finance most of the household expenditure
except school fees. The micro-entrepreneurs purchase water from standpipes, mitigate for the
lack of electricity by using generators and keep their children in public schools which are free.

The business-related expenditures are also the responsibility of the micro-entrepreneurs, most of
whom accessed initial start-up capital from informal sources such as friends or family members.
The income from the micro-enterprise is often not sufficient for restocking. Hence, the micro-
entrepreneurs rely on other sources of income, such as rotating savings and credit associations
(ROSCAs) for restocking. The problem with participating in ROSCAs is that micro-
entrepreneurs rely on the social networks of friends and family to help pay for the contributions
and continue to make the contributions even after they have received the loans. The micro-
entrepreneurs also rely on kilapi or informal credit to buy stock. The problem with this informal
source of credit is that the micro-entrepreneurs run out of money before they can make the
payments.

5.2.3 Objective 3: the effect of constraints on demand for micro-credit

Most of the micro-entrepreneurs do not access credit through microfinance institutions (MFIs)
specifically because of the lack of information about the conditions put forward by the MFIs. In
a market of 530 000 informal sector traders the MFIs can only claim to service 14 000 of the
micro-entrepreneurs. The microfinance institutions have failed to supply micro-credit to more
micro-entrepreneurs, because they have to compete with informal source of credit and the micro-
entrepreneurs do not trust each other to take up jointly liable group loans. The microfinance
institutions in Luanda mainly provide group lending schemes adapted from the Grameen Bank.
This form of lending does not prompt micro-entrepreneurs to participate in microfinance
institutions.

Moreover, the micro-entrepreneurs have low levels of education and do not understand the
services of the microfinance institutions, such as micro-credit. The fact that the microfinance
institutions are not visible to the micro-entrepreneurs contributes to their lack of understanding.
The micro-entrepreneurs have different levels of education and income. This situation creates an
incentive to free riding amongst group members.

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The micro-entrepreneurs have been pushed into informal sector activities out of the necessity to
sustain their families. This means that the income earned from the micro-enterprise is used to pay
the household and business-related expenses. This leaves little income to repay any loans with
microfinance institutions. The micro-entrepreneurs understand this fact, which deters them from
approaching MFIs for loans.

In addition, micro-entrepreneurs have to cope with gender inequality that puts all the domestic
responsibilities on the women. This causes micro-entrepreneurs to have limited time to dedicate
to the micro-enterprise. However, women that are married or live with a partner are not targeted
by microfinance institutions. This means that microfinance institutions fail to understand gender
inequality as a constraint for the micro-entrepreneurs and hence, provide services that are not
tailored to their needs.

5.3 Recommendations

5.3.1 Recommendations for the microfinance institutions (MFIs)

It is important that MFIs adopt a more integrated approach when offering micro-credit to the
subsistence traders in Luanda. This means that microfinance institutions should provide services
such as micro-credit, which micro-entrepreneurs can understand and identify with in the informal
sector. Traders in Luanda experience more than financial constraints. These women traders are
not aware of the micro-credit and the utility of micro-credit for the micro-enterprises. The MFIs
need to collaborate with the administration of the markets to increase the access to credit for the
micro-entrepreneurs. Microfinance institutions can arrange group meetings so that traders in
group-lending schemes can meet and discuss their differences. In this way the traders can bond
to develop trust amongst them. Moreover, the group meetings provide opportunities for the
traders to network.

It is important that microfinance institutions increase the target group to include women that are
married and those that cohabitate. In this way the MFIs can learn more about other constraints
facing the micro-entrepreneurs apart from their financial requirements.

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5.3.2 Recommendations to the government

It is important that the government initiates cooperation amongst the micro-entrepreneurs in

Luanda. The micro-entrepreneurs operate their micro-enterprise in isolation, because they do not
trust each other. If government can assist to foster an environment of trust amongst the micro-
entrepreneurs they can cooperate and participate in the development of activities that add value,
such as trading between regions of the country and the transformation of raw materials.

The micro-entrepreneurs lack the skills and education to shift away from subsistence activities.
Government can assist micro-entrepreneurs to move away from subsistence activities, through
skills development programs to equip the micro-entrepreneurs with the skills that can assist them
to expand their businesses. The micro-entrepreneurs can also be equipped with skills that assist
them to be absorbed into the formal sector of the economy. It is important that the micro-
entrepreneurs are not pushed away from their traditional activities and forced to adapt to new
methods of doing business which they do not understand. Because of their low levels of
education and by shifting the micro-entrepreneurs away from their traditional activities into new
markets, it can put them under pressure and lead to failure of their businesses.

The skills development programmes can train micro-entrepreneurs about the importance of
adopting hygienic practices, recording the financial flows of the micro-enterprises and the
importance of budgeting for the financial stability of their enterprises. The training of micro-
entrepreneurs must reflect the realities in the informal sector.

5.3.3 Recommendations to the traders

It would benefit the micro-entrepreneurs to organise themselves in cooperatives. Since the

micro-entrepreneurs participate in ROSCAs, are located in the streets and the markets they can
take advantage of enterprise clusters in the informal sector. These cooperatives can facilitate
business interactions with other regions and with each other. This can enhance their capacity to
restock and transport their supplies more effectively. The cooperatives can also facilitate joint
protection against police harassment and vigilance against criminals.

The fishmongers in Mabunda and the street traders in São Paulo should observe hygienic
practises. The traders can organise a designated location for dumping rubbish that is

77
conveniently accessible to the waste removal companies. In this way the micro-entrepreneurs can
create a trade environment that is cleaner and does not obstruct the traffic. This will also improve
their health and increase their productivity.

5.4 Limitation of this research

The constraints of micro-entrepreneurs that participate in microfinance institutions (MFIs)

cannot be concluded with accuracy, because during the field work in the markets and the streets
none of the micro-entrepreneurs participated in microfinance institutions. To be in contact with
micro-entrepreneurs that participate in MFIs, the microfinance institutions had to be contacted or
approached with the permission to survey the women. This would have been a time consuming
task for the researcher, because there was no guarantee that MFIs would give permission or that
the micro-entrepreneurs would have agreed to participate in the survey. Hence, constraints such
as levels of education, risks and injuries, living conditions and gender inequality highlighted in
the research are specific to the sample chosen. These are women micro-entrepreneurs who are
working alone in the markets or in the streets. This holds valuable lessons for MFIs to structure
micro-credit so that it appeals to a wider spectrum of clients in the informal sector.

5.5 Suggestions for future research

Future studies should analyse the impact of rural-urban migration on economic development in
Luanda and the impact of government policies in the process of migration. The rural-urban
migration is stretching the resources in Luanda. Future research should investigate the
government policies to stem rural-urban migration. The research should also aim to establish
whether such policies would reduce labour in Luanda and slow the progress of development in
the city.

Future studies should analyse the poverty of micro-entrepreneurs in Luanda using the concept of
the capabilities approach as developed by Amartya Sen (1999: 87). In this way the poverty of
subsistence traders is explained beyond gender inequality, health status and the level of
education.

Future research should analyse the outreach of MFIs in Luanda using the framework for outreach
developed by Mark Schreiner (2002). Future studies should also analyse government regulations

78
of MFIs in Angola or the prospect of future government regulations. These regulations should
focus on the distribution of micro-credit to prevent multiple-loan taking, the form of lending, in a
group or individual lending and the strategies of the MFIs to increase their outreach.

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APPENDIX 1

MICRO-ENTREPRENEURS IN LUANDA:

CHARACTERISTICS AND ACTIVITIES QUESTIONNAIRE

Informed Consent to Participate

Helena Preciosa Fernandes Gaspar, is currently undertaking a Masters in Development and

Policy Issues at the University of Johannesburg. This survey is necessary for her successful
completion of the minor-dissertation which forms part of the master’s degree programme. The
purpose of this visit is to learn more about the women traders in Luanda. This is in terms of their
characteristics, occupational health and gender related issues, their networking practices and
their financial strategies. The information will be used to determine factors that hamper the
success of their enterprises and limit them to low income informal sector activities. The
questions will be conducted on a personal basis, because of the difficulties involved in reaching
these women any other way. The survey will take about 10 minutes of your time and it is
confidential and in line with all the ethical requirements of the University.

Note that:

 You are under no obligation to participate in the study. If you feel that you do not want
to be part of the study you are free to withdraw at any time.

 The information that is obtained from you will be kept confidential at all times and not be
referred to individually,

 The information obtained from you will in no way be used to inform others about your
practices. No harm to you or your family can or will arise from this information,

 No monetary compensation is offered for your participation,

Respondent’s response:

 I have heard the proposed activities of the project. The activities are clear to me,

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  I was provided the opportunity and the time to think about the issue and ask questions,
 I have not been pressurised to participate in any way,
 I understand that participation in this research project is completely voluntary,
 I understand that I will not receive any monetary compensation for my participation,
 I understand that I may withdraw from it at any time without supplying reasons,
 I confirm that I may speak on behalf of my family,
 I consent to supply our personal details. I understand that while it will be involved in the
analysis of the results of all the participants, it will not be used in any way to breach
confidentiality,
 I understand that this research project has been approved by the relevant Department of
the University of Johannesburg,
 I am fully aware that the results of these projects will be used for scientific purposes and
may be published. I agree to this, provided my privacy is guaranteed,
 I hereby consent to participate in this project.

Name of the respondent

Statement by Interviewer

I have provided verbal information regarding this research project. I agree to answer any
questions from the respondent concerning the project as best as I can. I will adhere to the
approved research protocol.

Name of Interviewer

Signature

Place

Date

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 Section A

The aim of this section is to determine the demographic characteristics of the micro-
entrepreneurs.

1.1 Where is your business located? Please indicate all is applicable sections
Market
On the street
Home-based work
Other please specify

1.2 Which type of activity do you engage in? Please mark all that is applicable
Buying and reselling physical goods i.e.
clothing, shoes, pots, charcoal, hang-bangs
Carpentry
Mobile phone rental, telephone bureau,
internet café
Shoe repair/cobbler
Photocopies or printing
Exchange of foreign currency (kinguilas)
Ambulant urban traders walking around
selling things in the market and the
neighbourhood (zungueiros)
Cooking in the market or the streets
Selling vegetable in the market
Selling fish or related products
Hair braiding
Rental of stalls
Rental of warehouses
Restaurants
Bakeries
Photo studios
Other please specify

1.3 How many years have you been in this business? Mark one with X where applicable
Less than a year
3 years
4 years
5 years and longer

1.4 How old are you?

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1.5 Marital status? Please mark all that is applicable
Married
Living together
Widowed
Divorced
Other please specify

1.6 How many children do you have?

1.7 Can you read or write? Yes No

1.8 What is your highest level of education? Please mark one which is applicable
None
Primary school
Secondary school
Tertiary school

1.9 Do you stay in,

Rental property
Own property
Wendy house
Other please specify

1.10 Apart from your children and yourself how many family members do you live with?

Section B

In this section occupational safety and security issues and concerns of the micro-entrepreneurs
are assessed.

2.1 Have you ever sustained any injuries in your occupation? Yes No

2.2 If Yes, what types of injuries have you sustained in your occupation?
Burns
Cuts
fractures, sprains
injuries to the eye/teeth
Others please specify

2.3 Have you visited any health facilities regarding occupational injuries? Yes No

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2.4 If your answer to question 2.3 is Yes, what health facility have you visited?
Hospitals
Clinics
Others please specify

2.5 If your answer to question 2.3 is No why did you not report your occupational injury?
No hospitals or clinics nearby
No money to pay for medical services
Poor services at the health centres
I have to be in business at the same time
Other please specify

Section C

This section of the questionnaire aims to determine whether aside from education, what other
gender related issues limit women to trade activities in the informal sector.

3.1 Why have you decided to engage in this particular business?

It does not require a substantial amount of start-up capital
It is not physically and mentally challenging
Does not require a specific skill
Does not need to be registered
Other please specify

3.2 Why have you decided not to engage in other business such as these listed below?

Career a) b) c) d) e)

Taxi driver it is men’s difficult to lack of traditional lack of skills

work register/access finance customs does
not allow it

Cart carriers it is men’s difficult to lack of traditional lack of skills

(raboteiros) work register/access finance customs does
not allow it

Construction it is men’s difficult to lack of traditional lack of skills

work register/access finance customs does
not allow it

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Tailor it is men’s difficult to lack of traditional lack of skills
work register/access finance customs does
not allow it

Hairdresser it is men’s difficult to lack of traditional lack of skills

work register/access finance customs does
not allow it

Carpentry it is men’s difficult to lack of traditional lack of skills

work register/access finance customs does
not allow it

Retail agents it is men’s difficult to lack of traditional lack of skills

work register/access finance customs does
not allow it

Section D

The aim of this section is to explore how women micro-entrepreneurs work together to
sustain their micro-enterprises.

4.1 Where did you get start-up capital for your business?
From your husband or other family
members or friends
Savings
Bank loans
Micro-credit
Retirement benefits
Other please specify

4.2 Are you part of a self-support or cooperatives? Yes No

Other please specify

4.3 If Yes, which self-support group(s) or organisation(s) are you part of? Please mark
with X where appropriate
Rotating savings and credit associations
(ROSCAs)
Microfinance institutions
Workers union
Other please specify

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 4.4 State how you have benefitted from this self-support group? c)lack of
Received a loan or grant finance
Protection against police harassment
Collectively we provide vigilance against
criminals
We aid each other to source goods from the
suppliers
Received business management training
Received training on appropriate nutrition
for the family
Received training on family planning
Other please specify
4.5 How do you obtain your merchandise?
Directly from the supplier
From a retailer
From a larger markets (Roque Santeiro)
From a family member who owns a
distribution store
Members from the self-support group
Other please specify

4.6 Why do you obtain your merchandise from this particular place(s)? Mark applicable blocks
Because it is cheaper
Closer to home
Closer to the place of trade
Obtain on credit through the support group
Other please specify

4.7 Which mode of transport do you use to obtain your merchandise? Mark with X where
appropriate
Private car hire
Hire transport in a group
Public transport (Taxis)
walk
Pay hand cart/potters’ drivers
Other please specify

Section E
The aim of this section is to analyse the levels of income earned and expenditure by the micro-
entrepreneurs in Luanda

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5.1 Income sources
Please specify from which sources you earned an income and Amount received a
how much was earned from each source, on average per state month in Kwanza
grants or pensions

Buying and reselling physical goods i.e. clothing, shoes, pots,

charcoal, hang-bangs
Carpentry
Mobile phone rental, telephone bureau, internet café
Shoe repair/cobbler
Photocopies or printing
Exchange of foreign currency (kinguilas)
Ambulant traders this is walking around selling things in the
market and the neighbourhood (zungueiras)
Cooking in the market or the streets
Selling vegetable in the market
Selling fish
Hair braiding
Rental of stalls
Rental of warehouses
Restaurants
Bakeries
Photo studios
Other sources not listed above
Estimated total income

5.2 On average, how much Kwanza do you spend a month on each of the following items?
Enter 0 if none.
Food
Electricity
Water
School
Restocking
Saving
Share amongst the women in the rotating
savings and credit associations (ROSCAs)
Loan repayment to the bank
Loan repayment to the microfinance
institution
Airtime
Others please specify
Thank you for your participation

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