School of Post Graduate Studies

Department of Business Administration

Assessment the practices and challenges of street vending business

in Addis Ababa: in the case of Yeka and Bole sub cities in particular

By

Liul Dessie

Addis Ababa, Ethiopia

July, 2022
 Gage University College
School of post graduate Studies

Department of Business Administration

Assessment the practices and challenges of street vending business

in Addis Ababa: in the case of Yeka and Bole sub cities in particular

By

Liul Dessie

ID No MBA/388/13

Advisor

Dr. Essayas.Taye (PHD)

This Thesis Submitted to Gage University College Department of Business

Administrationin Partial Fulfillment of the Requirements for The Degree of Master of
Art in Business Administration.

Addis Ababa, Ethiopia

July, 2022
 Declaration
This is to declare that this thesis is my original work, prepared under the guidance of my Advisor
Essayas Taye (PHD). The thesis has been submitted in partial fulfillment of the requirements for
MBA degree at Gage University College, School of post graduate with the Title Assessment
the practices and challenges of street vending business in Addis Ababa: in the case of Yeka
and Bole sub cities in particular. All sources of materials used for the thesis have been duly
acknowledged and no part of the research has been reproduced illegally (copy and paste) which
can be considered as Plagiarism. All referenced parts have been used to argue the idea and cited
properly.

Declared by:

Name: Liul Dessie signature: _________ Date: __________

This is to certify that the above declaration made by the candidate is correct to the best of my
knowledge.

Approved by Advisor: Essayas Taye (PHD)

Signature: ______________

Date________________

Place: Gage University College, Addis Ababa Ethiopia July, 2022

I
 Gage University College

School of post graduate studies

Department of business administration

Assessment the practices and challenges of street vending business

in Addis Ababa: in the case of Yeka and Bole sub cities in
particular.

BY

Liul Dessie ID No MBA/388/13

Approved By Board of Examiners

Dean, Graduate Studies Signature Date

______________________________________ __________________ _______________

Advisor Signature

Essayas Taye (Phd) ___________________ _ _________

External Examiner Signature

______________________________________ __________________ _______________

Internal Examiner Signature

______________________________________ __________________ _______________

II
 Acknowledgment
First and for most, thanks to GOD and I have taken efforts in this thesis. However, it would not
have been possible without the kind support and help of many individuals.

I would like to thanks extend our sincere advisor Essayas Taye (Phd) for the valuable guidance
and advice for this master thesis. Accomplishment of this work would have been not possible in
the absence of data; thanks to for providing the essential information all respondents from
Yeka and Bole sub city Administration their kind cooperation towards successful completion
of this work. I would like to thank all my family and colleagues for their cooperation.

Furthermore, I want to express my deepest thanks my dear boss‟s Kidane Tsigie and
Wondwesen Tilahun (Netefisahe Trading) deserves too much appreciation and gratitude for
unwavering assist in my achievement of this work by sharing a good heart to encouraged,
support me. Be blessed always.

Researcher’s Name: Liul Dessie Signature: ____________

III
 Abstract
The study was aimed to assess the practices and challenges of street vending business in Addis
Ababa: in the case of Yeka and Bole sub cities in particular. It examined the main source of
capital and identified the reasons why people are engaged in street vending business. Data were
generated through questionnaires. The collected data was processed and organized in the
descriptive manner and organized using frequency table and percentage with relevant discussion
and the empirical study shows a major challenge which seem to challenge and practices of street
vending business in the sub cities. A descriptive survey design was used and a purposive sample
of the respondents of the street vending business participants was taken. The purpose of the
questionnaires of the participants was to discover their perception of the street vending business
in Yeka and Bole a sub cities in particular. A total of 200 street vendors were involved in this
study and out of them 133 respondents were in survey questionnaires 78.2% were male and at
the age of 20-30years. The results also indicated that the street vending business engage largely
in male and the active youth and matured. In addition all of them had no formal training on this
business more than 87.2% , 84.2% percent of the streets vending business participants are
making support their family economically and changed life through their activities despite some
difficulties. The lack of employment in the formal sector and the desire to survive were found to
be the problems that enhance the growth of the streets vending business in Yeka and Bole sub
cities. The participants could further expand their street vending business activities if access to
credit facilities and working space were made available ultimately change to formal sector.
However, further research is required on the size and contribution of this sector to
poverty alleviation and economic growth. Therefore the government should practically realize
work process and the role of vendors in the urban economy, and protect vendors basic
rights and property. Provide the regulation the street vendors by issuing license including
permanent markets and working places in sub-cities.

Key Words: Street vendors, Start-up, Pedestrians, Capital, Challenge and practices, Informal.

IV
Table of Contents Pages
Declaration .................................................................................................................................................. I

Acknowledgment ....................................................................................................................................... III

Abstract ..................................................................................................................................................... IV

List of Tables ............................................................................................................................................. IX

List of Acronyms ........................................................................................................................................ X

CHAPTER ONE ......................................................................................................................................... 1

1. Introduction ............................................................................................................................................ 1

1.2. Statement of the Problem ................................................................................................................. 8

1.3. Objective of the study ...................................................................................................................... 9

1.3.1 General objective: ...................................................................................................................... 9

1.3.2. Specific objective: ..................................................................................................................... 9

1.4. Research question ............................................................................................................................ 9

1.5. Significant of the study ................................................................................................................ 10

1.6. Scope of the study .......................................................................................................................... 10

1.7. Limitation of the Study: ................................................................................................................. 11

1.8. Organization of the study ............................................................................................................... 11

CHAPTER TWO ...................................................................................................................................... 12

2. Review of Literature ............................................................................................................................. 12

2.1. Introduction.................................................................................................................................... 12

2.1.1. Three schools of Thoughts about Informal Sector ................................................................... 14

2.2. Definition of Street Vendor ............................................................................................................ 15

2.2.1. Categories of Street Vendors................................................................................................... 17

2.2.2. Working Conditions of Street Vendors ................................................................................... 17

2.3. Causes of Street Vending ............................................................................................................... 18

VI
 2.3.1. Challenges faced by street vendors ......................................................................................... 19

2.4. Street Vending in Ethiopia ............................................................................................................. 20

2.5. Empirical Review .......................................................................................................................... 22

2.6. Good Practices ............................................................................................................................... 23

2.7 Regularity Framework .................................................................................................................... 24

CHAPTER THREE .................................................................................................................................. 25

3. Research Methodology ......................................................................................................................... 25

3.1. Introduction.................................................................................................................................... 25

3.2. Research design ............................................................................................................................. 25

3.3. Research approach ......................................................................................................................... 25

3.4. Sampling Design ............................................................................................................................ 25

3.5 Population and Sample Size ............................................................................................................ 26

3.5.1 Target population ..................................................................................................................... 26

3.5.2 Sample Size.............................................................................................................................. 26

3.5.3 Sampling Technique ................................................................................................................ 27

3.6 Data sources and Data Collection Method .................................................................................... 27

3.6.1 Source of data .......................................................................................................................... 27

3.7 Data analysis method ...................................................................................................................... 28

CHAPTER FOUR .................................................................................................................................... 29

Data Presentation, Analysis and Interpretation ......................................................................................... 29

4. Introduction .......................................................................................................................................... 29

4.1 Demographic Characteristics of Respondents ........................................................................... 29

4.1.1 Gender Age and Marital status of Respondents ................................................................. 29

4.1.2. Educational status of the respondents ...................................................................................... 30

4.2 Causes of street vending business and work /business experiences................................................. 31

4.2.1. Respondents housing situation and operating of current activities .......................................... 32

VII
 4.2.3 Types of Street Vending Businesses and License Registered activity ...................................... 33

4.2.4 Street Vending Business Income Tax Payment ........................................................................ 34

4.2.5 Respondents Start-up fund, Initial capital and their additional job ........................................... 35

4.2.6. Constraints Faced while Establishing street vending Business ................................................ 36

4.2.7 Respondents Training situation and setting prices of the business ........................................... 38

4.2.8 Participants Earning and Life Status ........................................................................................ 39

4.2.9 Future street vending business Plans of the Participants .......................................................... 40

4.2.10. Benefits of informal business sectors /street vending businesses .......................................... 41

4.2.11. Marketing area of street vending business participants ......................................................... 42

CHAPTER FIVE ...................................................................................................................................... 44

5. Conclusion and Recommendations ....................................................................................................... 44

5.1 Conclusion ...................................................................................................................................... 44

5.2 Recommendation ............................................................................................................................ 46

REFERENCES ......................................................................................................................................... 47

APPENDIX .............................................................................................................................................. 51

Appendix -1 .......................................................................................................................................... 51

VIII
 List of Tables pages

Table 3.1 Distribution of sample size in locations .................................................................... 25

Table 4.1 Gender Age and Marital status ................................................................................. 29

Table 4.2 Educational level of the Respondents ....................................................................... 30

Table 4.3 cause of Street Business ............................................................................................. 31

Table 4.4 House situation and current operation .................................................................... 32

Table 4.5.Types of street vending business ............................................................................... 33

Table 4.6 street vending tax pay ................................................................................................ 34

Table 4.7 Respondents Start-up fund, engage other job ......................................................... 35

Table 4.8 constraints faced by participants when starting a Business ................................... 36

Table 4.9 Training and price setting ........................................................................................ 38

Table 4.10.Respondents Earning income and life standard status ......................................... 39

Table 4.11 Expanding Business Plans ....................................................................................... 40

Table 4.12 Benefits of informal business................................................................................... 41

Table 4.13 Street vending business main marketing areas ..................................................... 42

List of Figures Pages

Figure 2.1: Regularity frame work of Challenges of street venders during operate their work ... 24
Figure 4.2: Street Vendors Marketing Areas ........................................................................... 43

IX
 List of Acronyms

ANC African National Congeries

BDS Business Development Services

BIDPA Botswana Institute for Development Policy Analysis

CSA Central Statistics Agency

ETB Ethiopian Birr

FDRE Federal Democratic Republic of Ethiopia

FGD Focus Group Discussion

GDP Gross Domestic Product

GTP Growth and Transformation Plan

IEMS International Education and Migration Service

ILO International Labor Organization

LC Level of challenge

MFI Micro Finance institutions

MoTI Ministry of Trade and Industry

SME Small and Micro Enterprises

SPSS Statistical Package for Social Science

TVET Technical and Vocational Education and Training

WTO World Trade Organization

X
 CHAPTER ONE

1. Introduction
This chapter begins with research background to give an idea about the area of the paper to the
reader. It followed by background of the study, the statement of problem, the formulated
research questions, objectives, significance of the study, scope of the study and limitation of the
study.

1.1. Background of the Study

The purposes of this paper assess the practices and challenges of street vending business in
Addis Ababa: in the case of Yeka and Bole sub cities in particular. In order to achieve the
research goals, this study would employ a multi-methodology approach in which both
quantitative and qualitative methods are used. I apply a qualitative approach to review the
literature in an exploratory nature and to explain and comprehend the research findings. In this
paper, street vending includes sellers of any type along the streets, sidewalks, squares, public
parks or in other public spaces, including those selling prepaid phone cards, newspapers,
second-hand clothes, as well as those shoe shiners and tailors . Street vendors are part of
the informal sector, in which workers are portrayed as mostly unregistered, unregulated and as
unable to access organized markets or institutional support. And even if these workers are
registered or covered by some aspects of the law, then they are still often unprotected in the
workplace by social security and labor legislation (ILO, 2004).

Street vendors have an important role in the informal economy by making a significant
contribution. Studies indicate that over 25% of the workers globally operate in the
informal sector. Due to the constant influx of people from the rural areas, the informal economic
activities mobilize 30% to 80% of the workforce especially in the urban regions of the
developing countries.

1
In this study, the terms―hawkers and―street vendors‖ have the same meaning. (Bhowmik,
2005) uses these two terms interchangeably in his study of street vendors in Asia. A hawker is a
person who sells any article in any public place or on any street, whether it is for human
consumption or not. Street vendors buy products from wholesalers, manufacturers or large
scale retailers and sell it to the final consumers in profit. Vendors can be a flexible
(Mobile) i.e. move from one point to another searching for customers, or stationary (fixed) i.e.
they position their products at the same place every day (Asiedu & Agyei- Mensah, 2008).
Street vendors: According to (Jain, et.al, 2016) uses street vendors interchangeably with “street
trader” or “street hawker”. Street vendors are distinguished from vendors who use off-street
markets, which can be public/private.

When, they move off the street, they are referred to as market vendors/micro
entrepreneurs, although their businesses might be the same or they may be in mobile in the sense
that they move from place to place by carrying their wares on push carts or in baskets on their
heads. An integral component, distributors of goods and services at affordable prices and those
who provide consumers with retail options and forma vital part market of a city are
described as Street Vendors (Broomley, 2000).As cited by Farinmade Ademola and
Anyankora,M .I. “The informal sector is generally viewed as another sector outside the
normal organized formal sector that provides employment and sustenance through
engaging in a variety of activities, such as street trading, hawking, vulcanizing, local
manufacturing and cobbling to mention but a few. The sector is characterized by small scale
operations, labor intensive techniques, low-income families, private and indigenous
ownership of enterprises that are largely unprotected by government‟‟ (Lawanson, 2011).
“Informal business sources from Unemployment, resource scarcity, lack of education, low
productivity in agriculture, high population, high economic competition, is forced millions
of youths of developing countries like Ethiopia migrate to urban to get employment and
participate in informal trade ‟‟(Aryeetey, 2009). The informal sector is a source of livelihood
for millions of vendors, mechanics, domestic workers, bus drivers and micro-entrepreneurs.
Broadly defined as small-scale, self-financed activities operating with a low level of organization
in an unregulated environment, the informal sector has exploded with globalization and
economic openness (Verick, 2006).

2
Economic activity in countries simply cannot be understood without recognizing that a
great share of income, output and employment is generated outside the formal economy. The
sector is characterized by small scale operations, labor intensive techniques, low-income
families, private and indigenous ownership of enterprises that are largely unprotected by
government.

The main features of informal sector economic units are: ease of entry; small scale of
the activity; self-employment; little capital and equipment; labor intensive technologies; low
skill; low level of organization with no access to organized markets, formal credit,
education and training or services and facilities; low productivity and low income. Informal
sector participants generally live and work in appalling, often dangerous and unhealthy
conditions, usually without basic sanitary facilities, in the shanty towns of urban areas
(Lawanson, 2011). The informal business covers a wide range of labor market activities that
combine two groups of different nature. On the one hand, the informal sector is formed by
the coping behavior of individuals and families in economic environment where earning
opportunities are scarce. On the other hand, the informal sector is a product of rational behavior
of entrepreneurs that desire to escape state regulations.

These are, Coping strategies (survival activities): casual jobs, temporary jobs, unpaid jobs,
subsistence agriculture, multiple job holding, unofficial earning strategies (illegality in
business): un official business activities: tax evasion, avoidance of labor regulation and other
government or institutional regulations, no registration of the company; Underground activities:
crime, corruption activities not registered by statistical offices. The informal sector plays an
important and controversial role. It provides jobs and reduces unemployment and
underemployment, but in many cases the jobs are low-paid and the job security is poor.
It supports entrepreneurial activity, but at the detriment of state regulations compliance,
particularly regarding tax and labor regulations. It helps alleviate poverty.

The concept of the informal sector was introduced into international usage the
International Labor Organization in its Kenya Mission Report, which defined informality as a
way of doing things characterized by (a) ease of entry; (b) reliance on indigenous resources; (c)
family ownership; (d) small scale operations; (e) labor intensive and adaptive technology; (f)
skills acquired outside of the formal sector; (g) unregulated and competitive markets.

3
The informal sector workforce can be categorized into three broad groups:

(a) Owner-employers of micro enterprises, which employ a few paid workers, with
or without trainers;
(b) Own account workers, who own and operate one-person business, who work alone or
with the help of unpaid workers, generally family members and apprentices; and
(c) dependent workers, paid or unpaid, including wage workers in micro enterprises,
unpaid family workers, apprentices, contract labor, home workers and paid
domestic workers (ILO, 2009). Its contribution to the economy now matches and
sometimes even outweighs that of the formal sector in many developing
countries: in 2009, informal activity accounted for over 80% of non-agricultural jobs in
Sub-Saharan Africa and South Asia, 50% of gross national savings in India, and 58%
of non-agricultural growth in Ghana (CUTS, 2009).
This expansion shows no sign of slowing down. Even in the presence of strong economic growth
in Southeast Asia and Latin America, rates of informal employment have increased steadily
over the past twenty years, with formal employment stagnating in comparison (Jütting and
Laiglesia, 2009). Yet despite the clear economic, political and social importance of this
phenomenon, a wide knowledge gap remains concerning the impact of informal sector
size on macroeconomic outcomes (Gerxhani, 2002). There has recently been a renewal of
interest in the dynamics of informality, yet the discourse is not without disagreement:
economists and decision-makers disagree as to whether this phenomenon is a problem to be
suppressed or an opportunity to be stimulated. Some experts argue that due to their small size,
informal firms cannot achieve high capital intensity and productivity (Pagés, 2010).

Furthermore, a large informal sector may create competition for official firms and draw workers
away from these, with negative repercussions for public finance. At a January 2011 panel
event hosted by the Organization of American States (OAS), for example, participants
discussed the problem of the informal sector and presented various roadmaps to
formalization as proposed policy responses (OAS, 2011). On the other hand, the rising
popularity of microfinance initiatives and of micro-pension schemes for informal workers cast
informality as a force for inclusive economic development in poor countries. Informal sector jobs
can enhance the competitiveness and flexibility of production, allowing workers to find

4
employment in the absence of government support (Misati, 2010). To measure the magnitude of
informal sector several approaches may be used to estimate activity in the informal sector. The
choice or combination will depend on the objectives which range from very simple such
as only having information about the evolution of number and characteristics of persons
involved in the informal sector, or more complex such as obtaining detailed information
about the characteristics of the enterprises involved, the main activities undertaken,
number of employees, income generation, capital equipment, etc. The choice of
measurement method depends upon data requirements, statistical systems organization, financial
and human resources capability and user needs, especially policy makers involved in economic
decision taking.

The main methods used to obtain estimates of the magnitude of the informal sector can
be separated into three classes: Direct methods, indirect methods and Model approaches
consequently.

Direct methods are microeconomic in nature and based on surveys or the results from tax audits
used to construct estimates of total economic activity and its official and unofficial (or measured
and unmeasured) components. In order to make a direct estimate of the informal sector several
approaches are used, To conduct a special survey on the informal sector, To expand the
coverage of the existing regular surveys, such as labor force or household surveys, with
information pertaining to the informal sector, To carry out mixed household–enterprise
surveys. Special surveys on the informal sector, even if they are the most appropriate for
data collection, are very costly and often entail sizeable financial and human resources.

Indirect methods are macroeconomic in nature, and combine various economic variables and a
set of assumptions for producing estimates of total economic activity (that is, measured and
unmeasured, official and unofficial). Hence, only the size of the informal sector may be
estimated, not any other relevant information and indicators about the country, like the extent
of social protection, access to education, health, credit, differences in wages and working
conditions and prevalence of poverty.

5
Indirect methods can be sub-classified as follows:

 Discrepancy methods that rely on differences between aggregate income and

expenditure that capture the economic activity of the informal sector or between labor
force and formal employment. This estimation of the informal sector based on
the differences between aggregates requires having independently obtained
measures of GDP using expenditure and income approaches and thus, limiting its
application in practice.
 Monetary methods are by far the most used in the empirical literature. They are based
on the assumption that hidden transactions use only cash; so, estimating the
quantity of money in circulation and then taking away the incentives that induce
agents into informality (usually taxes) should give a good approximation of the
money used in informal activities.
 Physical input methods use discrepancies in electricity consumption and GDP. This
method has limitations due to the assumption of a constant coefficient of use per
unit of GDP which does not consider technological progress and starts its
estimation from a base year in which the magnitude of the informal economy is zero
or negligible (an unrealistic assumption for most countries).
The Model approach for measuring the informal sector involves using structural equations to
link unobserved variables to observed indicators and cause. The most common method is that of
the Multiple Indicator–Multiple Cause (MIMIC) model that imputes a level of underlying
informality from a set of presumed causes of informality on the one hand, and
measurable consequences of it, on the other. Among the causes that can be included are
taxation level, inflation, salaries, and unemployment; the indicators refer to the currency in
circulation and real GDP. The two main components of the model, the measurement
equation and the structural equation, provide the size of the informal economy using the causes
and indicators included in estimations (Dalisay, 2008). The informal sectors activity is practiced
with full of challenges like lack of initial capital, inadequate skill, lack of decent market place,
lack of encouraging policy, and with police harassment.

Totally the sector is with unsecured working condition. Street vending is an informal type of
business, which provides goods for sale to the society. This informal sector is an urban

6
livelihood strategy because it is a low entry barrier in terms of skill and capital, family
ownership of enterprises, labor intensive production, no access to formal credit, low skills,
low level of education, low incomes, and unregulated markets (Bhowmik, 2015).

The challenges on street vendors are Absence of official protection and recognition, Non
coverage by minimum wage legislation and social security system, Predominance of own
account and self-employment work, Absence of trade union organization, Low income
and wages, Little job security or working condition and No fringe benefits from institutional
sources. Beyond economic capability, street vendors are entrenched in a web of complex
livelihood challenges, which go beyond self-empowerment (Joseph, 2011).

Presently, in Ethiopia, people are engaging in street vending and they are expanding
rapidly specially on the perishable products, with or without any support from the government or
other agencies as their means in surviving their livelihoods. At same time, the income of
street venders becoming dependent on the cash income from sales growth of their
markets. street vending has shown a dramatic increase in Addis Ababa particularly on this
study target locations. However, the marketing performance of these street vendors has
remained beyond the horizon of scientific research. Therefore, the purpose of this study has
been assessed street vendor practices and challenges in terms of their sales specifically in Yeka
and Bole Sub-cities in Addis Ababa.

7
 1.2. Statement of the Problem
Despite of a large number of research about the informality of street vending business,
there is a lack of knowledge about how to make it work efficiently for income poverty
reduction in Sub Saharan Africa counties particularly Ethiopia. Therefore, this proposal aims
at conceptualizing the street vending business for income poverty reduction in Addis Ababa
Ethiopia . Addis Ababa is the capital city of Ethiopia. A lot of people living in this city, out of
the total population nearly 75% are participating on formal sectors and the rest 25% of
all employed population are engaged in street vending business the share of informal
sectors in the city economy plays an important role in poverty reduction and creating
employment through small units of production and services (CSA, 2014).

The activities of the people operating in the informal sector in most urban settlements in
less developed countries cannot be ignored since they play significant role in the development of
the economies of these countries. Street vending business has a great significance on
generating income for the poor people and providing employment opportunity for those
who are marginalized women, low educated youths and disabled peoples in our county and also
play a crucial role of the total development of the economies of our country. So this sector
should not be ignored as an illegal sector rather we have to make it work efficiently for poverty
reduction Particularly in Addis Ababa Ethiopia.

Despite its contribution to economic development, the sector is still regarded as the sector where
the bulk of the poor are found. Scientific studies on the practices and challenges of informal
sector in alleviating poverty and their coping measures are still in short supply in Yeka and Bole
sub-cities. Some related researches were conducted in other sub-cities but their scope was
limited to a specific operator group on specific issue of the informal sector. It is therefore
difficult for officials and policy makers to provide pragmatic solutions to the poverty situation in
the sector. In order to provide objective solution to the practices and challenges in the sector, the
purpose this study has been specifically assess and fill in the gap by conducting a study on the
practices and challenges of employment and income levels, socioeconomic backgrounds and the
various problems faced by unregistered street vending business at the Yeka and Bole Sub -city
level.

8
1.3. Objective of the study:-

1.3.1 General objective:

The general objective of this study has been to assess the practices and challenges of street
vending business in Yeka and Bole Sub – cities in Addis Ababa.

1.3.2. Specific objective:

Based on the General objective of the study the specific objective of the study was:-
 To assess the main source of capital street vendors.
 To determine the constraints faced by participants on the street vending business.
 To determine opportunities for entrepreneurs in the street vending business.
 To identify the reasons why people are engaged in street vending business.
 To identify support needed to this sector from Government and related sectors.
 To explore the socio economic background of street vendors. To achieve the stated
objectives, this paper is organized into three sections. The first section the introduction.
The second part consists of literature review and the third part is the research methods.

1.4. Research question

 What are the main sources of capitals?
 What are the constraints for entrepreneurs in this informal sector?
 What are the opportunities for entrepreneurs in this informal sector?
 Why people are engaged on street vending business?
 What kind of support is needed to informal sector from government and other sectors?
 What is the socio economic back ground of street vendors?

9
1.5. Significant of the study:

The findings of the study have practical significance. This micro level study is expected to
give insights to understanding of the importance of street vending business in Addis Ababa.
The study expected to raise societal awareness of street vends, to identify the factors that
contribute to this operation and to understand the challenges faced by the vendors. In due
course, it is hoped that this study would provide information to donor communities about
recent statistical data and research findings. It may also have some contribution to the
formulation of appropriate policies for reducing and managing the problems of street
vendors. The concerned bodies have use the research findings to focus on the root
causes of street vending attention to the observed problems. In addition to this, the
policies may facilitate to have further studies on the problem since there is little relevant and
comprehensive data on the problem of street vending.

1.6. Scope of the study

The informal business is highly expanding in Ethiopia. The scale of expansion is alarming in
Addis Ababa city administration. This thesis was mainly concentrate on practices and
challenges of street vendors in Addis Ababa particularly Yeka and Bole sub cities. And it
does not look over all informal sectors focus on. The scope of the study restricted to un-
registered street vendor or informal sector operators in Addis Ababa city specific locations
Yeka and Bole sub-city Administration.
The study has been gives emphasis on socio-economic analysis of the vendors and identifies
appropriate strategy to include street vending into both sub-cities system. However given the
complexity of street vending and diversity of individual circumstances suggesting any
generalized solution to the existing problem for a large and growing city like Addis Ababa
is quite difficult task. The scope of this study is limited in terms of commodity and
geographic coverage to assess the areas under stated in two sub cities administration only
to some selected street vendor local markets namely: Megenagna, Shola, Cotebe 02,
Kara, Bole (Bole around the area) and 22 square areas located in two sub– cities.

10
1.7. Limitation of the Study:
A Street vending is illegal or informal operation; it was difficult to do data collection as some
vendors were not willing to talk to me. Furthermore, it was a challenge to find the street vendors
as they were scattered in different places and it was time consuming for me because I
had to move from one vendor to the other asking. If they were in the market before they went to
the streets.

Generally due to the nature of my respondents carrying out the research was resource and time
consuming because the street vendors had to attend to their customers as well as talk to me. The
research limitations are bulky, exhaustively due to limited resources such as

 when the questionnaire distribution the vendors are not voluntary

 Low return of questioner
 budget and time constraints
 Carelessly fill the questionnaires and it is very much difficult to get a population list
of the study

1.8. Organization of the study

The study is divided into five chapters. Its contents organized as follows: Chapter one
provides Background of the study, Statement of the problems, Objectives, Research questions,
Significance of the study, Scope and Limitation of the study, Chapter two consist Review of
the literature under the considering of both Theoretical and Empirical literatures which are
related to street vending. Chapter three deals with Method of the study related to the Challenges
and Practices of Street Vending business in Yeka and Bole sub- cities administration in Addis
Ababa. Chapter four about Data Presentation, Analysis and Interpretations .Finally, Chapter
five told about Conclusion and Recommendations

11
 CHAPTER TWO

2. Review of Literature

2.1. Introduction
Literature is reviewing to find out the state of knowledge in the subject under consideration, so
that other areas requiring further work would be pointed out. The related works that are already
done will be reported to prevent its being repeatedly published. Literature review brings up-to-
date, the level of academic works that have been done and those that are currently going on in
the area of study. This gives the researcher a wider knowledge of the area of study and at the
same time prevents plagiarism of somebody‟s efforts .This chapter reviews works on assess the
practices and challenges of street vending business in Addis Ababa: The case of Yeka and bole
sub cities in particular. This help to understand the state of practices and challenges of street
vending business and its determinants of the performance. The literature recognizes many
discussions aimed at understanding the phenomenon linked to growth in respect of street vending
business. Different approaches and models related to growth imposed the need for their
classification.

The concept of informal economy originated in the Third World out of studies on urban
labor markets in Africa (Potts, 2007). How to define the informal economy and
differentiate it from the formal economy has been an ongoing contest ever since Keith Hart
first introduced this concept in his work on Kenya (ILO, 1972) and Ghana (Hart, 1973). The
first ILO mission in Kenya distinguished the informal sector from the formal sector on the
basis of seven antipodal traits namely easy versus difficult entry; reliance on local rather than
foreign resources; family in contrast to corporate ownership; small versus large-scale
enterprises; labor intensive and adapted instead of capital intensive and imported
technologies; informally rather than formally acquired skills; and unregulated and
competitive as opposed to a protected market.

The informal sector comprises of street vendors, domestic workers, home- based workers,
construction workers, transport workers, and waste pickers. Street vendors and home based
workers makeup the largest group of informal sector operators. While home-based workers are
invisible but numerous, street vendors are the most visible and self-employed entrepreneurs
12
(ILO, 2002b). Street vending refers to income-generating activities whereby individuals sell
their wares along streets and pavements to passing pedestrians and motorists. Cross (1998)
uses legal infringements as the defining principle. He terms street vending as the production
and exchange of goods and services that involved the lack of appropriate business permits,
violation of zoning codes, failure to report tax liability, non-compliance with labor
regulations governing contracts, work conditions, and/or legal guarantees in relations with
suppliers and clients. Over the years, there have been continuous debates among the three
theories regarding the informal economy. According to the dualist theory, the persistence of
informal activities is due to the fact that not enough formal job opportunities have been
produced to take in surplus labour due to a slow rate of economic development and a
faster rate of urbanization (Tokman 1978). In this logic the economy was conceived as being
dual, consisting of traditional and modern sectors. Thus, the dualistic theory views the formal
and informal sectors as having almost no links with each other and in theory represent
almost two opposite parts of the economy.

However, (Chen 2007) disputed the dualist view of thinking by arguing that, the formal and
the informal economy are often dynamically linked with many informal enterprises having
production or distribution relations with formal enterprises, supplying inputs, goods or
services ready for the market either through direct transactions or subcontracting
engagements. Moreover, several formal enterprises employ wage workers under informal
employment relations, for instance, the majority of part time workers, temporary workers and
home workers work for formal enterprises through contracting or sub-contracting arrangements.
Hence, in reaction to the dualist theory, a new understanding of the informal sector emerged with
the name structuralism. The structuralize theory is also known as the black market theory, the
underground theory, the world systems theory and the Portes theory (Rakowski 1994). The
structuralist school was propounded by Moser and by Castells and Portes in the late
1970s and 1980s and they focused on the analysis of the modes of production within the
capitalist system and the subordinations that occurred within it (Saha 2009).

13
 2.1.1. Three schools of Thoughts about Informal Sector
There are three schools of thoughts about the informal sector:-

 The romantic view (De Sato, 1989) holds that, most of the informal undertakings are
not quite different from the formal one; the distinction is that, they happen to be born in
informal environment. If they will be intervened by the government in terms of policies,
regulations, capital and skills they could perform in the same way as the formal
sector (Granström, 2009). Basing to this view the informal sector is an engine of growth just
waiting to be released by giving informal firm's property rights (Porta & Shleifer, 2008).
According to this view informal firms are potentially productive, but held back by
government policies, regulations, and limited access to finance. Therefore if such
barriers would be eliminated informal businesses would register and take advantage
of the benefits of their formal status. Generally, this view believes that informal
undertakings are basically similar to official ones.
 The Parasite view sees informal enterprises from the perspectives of illegality and presents
them as a means to gain an unfair advantage in their competition with the formal sector
(Porta & Shleifer, 2008; Jütting & Laiglesia, 2009). It views, informal sectors as surviving
at the expense of the formal sector. The parasite view holds that informal firms need to
stay small to avoid detection. The decision to remain in the informal economy is a
rational one, because the cost advantage of escaping taxes and regulations allows unofficial
firms to undercut official firms in prices. Informal firms are thus hurting growth
because their small scale makes them unproductive and because they take away market
share from more productive, formal competitors. Government policy should aim to
eradicate informal firms by reducing tax evasion and increasing government
regulation enforcement. According to the dual view as advocated by Harris and Todaro
(1970), informal firms are highly inefficient, do not pose much threat to the formal firms,
but also do not contribute to economic growth, which is driven by the efficient formal
firms (Porta & Shleifer, 2008).

 The dualists argue that the informal actors and their operations have few linkages to the
formal economy, but, rather, operate as a distinct separate sector of the economy (Chen,
2007). Given the heterogeneity of the informal economy, there is some truth to each of these

14
 perspectives. Unlike the previous study (La Porta & Shleifer, 2014), this work is in
favor of De Soto‟s romantic view of informality. This means that if the street vendors
will be empowered in terms of business permits (license), policy, regulation special
vending zones, appropriate business skills, vending association, and business security
they would provide impetus to income growth and general business development which in
turn could reduce poverty.

2.2. Definition of Street Vendor

Street vending as an informal type of business, which offers goods for sale to the public, without
having a permanent built-up structure. Lyons and Msoka (2010) define street vending as all non-
criminal commercial activity dependent on access to public space, including market trade, trade
from fixed locations and hawking (mobile vending). The term “street vendor” in English
is typically used interchangeably with “street trader,” “hawker,” and “peddler”. Statistics
about street vendors are scarce at national and international level due to the nature of
vending business e.g. mobile, part time, and informality (Skinner, 2008). However, as a share
of total informal employment, street traders generally accounted for 15-25 percent in African
cities, 10-15 per cent in Asian cities, and 5-10 per cent in Latin American cities for the year
2001/03 (Esquivel, 2010). Lyons and Msoka (2008) estimated 700,000 street vendors in the Dar
es Salaam city in 2007. However the interview with the city authority shows that the number is
more than 1 million in 2014. Street vendors could be stationary and occupy space on the
pavements or other public/private areas, or could be mobile, and move from place to place
carrying their wares and move on the street (Bhowmick, 2005). The mode of operation of SVB
differs from one vendor to another, depending on the type of products sold. The most
common structures used to carry/display products are tables, wheelbarrows, bicycles,
baskets, and buckets. Others carry their products on hand, shoulders, or by using a special board
built by used boxes and gunny bag. When it comes to clothes, vendors usually hang their
products over the walls, fences, parked cars, and on bridges. It is common to find street vendors
in highly populated areas like bus stands, high traffic roads, near the market, football grounds
and worship centers.

Micro-enterprises (e.g. SVB) are claimed to be important for surviving or escaping poverty
in developing country cities (Lyons, 2013).This is because they provide employment, income,

15
relative cheap price products, and a variety of newly products to the public (Adhikari, 2012).
Conversely vendors are continuously on the run due to constant harassment, assault and seizure
of goods by the local government authorities or police in and other users of the city space
(Asiedu & Agyei-Mensah, 2008). Furthermore, they are challenged by limited access to
capital, unstable security, unplanned policies on urban development, harassment from the
owners of formal business, and low level of business skills (Falla, 2013). They lack
intrinsic empowerment, basic freedoms, self-confidence, walking with dignity, feeling respected,
and living without fear (Nussbaum, 2003). These hindrances limit opportunities for street
vending business (SVB) to work efficiently for the income poverty reduction. Godfrey
(2011) argues that the informal economy has a great potential for poverty reduction and
researchers should focus more into this relation.

Poverty is often presented as an evolving concept linked to dominant development paradigms. It

can be defined and measured in different ways; the common ones are direct and indirect
methods. A direct definition of poverty focuses on relative deprivation (poverty seen as
having unfavorable living condition), usually base on basic living requirements. The indirect
poverty definition is using a yardstick for consumption and living conditions such as disposable
income (poor if disposable income is less than minimum subsistence) in other words it
is referred to as income poverty (Dixon et al., 2002). In other words, income poverty is when
income fails to meet the established threshold. The international standard of extreme poverty is
set to the possession of less than 1$ a day (Smelser & Baltes, 2001). Poverty is often
presented as an evolving concept linked to dominant development paradigms. Poverty can
be defined and measured in different ways; the common ones are direct and indirect methods.

A direct definition of poverty focuses on relative deprivation (poverty seen as having

unfavorable living condition), usually base on basic living requirements. The indirect poverty
definition is using a yardstick for consumption and living conditions such as disposable income
(poor if disposable income is less than minimum subsistence) in other words it is referred to as
income poverty (Dixon et al., 2002). In other words, income poverty is when income fails to
meet the established threshold.

16
The international standard of extreme poverty is set to the possession of less than 1$ a day
(Smelser & Baltes,2001). Tanzania is one of the poorest countries in the world; for instance,
in the human development index (HDI) -2013 its values is 0.488 which is in the low human
development category, positioning the count ry at 159 out of 187 countries in the report (UNDP,
2014). Despite recording high rates of economic growth over the years, averaging 7 per cent per
annum since 2001, the level of poverty remained high in Tanzania with one -third of the
`population considered poor (UNDP, 2014). The Tanzania Household Budget Survey,
2011/12 shows that the incidence of Basic Needs Poverty has declined from 34.4 percent in
2007 to 28.2 percent in 2011/12 whereas Extreme poverty has been reduced by 6.5 percent
between 2007 and 2011/12. Regardless of the significance in the decline of poverty over recent
years, Tanzania remains a poor country. In 2012, its average per capita income stood at US$
570, placing it in the 176th position out of 191 countries in the world (World Bank, 2014). Hence
there is a need out on how to reduce this level of poverty.

2.2.1. Categories of Street Vendors

Although street vendors classification (Bhowmik, S. K. 2003, 2005) can be possible on
various factors but according to the need of the study we have classified street vendors on the
basis of their mobility and working duration. On the basis of the aforesaid criterion, there are
three categories of street vendors:

 Those Street Vendors who carry out vending on a regular basis with a specific location
 Those Street Vendors who carry out vending not on a regular basis and without any
specific location, for example, vendors who sell goods in weekly bazaars during
holidays an d festivals.
 The Mobile Street Vendors

2.2.2. Working Conditions of Street Vendors

The street vendors spend nearly 10 hours a day in their business. Most of them take up to 5
hours every day for preparations. It includes visit to the wholesale markets for street vendors..
During their working time vendors are facing many problems from the public and police
personnel. They are not protected from the harmful weather conditions like heat, rain, dust
and lack of storage facilities. Those people selling non perishable household articles too
have to go to the wholesale market to procure their goods at lower prices. Taking into

17
account both preparation time and the time for selling we find that at an average a street vendor
spends up to 15 hours every day in his or her activities in order to earn a hundred or
two hundred rupees (CUE Report, 2014).

2.3. Causes of Street Vending

According to (Bhowmik, 2005), people join street vending to have a source of income. Street
vending is also employed as means of avoiding depending on others for economic
purposes. Street vendors use their personal saving as start-up capital to begin street
vending. Lack of gainful employment coupled with poverty in rural areas has pushed people out
of their villages in search of a better existence in the cities. These migrants do not possess the
skills or the education to enable them to find better paid, secure employment in the formal sector
and they have to settle for work in the informal sector. In industrial countries the informal sector
will appear due to lose of jobs because of closures, down-sizing or mergers in the
industries they worked in and the employers or their family members had to seek low-paid
work in the informal sector in order to survive.

The first category namely low skilled rural migrants exist in all countries of Asia but they are
more prevalent in the poorer countries such as India, Bangladesh, Nepal, Cambodia and
Vietnam. These countries did not have a strong industrial base and in the past too. The urban
workforce was engaged mainly in the informal sector.

The second category, namely, workers who were earlier in the formal sector, exists in
countries such as Philippines, South Korea, Thailand, Malaysia, Indonesia and India
(Bhowmik, 2005). Street vendors, particularly in Addis Ababa Ethiopia there are face main four
common constraints outlined by (Belesti Wodaje, Kelemua Zenebe, Yigerem Terefe, and Terry
B. Northcut, 2019).

 Economic pressures (unemployment, lack of access to formal employment, and lack of start-
up funds and collateral for bank loans)
 Socio-cultural challenges (gender and disability barriers that exclude women and disabilities
from education and training and competition with other traders and formal businesses)

18
 Adverse political conditions (lack of political stability, lack of policies protecting rights
safety, ethnic‟s conflict, corruption and lack of essential health and public services outside
the capital city).
 Operational challenges (e.g., fees, lack of security, bad weather, territorial conflicts, and
harassment).

2.3.1. Challenges faced by street vendors

The challenges are Absence of official protection and recognition, Non coverage by minimum
wage legislation and social security system, Predominance of own-account and self-employment
work, Absence of trade union organization, Low income and wages, Little job security
or working condition and No fringe benefits from institutional sources. Beyond economic
capability, street vendors are entrenched in a web of complex livelihood challenges, which go
beyond self-empowerment (Joseph, 2011). They are subjected to repressive planning legislation
which excludes them from street trading (Joseph, 2011; BIDPA, 2011). According to the 2007
Informal Sector Survey (2009), many street vendors enterprises in Botswana are faced with
the following challenges; non-payment of goods and services supplied on credit to their
customers; high competition, lack of managerial skills which were the most constraints
among operators, lack of space for business operations and lack of credit facilities. Though
street vendors are one of the highly visible informal sector activities, street vending is mostly
unregulated trading that takes place in public spaces such as streets, sidewalks, bridges,
pavements etc.

Botswana government and the private sector have been assisting micro enterprises but not paying
much attention on the component of training small business owners on how to manage
their businesses for long term survival in the market (Gobagoba and Littrell, 2003;
BIDPA and CEDA, 2007). In developing countries urban planners formulate policies to control
the operation of the informal sector activities particularly street vending (Palmer, 2007)
but some of these policies are not friendly to street vendors (Palmer, 2007; Joseph, 2011). For
instance, they carry out frequent inspection and do destructions, removal of goods and
sometimes remove some street vendors from where they operate (Joseph, 2011). Furthermore,
restrictive bureaucratic regulations are some of the challenges that affect street vendors and lack
of facilities to conduct their business. Due to competition street vendors sometimes as a way of

19
attracting customers, they sell their products at low prices which in turn a lead to reduced profits
(Sekar, 2007; Bh at and Nengroo, 2013; Jimu, 2004; Fuller-Love, 2006). Furthermore, there is
lack of appropriate land zones gazette specifically for street vending in Gaborone (Joseph,
2011). Location preferences for street vending enterprises are customer driven such that
the officially poorly zoned market area at Bontleng, becomes unattractive to even the new
entrants (Joseph, 2011). Moreover, urban planners are reluctant to organize spaces such as
market stalls within street vendors‟ site of preference (Monnaesi, 2011).Joseph (2003) indicated
that there was lack of definite statutes, disjunction between licensing and land requirements,
lack of consultation, environmental and public health concerns. Street vending and other
informal sector activities in Botswana are managed using clauses found in legislations
drawn to address different issues such as public health, food control, and environmental
management (Joseph, 2003; Joseph, 2011).

There is lack of inspection on health issues and poor hygiene practices tend to pose significant
health risks to street vendors. They also highlighted that there are health risks in preparation and
handling of food. The food can be contaminated with bacteria as some food lack covering. There
is issue waste water which is usually splashed everywhere which can be a breeding
place for mosquitoes and malaria (Ayed et al., 2011).

2.4. Street Vending in Ethiopia

A 2002 study by the Association of Ethiopian Microfinance Institutions estimated that the
informal sector in Addis Ababa to be 51 percent of the productive economy (UN, 2006). While
the informal economy in Ethiopia is considerably large, for every ten registered firms there are
almost four non-registered firms (Enterprise Survey, 2014). This number is significantly lower
compared to Ethiopia„s regional counterparts. For instance, the average for Sub-Saharan Africa
is 7.5. Ethiopian entrepreneurs also indicated one of the lowest rates of firms identifying
competitors in the informal sector as a major constraint (only 11%). This number is over three
times higher in Su b-Saharan Africa (37%). A survey conducted by the Central Statistical
Authority (CSA), in 1997, showed that there were 584,913 informal sector activity operators
and 2,731 small-scale manufacturing industries, employing a total of 739,898 people. The
survey indicated that activity is concentrated in the manufacturing and trade (47%) and services
sectors (42%). According to the 1997 data by the CSA, the size of labor force engaged in

20
informal sector activities and small-scale manufacturing industries was eight times larger than
that of the medium and large-scale manufacturing industries (EBDSN, 2014). Recent
estimates of the informal sector in Ethiopia place the sector at 69% in Addis Ababa, compared
to the national average, which lies below 15% (World Bank, 2014). Of the informal
activity, street vending comprises a widespread economic activity in Addis Ababa. The
urban poor are typical involved in the activity. Street vending in the city, significantly contribute
to the city employment. An integral part of the urban economy, they provide a wide variety of
good at bargain prices. One finds street vendors and their markets in almost all the district of
the city selling goods and service without obtaining permit giving receipts or paying taxes.
Some of vendors operate at sidewalks busy roadways and intersection where large number of
people gather or at bus stop, especially at first and last stop. Other walks around the city selling
goods or services without a fixed place to operate (Girma, 2004; cited in Girma, 2009).

In a general context street vending is widely understood as an inevitable phenomenon tied to

urban growth. In the context of Addis, it has proliferated as a way of life and a coping
mechanism adopted by those economically under privileged segments‟ of the society. It is also
considered as the chief source of self-employment for the unskilled labor force that has been
increasing in each passing day as a result of increased rural-urban migration. There is,
therefore, the need for policy makers, town planners, law enforcement bodies and other
stakeholders to rethink and find ways of sustainably addressing street vending as one
form of the socio-economic problem. It is undeniable fact that street vendors often take illegal
and risky ways to avoid accountability. No wonder thus street vending not only creates
chaotic scenes but also causes traffic accidents and obstructs side-walks. Obviously street
vending hurts legal trade and hurts economy by denying the government revenues that it
would have collected in the form of taxes; thus, the growing problem is not unnoticed by the city
administration (Melekot, 2004). Street vending also poses a health threat as many are
engaged in vending food items on the streets. Since street foods are produced by those with
limited knowledge about food safety with little care. In that regard, most users have a good
chance to be victim of health risks. A further risk may occur from the use of foods and raw
materials that contain chemical contaminants like drugs. Micro and Small Enterprise
Development Program has been given due attention by the government since 2004/2005.
The program has been largely successful. However, when it comes to street vendors there

21
has been little done to organize them in micro and small scale enterprises. Besides rural
urban migration exacerbated the street vending problem Street vending is all about trading
without paying tax and the nuisance it creates on the streets has its own negative impacts.

2.5. Empirical Review

The World Bank (2000) defines poverty as the economic condition in which people lack
sufficient income to obtain certain minimal levels of health services, food, housing, clothing and
education generally recognized as necessary to ensure an adequate standard of living. Poverty
reduction is a function of many things, but the common one is the economic growth (Khan,
2009). Roemer and Gugerty (1997) argued that “GDP growth of ten percent per year is
associated with income growth of ten percent for the poorest. These results give strong support to
the proposition that growth in per capita GDP can be and usually is a powerful force in reducing
poverty.

The findings show that the informal cross border trade contributes positively to poverty
reduction. The contribution has been noticed through the improvement in the socioeconomic
well -being of traders, traders to acquire assets and improved food security. This calls for the
government to develop policy and regulations for effective informal business operation, hence
contribute to the national development. In sub -Saharan countries where formal employments
are little and the level of education of many youth is minimal, informal business could serve as
an alternative source of employment. The study recommends that, policy in low income
countries should include the role of informal sectors and the governments should improve the
working conditions of the informal sector. In many African countries the working conditions of
the informal sector are difficult and not regulated by the government policy and regulations. Kar
and Marjit (2009) in India explore the connection between informal trade and poverty. The
findings show that the, growth of informal wage in the informal sector is capable of reducing the
incidence of urban poverty.

The study argues that, real informal wage increased with trade reform and transmitted favorable
impact on urban poverty reduction. Yeboah‟s (1980) study in sub-Saharan Africa argues
that instead of discouraging informal trade activities emphasis should be on encouraging
them and providing them with institutional, managerial, technical, and financial support
necessary to grow and contribute to the economies. Mlinga and Wells (2002) Study in

22
Tanzania show that, the informal sector (construction) is ignored and receives little support from
the government. The study argues for the government to develop policies for supporting the
informal sector that can used to address the needs of the informal sector, where the bulk of the
labor force is found, as well as those of the formal sector. The study found strong linkages
between formal and informal construction industries in Tanzania in the form of outsourcing. All
these studies prove the ability of the informal sector to contribute to poverty reduction, through
creation of employment and earnings. However, all the studies recommend to the government to
develop favorable policy and regulation for smooth and effective informal sector
operation. The informal sector is a combination of many industries e.g. construction,
manufacturing, trade, employment, and many others yet none of them explore the linkages of
street vending business and informal business.

2.6. Good Practices

According to Harlan Dimas, in his book of street vendor‟s urban problem and economic
potential, there is no question that for many people street vendors are a major pain. They obstruct
foot and vehicle traffic, due to their encroachment of sidewalks/pavements and roads. They are
unsightly, due to their slap-dash shelters or booths. Their booths and shelters also reduce air flow
and sun rays. They are dirty and disorderly. First and foremost is a change of mindset. People
make and enforce policies. Without the correct attitude with respect to street vendors there will
not be any sustained policy effort to support them. In Thailand (ILO, 2006) and India (ILO,
2007) are good examples of public concerted effort to support. Macroeconomics is a necessary
factor. The conventional view of trickledown effect is not totally in error. With better economy
the need for informal sector employment will be less and, in turn, there will be less street
vendors also (both mobile and static). Development economists have for some time advocated
rural development to prevent rural labor migrating to urban areas. With prosperity in the
villages there will be less need to search for employment in the crowded least developing
countries (Todaro, 2005). Consequently, allocating scarce capital to the cities to alleviate urban
poverty will only attract more rural migration. The Central Bank of Indonesia (2006) initiated
rules to guide micro financing institutions. Brazil has two examples of successful micro
financing institutions (ILO, 2005). Microeconomics: in the end the local implementation is
what counts. One of the most difficult obstacles to overcome is bureaucracy. For informal sector

23
participants generally and street vendors specifically, the cost of bureaucracy is often too prized.
They simply cannot afford to pay the price, so they never can step up to formality.

2.7 Regularity Framework

Institutional and legal framework is important for ensuring the smooth operations of
business. Inappropriate regulations raise the cost of business entry, growth and distort markets.
The institutional framework for informal activities including street trade has generally
been hostile in most Addis Ababa sub-cities. The policies, by-laws, regulations, registration,
licensing, organizing, relations with government and other partners are major issues which
can used as framework.

Figure 2.1: Regularity frame work of Challenges of street venders during operate their work

24
 CHAPTER THREE

3. Research Methodology

3.1. Introduction
The main purpose of this study has been to assess the practices and challenges of street vending
business in Addis Ababa: The case of Yeka and Bole sub cities in particular. This part of the
study provides an overview of the research paper methods. The research consisted research
design, sampling design, target population, sampling method, sampling size methods of data
collection and method of dada analysis.

3.2. Research design

A research design is the arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure. This
thesis used descriptive research design the major purpose is description of the state of affairs as it
exists at present. Then this study has described and critically assessed the practices and
challenges of street vending business in Addis Ababa: In the case of Yeka and Bole sub cities in
particular.

3.3. Research approach

There are main research approaches these are quantitative and the qualitative approach.
Quantitative form which can be subjected to rigorous quantitative. Qualitative approach to
research is concerned with subjective assessment of attitudes, opinions and behavior. But this
thesis used a mixed approach methods. In which the study to conducted under the descriptive
research method in order to answer questions who, what, when, and how. This research method
helps to the researcher take both qualitative and quantitative data to interpret the idea.

3.4. Sampling Design

The total of 16,000 street vendors or informal businesses was found in both sub cities. Among
this, sample size 390 of street vendors found in the two sub cities of Bole and Yeka. Out of them
200 street vendors were chosen from both selected sub cities of Addis Ababa. For this selection
criterion the researcher choose more populated business sub cities. It‟s no registered street
vendors taken based on scope location and proportionate of legally registered traders.

25
 Table 3.1 Distribution of sample size in locations

Sample with Sample people street

S/N Sample size Locations Percent vendors in Ratio

1 Megenagna 200*44.4% 88.8

2 22 or haya hulet 200*9.8% 19.6
3 Cotebe 02 200*30.8% 61.6
4 kara allo/kara 200*3.8% 7.6
5 Shola 200*6.8% 13.6
6 Bole deldy 200*4.5% 9.0
Total 200
Source: Primary Data, 2022
There are 200 street vendors were selected from two sub cities that are usually populous
with vendors were selected In the sample the researcher tried to mix traders that were selling
different products to widen the research scope and it was the research purpose to get more or less
as many men as women.

3.5 Population and Sample Size

3.5.1 Target population

The study‟s target population focused on from targeted the informal sectors or non perishable
product Street vendors themselves.

3.5.2 Sample Size

According to the sub cities administration information above 16,000 non perishable product
street vendors were found in both sub cities. Based on this information the sample size of the
study has been determined using simplified formula calculated by the following Yeoman’s
formula with a consideration of 95% confidence level and 0.05 of margin of error.

n = N/1+N (e) 2
The estimated sample size can be n = 16,000/1+16,000*(0.05) 2

= 16,000/1+40 = 16,000/41 = 390

Where N=number of population n= sample e=error=0.05

26
 3.5.3 Sampling Technique
Sampling technique is a definite plan for obtaining a sample from a given population. It refers to
the technique or the procedure the researcher would adopt in selecting items for the sample. As a
prior the researcher must decide the number of sample that he or she is going to use for the study.
The sampling process is to choose the sampling frame, which is the list of elements
from which a sample may be drawn also called the working population (Zikmund, 2000).
This study employed a mix of different sampling techniques. It has used multi_ stage sampling
technique along with purposive and probability techniques.

3.6 Data sources and Data Collection Method

Collecting data is necessary in order to generate better bindings in the study. Since in this study
method of data collection method collect the necessary data from primary and secondary sources.
Primary data will gather using a questionnaires and interviews for the informants. Secondary
data will gather from published and unpublished materials.

3.6.1 Source of data

Two types of data source were used in this research as primary and secondary. Primary data were
conducted using survey questionnaire, observatory report and interviews. Whereas, the
secondary data was collected from different published and unpublished document like journal,
book, magazine, articles, website, research finding, policy document, manual and other relevant
materials.

3.6.1.1 Questionnaire
The researcher prepared and distributed a structured questionnaire to obtain the required
quantitative data from the selected sample of street venders. The basic reason why this method is
chosen due to the topic and targeted group, i.e., street vendors have no permanent address to mail
or telephone interview and have no accesses to use social network and difficult circumstance for
group discussion. The questioners designed closed ended questions based on the national original
language of Amharic. Then it translated into English.

27
 3.7 Data analysis method
In this thesis both qualitative and quantitative methods of data analysis techniques employed to
analysis of data in this research has been done by using statistical tools like frequency and
percentage. A descriptive analysis would have also used for demographic factors such as gender,
age, marital status, educational level, and for how long has been the participants work on
the street vending business and others variables . Tables employs to present the data and
statistical package for social science (SPSS) version 16.0 was used to support the analysis.

This was achieved through sequences of activities including editing, coding, entry, and
tabulation. Descriptive statistics such as frequency distribution, percentage were used as a
method of data analysis. This method of data analysis is important to analyze the quantitative
data. Qualitative data was analyzed based on the transcripts of taped interviews, from
Amharic language to English, classified and interpreted in a narrative form.

28
 CHAPTER FOUR

Data Presentation, Analysis and Interpretation

4. Introduction
This chapter deal with presentation and Analysis and interpretation of data gathered from
questionnaires on assessment of challenges and practice on street vending business its exist
with Yeka and Bole sub-cities through questionnaire 200 questionnaires are distributed to
Street vendors business workers, among these 133 were collected and the remaining were
uncollectable due to different reasons. This chapter presented in findings on those of the informal
sector participants themselves is presented. In each section, the results are presented in a simple
report, which is divided into two subsections: Conclusion and recommendation. In addition, the
results of the informal sector participants are stated using frequency tables and percentages.

4.1 Demographic Characteristics of Respondents

4.1.1Gender Age and Marital status of Respondents

Table 4.1 Gender Age and Marital status (n= 133)

S/N Items Or Variables Frequency Percent Cumulative

Percent
Male 104 78.2 78.2
1 Gender Female 29 21.8 100.0
Total 133 100.0
Less than 20 15 11.3 11.3
2 Age 20 to 30 89 66.9 78.2
31 to 35 25 18.8 97.0
36 to 40 4 3.0 100.0
Total 133 100.0
Single 96 72.2 72.2
3 Marital status Married 23 17.3 89.5
Divorced 11 8.3 97.7
Widowed 3 2.3 100.0

Total 133 100.0

Source: Own Data, (2022)

29
 The above table 4.1 Sex, Age and Marital Status of the Respondents of the 133 street vendor
participants who were contacted by a questionnaire, the result showed that 78.2% of the
participants were male and 21.8% were female. Which shows the male on street vending
business is huge in number than women as shown in table.

Age is an important demographic variable that influences the physical and mental abilities of
individuals at work. The results of the study revealed that the age of sample respondents ranges
with percentage from 36-40 years of 3 % , less than 20 years 11.3 %, From 31-35 years of 18.8
% and a table huge proportion 69.9% of respondents fall within the age ranges from 20-30
years which is productive age group this shows us the youth and matured groups are
participating on this sector which is the main power full age to change the economic condition of
the country. So, this shows us the sector and the participants need help.

Regarding for marriage status of respondents 17.3% of the participants were married, 72.2%
were single, while the remaining 8.3% and 2.3% were divorced widowed respectively. When we
see on marital status more of them are single this indicates us the sector seems to be the first job
opportunity and income generating area for to have a formal business.

4.1.2. Educational status of the respondents

Table 4.2 Educational level of the Respondents (n=133)

S/N Items or Variables Frequency Percent Cumulative

Percent
5 to 8 14 10.5 10.5
10+1/2/3 114 85.7 96.2
1 Education level Degree 5 3.8 100.0

Total 133 100.0

Source: Own Data, (2022)
As shown the above in the table 4.2 the level of educational status of the respondents the
10+1+2+3 were 85.7%, 5-8 were 10.5% and Degree holder were 3.8% the table shows us
educational statuses of the respondents. It is learned from the data that majority of the

30
respondents were college diploma or TVET graduated level and primary level. It is clear from
these findings that many of the street vendor participants were literate. Some of these
participants may have tried to find a job in the formal sector, but with the high
unemployment rate and low educational level is the cause for the increment of street vending
businesses in the sub-cities. In fact, street vending is created/ provided job opportunity to
many people who were jobless.

4.2 Causes of street vending business and work /business experiences

Table 4.3 cause of Street Business (n=133)
Cumulative
S/N Items or Variables Frequency Percent Percent

No 12 9.0 9.0
It‟s your full time Yes 121 91.0 100.0
1
business?
Total 133 100.0
0 to 3 42 31.6 34.4
3 to 6 73 54.9 94.3
How long have 6 and above 7 5.3 100.0
you been on this Total 122 91.7
2
business?
Missing – 999 11 8.3
Total 133 100.0
Political unrests 28 21.1 21.1
Lack of market place 86 64.7 85.7
Pushing factor of
3 Others 19 14.3 100.0
this business
Total 133 100.0
Source: Own Data, (2022)
As reflected in the table 4.3 the first line analysis indicates that 91.0% of respondents were a
full time street vending business makers and the remaining 9. % respondents were not full time
businesses. The second line analysis indicate 8.3 % were missing , 5.3 % of respondents were six
years and above, 31.6% were zero to three years and More than 54.9% have been in the business
for three to six years, which seems to suggest that business is stable and they have acquired the
needed experience. However, one can argue that some people join the sector as a temporary

31
survival mechanism but simply stay because they lack alternatives. The majority of the street
vendor participants in these Yeka and Bole sub -cities have been involved in the in street vending
business for more than three years.
Third line analysis indicated that pushing factors or reasons of involvement in street vending
business sector 14.3% respondents were other factors, 21.1% were political unrests and more
than 64.7% respondents were lack of market places. It implies the main reason of street vending
business were lack of market spaces and inability of paying rents.

4.2.1. Respondents housing situation and operating of current activities

Table 4.4 House situation and current operation (n=133)

Cumulative
Items or Variables
S/N Frequency Percent Percent

No 127 95.5 95.5

Do you have home Yes 6 4.5 100.0
1
your own? Total
133 100.0
with my parents 17 12.8 13.3
with my friends 7 5.3 18.8
In a rented house 104 78.2 100.0
If your answer is no
2 Total
where did you live? 128 96.2
Missing – 999 5 3.8
Total 133 100.0
It‟s the only source of
118 88.7 88.7
income
To avoid taxation and
Why do you operate 4 3.0 91.7
3 registration
your current activity
Not fulfilled minimum
in the street? 11 8.3 100.0
requirement for registration
Total
133 100.0

Source: Own Data, (2022)

As the table 4.4 Regarding where the respondents live, 95.5% of the participants do not own a
home while the 4.5% of them own house. However, of all those who don„t own home, 78.2%
live in a rented house, 12.8% live with their parents and the remaining 5.3% live with their
friends as indicated. One commonly held characteristic of these respondents was the desire to be

32
independent rather than dependent on someone else for their housing. As for those who rented
a house, it is clear from the figures that an attempt was made by the participants to rent
relatively the cheapest place possible. Minority of the street vendor participants in Yeka and
Bole Sub-City live with their families, while majority of those who rent homes, pay the
minimum rent possible. One can infer from this that the street vending business s in the
sub-cities afforded participants to contribute to their day to day livelihood and be able to support
themselves and their families. With respect to operating the current work/business activity,
88.7% of the respondents stated that they operated their current because it was the only source of
income, 3% said the reason was to avoid taxation and registration fee, and the remaining 8.3%
quoted not fulfilling minimum requirements for registration.

4.2.3 Types of Street Vending Businesses and License Registered activity

Table 4.5.Types of street vending business (n=133)
Frequency Percent Cumulative
S/N Items or Variables
Percent
1 selling clothes 56 42.1 42.1
selling shoes 19 14.3 56.4
Types of businesses? selling bags 13 9.8 66.2
shoe shining 22 16.5 82.7
Others 23 17.3 100.0
Total 133 100.0
Do you have legal No 123 92.5 92.5
2 Registration/license? Yes 10 7.5 100.0
Total 133 100.0
Do not want my business
89 66.9 72.4
be register
3 Do not know if i have to
If your response is no register 6 4.5 77.2
why?
Too many requirements to
14 10.5 88.6
complete registration
My work activity does not
14 10.5 100.0
qualify for registration
Total 123 92.5
Missing – 999 10 7.5
Total 133 100.0
Source: Own Data, (2022)

33
According to the survey from table 4.5 above The types of businesses in which the street
vendor participants are involved in Yeka and Bole sub-cities, 42.1% of respondents are
engaged in selling cloths, 14.3% of them are engaged in selling of shoe, 9.8% of respondents are
engaged in selling of bags, 16.7% of the respondents engaged in shoe shining, 17.3% of
respondents are engaged in selling of others. Hence it shows us selling clothes and others are
respectively the most dominant in the street vending business.
A combination of work or business types to generate income for their livelihood with regard to
registration for license, all of the respondents 92.5% had no official registration/license for their
business activities and 7.5% respondents have an official license. It indicates most of the street
business not required licenses. Of all these with no registration, 69.9% do not want their business
activity to be registered, 4.5% do not know whether they should register, 10.5% too many
requirements to complete registration and the remaining 10.5% of respondents claimed their
work activity does not qualify for registration and 7.5% missing. As the table above shows Most
of the respondents were in one way, this makes entry into this sector quite easy. The participants
do not need to get registered in order to participate in the sector.

4.2.4 Street Vending Business Income Tax Payment

Table 4.6 street vending tax pay (n=133)
S/N Items or Variables Frequency Percent Cumulative
Percent

Do you pay an income No 133 100.0 100.0

1 tax?
Total 133 1000.0
My income level is too
115 86.5 86.5
small
Why not pay income I don‟t know if I have to
tax? 4 3.0 89.5
pay
2 No state agent/institution
14 10.5 100.0
asked me

Total 133 100.0

Source: Own Data, (2022)

34
In table 4.6 also with respect to paying tax, all of the respondents 100% do not pay tax. The
reason did not paying income tax Minority 3% of these do not know to pay any tax, majority
86.5% claimed that their income is too small while the remaining 10.5% no state
agent/institution are asked them to pay tax because of they are not registered and have no license.
In above result shows the way to makes entry into this sector quite easy for participants do not
need to pay income tax in order to participate in the sector.

4.2.5 Respondents Start-up fund, Initial capital and their additional job
Table 4.7 Respondents Start-up fund, engage other job (n=133)
Frequency Percent Cumulative
S/N Items or Variables
Percent
1 personal saving 96 72.2 72.2
Micro finance
6 4.5 76.7
institutions
How did you get fund Family 26 19.5 96.2
for start-up business Friends/relatives 4 3.0 99.2
Iqub/Idir 1 .8 100.0
Total
133 100.0

2 1,000 to 2,500 115 86.5 86.5

3,000 to 4,000 12 9.0 95.5
How much was your
5,000 to 6,500 3 2.3 97.7
initial capital?
7,000 to 10,000 above 3 2.3 100.0
Total 133 100.0
3 No 126 94.7 94.7
Do you have
Yes 7 5.3 100.0
additional job?
Total 133 100.0
Source: Own Data, (2022)
The table above 4.7 When one examines the sources of this initial capital of the
respondent, the main sources of initial capital for were their own personal saving 72.2%,
assistance from family 19.5% , friends or relatives 3% and the remaining 4.5% borrowed
from micro finance institutions. Respondents started their informal sector businesses with their
own money. This was because of the lack of other sources of capital. The fact that they used
their own capital means that they would have started with very little. The only other source of

35
capital for them was borrowing and assistance from parents, relatives and friends who generally
did not give them much. Since most of the parents, friends and relatives are also poor, they
consequently start their businesses with very little capital. This implies that the best source of
financing this business is individual contributions and from their pockets and families. As shown
in the table 4.7 the starting capital in birr 86.5% respondents were 1,000 - 2,500, 9% were 3,000
- 4,000 the remaining 2.3% and 2.3% were 5,000 - 6,500 and10, 000 above respectively. Hence
street vending businesses are established in small amount of capitals because they have a big
challenge to access easily to get funds by lack of collaterals and other requirements. With regard
to supplementing income by engaging in other activities, 5.3% of the respondents
confirmed that they did other jobs to supplement their small income while 94.7% of those did
not engage in other jobs. Out of those who did other supplementary jobs gave their
reasons the respondents claimed that it was to supplement their small income and support their
family income generating activities.

4.2.6. Constraints Faced while Establishing street vending Business

Table 4.8 constraints faced by participants when starting a Business (n=133)
Frequency Percent Cumulative
S/N Items or Variables
Percent
Lack of start-up capital 84 63.2 63.2
What were constraints before Lack of market places 44 33.1 96.2
starting your business?
Lack of demand for my
2 1.5 97.7
1 product
police harassment 3 2.3 100.0

133 100.0
Total
Shortage of working
24 18.0 18.0
capital
What were constraints after Harassment
starting your business? government police and 76 57.1 75.2
shop guard
2 No access to credit 3 2.3 77.4
Family responsibility 11 8.3 85.7
Lack of demand 19 14.3 100.0
Total 133 100.0
Source: Own Data, (2022)

36
As indicated in table 4.8 above, constraint of faced before starting this business 63.2% of
the participants experienced lack of start-up capital/seed money to start their businesses,
33.1% had problems because of lack of market space, while 1.5% lack of demand for their
products/services, 1.5% of respondents claimed police harassment is their serious problem.
The fact that the street vendor participants struggle to raise capital for business startup costs is
not at all surprising because they are not qualified for bank loans or loans from lending
institutions.
This was because of a lack of assets or collateral at the time of start-up of their
businesses. As regarding to the constraints of after started business in table 18% of the
participants experienced lack of working capital to run their businesses, 57.1% had problems
because of Harassment from government police and shop guard, while 2.3% had problems of No
access to credit, 8.3% had a Family responsibility and 14.3% had lack demand also they are
facing a challenge from lack of demand for their products and services.This shows that
working into the street vending business is not always as easy as some may think. One
has to overcome several barriers before one can become involved. The fact that many of the
participants are owners of the businesses, seem to suggest that their businesses are a part Lack of
capital, strong competition, lack of space and harsh law enforcement is the main
obstacles to the work in the street vending business.

37
 4.2.7 Respondents Training situation and setting prices of the business
Table 4.9 Training and price setting (n=133)
Cumulative
S/N Items or Variables Frequency Percent Percent

Have you undergone any No 133 100.0 100.0

1 training on this business? Total 133 100.0
I have fixed shed 20 15.0 15.0
2 I'm a mobile seller 66 49.6 64.7
Where do you sell your
Both 42 31.6 96.2
items price?
Others 5 3.8 100.0
Total 133 100.0
price is the same 29 21.8 21.8
3 How do you compare your My price is cheaper 97 72.9 94.7
selling price to formal
sector? My price is expense 7 5.3 100.0
Total 133 100.0
4 There is no rent pay 18 13.5 13.6
It‟s mobile business 79 59.4 73.5
It‟s started by too
what is the reason for your smaller capital 34 25.6 99.2
answer for your prices
Missing – 999 1 0.8 100.0
Forgot -9 1 0.8
Total 132 100.0
Source: Own Data, (2022)
As it is presented in table 4.9, the respondents 100% of them had never had any training before
starting their business. All of participants started their street vending businesses without any
prior training. This may have been for the following reasons: It was interesting to note that, of
those who had training, the most received their training through formal/informal education in the
street vending business. It‟s also with respect to permanent selling conditions of the respondents
49.6% were mobile seller, 31.6% respondents were both mobile and fixed seller and the
remaining 15% and 3.8% were in fixed shed and other seller conditions. It shows the results most
of the participants in this street vending businesses are mobile seller and both /mobile and fixed
shed sellers in the case of searching and getting good market opportunity location. As comparing
of price with a formal sectors 21.8% respondents were the selling as same price, 72.8% were
selling as a cheaper prices, 5.3% were selling as an expenses with respect to a formal business
sellers price more of those participants sale in the same and cheaper prices. It also has the

38
following reasons 13.5% respondents were no rent, 59.4% were it‟s a mobile business, 25.6%
the business started in small amount of money and others 0.8%,0.8% were missed and forget the
questions. The analysis of the table indicated us most of the participants in this street vending
businesses are mobile seller and both /mobile and fixed shed sellers in the case of searching and
getting good market opportunity location.

4.2.8 Participants Earning and Life Status

Table 4.10.Respondents Earning income and life standard status (n=133)
S/N Items or Variables Frequency Percent Cumulative
Percent

50 to 150 birr 35 26.3 26.3

How much money do 200 to 350 birr 77 57.9 84.2
1 you make normally per 400 to 500 birr 19 14.3 98.5
day? more than 600 birr 2 1.5 100.0
Total 133 100.0
Do you think that your No 21 15.8 15.8
current business Yes 112 84.2 100.0
2
activity improved and
changed your life? Total 133 100.0
I can support myself and
116 87.2 87.2
my family economically
My monthly income has
10 7.5 94.7
3 If your life changes yes increased substantially
how can you tell? My working capital has
7 5.3 100.0
increased time to time

133 100.0
Total
Source: Own Data, (2022)

In the table 4.10 above those asked about their daily income, 26.3% of the respondents made
between 50 to 150 birr per day, another group of 57.9% made an average of 200 to 350 birr per
day. 14.3% made 400 to 500 birr per day and 1.5% of the total respondents made more than 600
birr per day. As shown in table above 15.8% participants thought their work activity no
improved support their life.
84.2% of the participants thought that their current work/business activity improved and
supported their life. 87.2% of those who thought their life was improved due to their informal

39
work claimed that they were able to support themselves and their family
economically.7.5% were their monthly income has increased substantially, The remaining
5.3% said that their working capital has increased from time to time.
57.9% of the participants made on average more than 275 birr ($5.39) per day, which translates
Into more than (275*30) 8,250 birr ($158.65) per month based on the data Ethiopian national
bank current exchange rate ($1=52.00 birr). According to the poverty line set at $1 and $2 a day
for the extreme poor and for the moderate poor respectively as provided by the world bank
(World Bank, 2001), they were making USD$158.65 per month which is significantly above
the poverty line. With this income in mind, one may conclude that the street vending business
participants were doing very well live in two sub-cities.
However, the average number of people per participant household should be taken in to
consideration. More than 57.9% percent of the street vending business participants in the
Yeka and bole sub-city earned enough money through their businesses to make a well
livelihood. Given the same opportunities, women are just as capable of establishing and running
profitable businesses as men. It can be inferred from this that the sector played a significant role
in poverty alleviation with struggling a lot of challenges faced in the sub-cities.

4.2.9 Future street vending business Plans of the Participants

Table 4.11 Expanding Business Plans (n=133)
Frequency Percent Cumulative
S/N Items or Variables Percent
1 No 12 9.0 9.0
Do you want to expand Yes 121 91.0 100.0
your business
Total 133 100.0
By loan or credit
17 12.8 12.8
2 If your answer yes what facility
do you need to expand By decent market place 1 0.8 13.5
your business?
By legal or licensed 103 77.4 91.0
Missing – 999 12 9.0 100.0
Total
133 100.0

Sources: Own Data, (2022)

40
As shown the table 4.11 respondents were asked if they wanted to expand their current business,
91% of participants Indicated that they would want to expand their business and 9% were thy
wound not want expand their business those who want to expand their businesses indicated that
they would easily do so if they had an opportunity to registered as a legal or formal business
77.4%, loan and credit Facility 12.8% missing and the remaining 0.8% needed descent market
place.
Almost all the participants wanted to expand their businesses. This is because everyone wants
to progress in what they were doing. In addition expanded businesses would enable them take
more profit which, in turn, would help them to improve their standard of living.

4.2.10. Benefits of informal business sectors /street vending businesses

Table 4.12 Benefits of informal business (n=133)
Cumulative
S/N Frequency Percent Percent
Items or Variables

You don‟t pay tax 2 1.5 1.5

No cost involved for
1 0.8 2.3
registration
What do you think the
You are free to
benefits of being an 116 87.2 89.5
1 operate where you are
informal participant?
Others 14 10.5 100.0

Total 133 100.0

Sources: Own Data, (2022)

As shown Table 4.12.While expressing their opinion regarding the benefits of working in the
street vending business, 1.5% of respondents said not paying tax is their benefit, 0.8%
claimed no cost involved for registration, 87.2% you are free to operate where you are
as their benefit. Almost all the participants wanted to expand their businesses. As stated above,
the obstacle to expansion is a combination of factors listed in table 4.11 the above table. The
participants mentioned several benefits of being involved in the street vending business.

41
The majority of the street vending business participants in commercial area of the Addis
Ababa city Yeka and Bole sub cities want to expand their business. Expanded access to
capital would enable them do so. The benefits of the street vending business differ when one
examines them from the perspective of the participants themselves.
All these benefits, however, make the street vending business in Yeka ,Bole Sub-City
increasingly relevant. The respondents were also provided with an openly their ideas to give
comment on their current work.

4.2.11. Marketing area of street vending business participants

Table 4.13 Street vending business main marketing areas (n=133)

Cumulative
Frequency Percent
Items or Variables Percent
S/N
Megenagna 59 44.4 44.4
22 or haya hulet 13 9.8 54.1

Where is your main Cotebe 02 41 30.8 85.0

1 market place or kara allo/kara 5 3.8 88.7
market area? Shola 9 6.8 95.5
Bole deldy 6 4.5 100.0
Total
133 100.0
Source: Own Data, (2022)

42
 Figure 4.2: Street Vendors Marketing Areas

As the above figure 4.2 and table 4.13 those asked about their marketing areas, 44.4% of the
respondents were Megenagna, 30.8% Cotebe 02 ,and the remaining 9.9%, 6.8%, 4.5%, 3.8%
Haya hulet, Shola ,Bole dldy and Karaallo respectively. in this thesis shows the main marketing
area of the respondents are Megenagna and Cotebe- 02 the most percents .this area is a
commercial center of Yeka and Bole sub-cities and in addition to around these also the
working and living area of the researchers . So it‟s easy to access get participants information
and conduct with street vendor business (participants).

43
 CHAPTER FIVE

5. Conclusion and Recommendations

5.1 Conclusion
This study is designed to assess the Practices and Challenges of Street Vending Business in a
Addis Ababa city administration in particular Yeka and Bole sub-cities. In order to gather on the
issue the population of the study was street vendors in both sub-cities. In addition to this,
government officials, formal business operators, and pedestrians were taken as a target group.

Considering the findings of the study, males participated more in vending than females. In fact
street vending activity is very tiresome job, so, it may difficult for women those have
double responsibility in taking care of household duties and managing street businesses. Even if
it is difficult most females are supposing to involve in the job.
The study result reveals the majority of the study participants age is in the productive and
matured category. In other word, most of the street venders those involved in this study
are socially active. In addition, most of the traders were come from with different reasons into
street vending business activities in the sub-cities have been increasing mainly due to lack of
job opportunities and insufficient monthly income of households. There are various factors
that hinder the success and profit earning potential of these street vending business participants.
These include lack of convenient working place, shortage of working capital, lack of institutional
and government support, political unrests, separation of their family as well as absence of family
and police harassment. Street vending business in these sub-cities supports the livelihood of the
poor. Most of the operators depend on it for living while some others used it as an additional
source of income.
This study measures the challenges and practices of street vending business in alleviating
poverty with reference to the participants‟ day to day livelihood and the objectives of this
research show that; they do have the human resource and physical well-being of street vending
during their operation by three factors which is financial constraints, environmental factors
and security factors. Among the three identified factors of problems of street vendors,
according to this study, lack of working place is the one and the most.

44
As well according to problem of work environment the problems of street vendors face due to
working environment constraints, lack of market and working place take the major hand. For the
problems of social security, the study found that while most of the street vendors lack freedom
during operation and feel psychological instable. In addition, harassment and eviction from
selling place by police accounts the superior position.
Involvement in street vending work/business is a livelihood strategy that participants
pursue to survive and alleviate poverty in urban like Yeka and Bole sub-city . These activities
as a livelihood strategy have brought various outcomes. Initially most of the participants had
most of literacy and small amount of startup capital before they start work, however,
after their participation in the street vending work/business; they are able to create jobs for
themselves to better survive and alleviate poverty even if their living condition is still
unsatisfactory.
Street vending has some negative impact also on the socio-economic and environmental
conditions of the city. According to the study, the activities of street vendors create
traffic congestion and jeopardizes the free movement of pedestrians especially children,
elderly and people with disabilities. In addition to this, it create favorable environment for
crimes. Economically, street vending weakened the city economy and creates unfair market
competition due to the reasons like absences of trading tax among the street vendors. Moreover,
sometimes it serves as fronting mechanism for the formal business operators to evade
taxes and under invoicing. Environmentally, it exacerbates waste disposal problems and creates
noise and pollutions. The study reveals that street vendors identify the locations where they vend
on their own without any guideline.

45
 5.2 Recommendation
There are several recommendations that can be made based on the above finding and
conclusions. But, I decided look only at the main recommendations:-

 Sub-City authorities should work with street vendors and their organizations to identify
regulations that appropriately address the practical reality of the work process and the role
of vendors in the urban economy, and effectively protect vendor‟s basic rights to livelihood
and property and during observation for assessing of this thesis in Megenagna after 12:00pm
the legal or official /registered vendors involved on street vendor activities. So the
authorities of the sub-cities should regulate and control these illegal vendors‟ activities with
involvement of street vending. If the legal traders continued in this business the government
may lose tax revenues and it maybe increases a tax fraud.
 The city government in general and Yeka and Bole sub-cities Administration in particular
needs to compile a systematized data base and official statistics of the street vending
business that will guide policy implementation and help design support programs for the
sector and be able to measure its contribution to the national economy.
 The government, private sector, NGOs and other stakeholders should support the
operations of the street vending business by providing for their required credit or capital
needs and work place for their business operations with no or minimal precondition. There
is need to strengthen the relations between the formal and street vending business by
making sure that it is a mutually inclusive rather than excluding themselves from the
formal sector through market linkage and SMEs(Small and Medium Business Enterprises).
 To invest in a street stall or to generate regular, sufficient earnings to support
monthly rents. Should be Make basic infrastructures such as running water and toilet
available to vendors and consumers would help street markets more attractive and hygienic
providing electricity and lighting would make the street safer for everyone and support
certain vending activities. Avoid confused system of regulation and unregistered street
vendors.
 Finally I recommend the street vending business should engage with government on issues
that concern the street vending business participants in order to come up with
solutions critical to the success of their businesses. The process of formalization should be
the ultimate goal for the street vending business.

46
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 APPENDIX

Appendix -1
Gage University College

School of post graduate College of Business and Economics

Department Master of Business Administration

Questionnaire for practices and challenges of street vending business for Street Vendors

Section 1: Introduction
This questioner is prepared to collect data on the challenges and prospects practices and
challenges of street vending business in Addis Ababa: in the case of Yeka and Bole sub cities in
particular. The aim of the questionnaire is collect information on the demographic profile of the
vendors, working conditions, challenges of the vendors, opportunities the trades have, etc. I
would like to promise you that the whole information given by the respondent is used for
academic purpose only. Hence, I confirm you that the information that you share me will be kept
confidential and only used for the academic purpose. Thank you in advance for your kind
cooperation and dedicating your time.

Instructions
 No need of writing your name

 For multiple choice questions indicate your answers with circle in the appropriate space.

51
Section 2: General Information on Business Owners.

1. Gender:

1). Male 2). Female

2. Age

1). Less than 20 3). 20-30

2). 31-35 4). 36-40

3. Marital status

1). single 3). widowed

2). married 4). Divorce

4. Education levels

1).5-8 3) . Degree

2). 10+1(2+3+4) 4). Masters

If your education level is just below the above levels, please write your level‟s completed
……………………………………………………………..

Section 2: business information

5. Is street vending business your full time job? 1) Yes 2) No

5.1. How long you have been in the informal street vending? _______ Years

(Write the number of months if less than a year).

5.2. If no, how do you explain your involvement in the street

business?______________________________________________________________________
______________________________________________________________________________
__________________________________________________________________

52
 5.3. What are the factors that push you to engage in street vending marketing? (List as

Many factors as you can)

1). ____________________________________________________________

2). ____________________________________________________________

3). ____________________________________________________________

6. Do you have a home of your own?

1) Yes 2) No

If your answer is “no” where did you live?

1). with my parents

2). with my friends

3). In a rented house

7. Do you have to pay any rent for where you are living?

1) Yes 2) No

If your answer is “yes” how much do you pay per month?

1) Less than 700

2) 701 to 900 birr

3) 1001 to 2000 birr

4) 2501 to 5000 birr

8. What are types of your street vending business?

1) Selling cloths 2) Selling shoes

3) Selling bags 4) Shoe shining

53
If you have other non perishable selling products specify it --------------------------------------------
--------------------------------------------------------------------------------------------------------

9. Do you have an official registration/license for your work/business?

1) Yes 2) No

If your response is “no” for Q.9 why?

1) Do not want my business be register

2) Do not know if I have to register

3) Too many requirements to complete registration

4) My work activity does not qualify for registration

10. Do you pay an income tax?

1) Yes 2) No

If your answer for Q.10 is “no” why?

1) My income level is too small

2) I do not know if I have to pay

3) No state agent/institution asked me

11. Why do you operate your current activity in the street?

1) It is the only source of income

2) To avoid taxation and registration

3) Not fulfilled minimum requirements for registration

12. How long have you been in your current work activity?

1) 0 to 3 years 2) 3 to 6 years 3) 6 and above

13. How Did You Raise Fund To Start-Up Your Business?

1) Personal Saving 2) Micro Finance Institutions

54
 3) Family 4) Friends/Relatives 5) Iqub/Idir

14. How much was your initial capital?

1) 1000 - 2500 birr

2) 3000 - 4000 birr

3) 500 -6500 birr

4) 7000 – 10,000 above birr

15. Do you do other additional jobs?

1) Yes 2) No

If your answer for Q.15 is “yes” specify the job ---------------------

16. What were the serious constraints you faced before you start your business?

1) Lack of startup capital

2) Lack of market place

3) Lack of encouraging government policy

4) Lack of demand for my product

5) Competition

6) Police harassment

17. What were the serious constraints you faced after you start your business?

1) Shortage of working capital

2) Harassment government police and shop guard

3) No access to credit

4) Family responsibility

5) Lack of demand

55
18. Have you undergone any training on this business?

1) Yes 2) No

19. If yes in Q.18, what aspects did you learn in the course / training?

(1)…………………………………………………………

(2) …………………………………… (3) …………………………………

20. Where do you sell your items?

1) I„ve a fixed shed 2) I„m a mobile seller

3) Both 4) other, specify . . . ………….

21. How do you compare your selling price as compared to the selling price of formal or
legal sellers?

1). Price is the same 2). My price is cheaper 3). My price is expensive

22. What are the reasons for your answer for question number.21 above?

a) __________________________________________________________________

b) __________________________________________________________________

c) __________________________________________________________________

23. How much money do you normally make per day?

1) 50-150 birr

2) 200-350 birr

3) 400-500 birr

4) More than 600 birr

24. Do you think that your current work/business activity improved and changed your life in a
better way?

56
 1) Yes 2) No

25. If your answer is “Yes” for Q. 25 above, how can you tell?

1) I can support myself and my family economically,

2) My monthly income has increased substantially,

3) I was able to create jobs for others,

4) My working capital has increased time to time.

26. Do you want to expand your work/business activity?

1) Yes 2) No

27. If your answer is “yes” for Q. 26 above, what do you need to expand your Work/business
activity?

1) A loan or credit facility

2) Training

3) Descent market place

4) A license

5) Other specify

28. What do you think is the benefits of being an informal sector participant?

1) You do not pay tax

2) No cost involved for registration

3) You are free to operate where you are

4) You are the boss for yourself

5) Other Specify

57