Business people depend on research data to make decisions about if, when, where and how much to invest. Without meaningful and reliable information poor investments can be made.
In 2001 South Africa was suffering from weak economic growth. High interest rates (broaching 25%) were causing business and home-owners sleepless nights.
It didn't help that Stats SA at the time had miscalculated some important numbers. They got inflation wrong. They got the rate of job creation wrong. They got production numbers wrong. And it wasn't until others pointed out inconsistencies that the methodology was reviewed and corrected.
South Africa currently has two large Cinderella projects: the Gautrain and the 2010 World Cup.
Both projects are astonishingly expensive. When the Gautrain was announced in February 2006 it was to cost R 14 billion. Now it is suggested that it may cost R 24 billion. The same has happened with the World Cup. It was R 2 billion in the original bid and is now rapidly shooting over R 9 billion.
Nassim Taleb, a specialist financial analyst, has a phrase for unexpected events that have an extreme impact and that are made to seem predictable with explanations concocted afterwards. He calls these "black swans".
Benin Mwangi, who blogs about doing business in Africa, asked me recently: "should the discussion be about how to get the informal sector to become part of the formal sector or should it be how to cater to the informal sector?" This in an excursion into the morass of African poverty and development.
The short answer is: neither; ending poverty has nothing to do with the informal sector.
This is not to dismiss the question, which is an important one. With the failure of most centralised economic policies and governments in Africa the informal sector is the largest employer and service provider in most of the continent.
However the question conflates symptoms with causes. For starters, how do informal markets even come to be?
