The pushcart business, street vendor and newsstand; not only are these a common sight in Sri Lankan towns and cities but they are also enduring symbols of Sri Lankan enterprise. Although the sight of a hawker selling his wares on the pavement is a sign of a developing economy, there is still an old-world charm, and it signifies determination to succeed no matter the circumstance.
There are many critiques of Sri Lanka’s economy. Stagnation is observed in developing nations owing to the lack of resources, know-how and political disposition but their potential should not be judged according to these metres.
There was a time when Western economies adopted protectionism; the United States during the 19th century is a clear example. During the late 1800s, the Japanese were considered “lazy” by travellers. And until the 1960s, Singapore was once a quaint outpost of the British Empire, with homes on stilts standing on mires and busy Chinatowns.
In the case of the ‘Asian Tiger’ economies mentioned, the microeconomic “bazaar spirit” remained largely intact. Japan’s cottage industries became home-grown entertainment empires to stand alongside its industrial giants. You go to Tokyo and the age-old business of hawking has been replaced by intricate vending machines that sell everything from digital cameras to fresh eggs.
The famous Japanese woodblock prints and origami crafts fostered a course of artistry so profound they have generated household names around the world. Which child does not recognise the smiling yellow Pikachu and the jolly plumber in red; Super Mario? In Singapore, you can find the only street food stands in the world with Michelin Star ratings.
But as these developments have taken a few decades of trial and error, we here in Sri Lanka have the opportunity to learn from abroad and accelerate our own economic development in a manner that is compatible to us.
Adjacent to the Port of Colombo, Fort is considered the birthplace of modern finance in Sri Lanka. The great gateway of trade, Fort is a nexus of railways and highways, bringing goods and people from all parts of the island.
Sailors from days gone by used to say that they can smell the cinnamon when pulling into the Colombo harbour. Although the smell of cinnamon is not as overpowering now, the sights and sounds of commerce is very much alive and well. Fort is also home to many corporate offices as it does warehouses and markets; so it is both a hub for logistics and businesses.
Considering the significance of Fort, I spoke to a few informal traders and small business owners.
Food stall
Natarajah Sarvanamuththu runs a food and refreshment stall on the Galle Face Green. He said his father started selling kites and had been in the trade for over 40 years and that he continued the business with his brothers and have been doing it for 15 years. Sarvanamuththu procures his goods from various wholesalers in Pettah and Slave Island and the assortments of pickles and fruits are from the central market.
“On a crowded day I can make around Rs 5,000 to Rs 6,000,” he said, when asked about profits. When asked what he could do to improve his business, he said, “There is nothing much to improve on, it’s all about our motivation. When there is big event, we bring more things to sell and on regular days we only have the basics,” he said.
Saravanamuththu said his biggest challenges when running the business are the natural elements. “We are used to the sunshine and rain; we have to face them all when trying to make a living out here. We have to put our children through schools and pay the bills, so we can’t really take a rain check.”
When asked about the economic crisis and Covid-19 pandemic, he said it got very difficult. “We were in so much trouble. We had to pawn our jewellery to make ends meet and lost many things. We are slowly trying to piece our lives back together but can’t really say that we made it back to normal.”
Drink vendor
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Kandiah Yogeswaran is a drink vendor at Galle Face. We met him while he was doing one of his rounds up and down the Green. He said he gets his goods in Fort early in the morning and has been selling refreshments for nine months.
“I make between Rs 2,500 to Rs 3,000 on a regular day,” he said. We asked him he had any inclination to improve his business, like buying a stall on the Green. He replied that there is red tape like getting permits from the Ports Authority which costs around Rs 20,000.
“I have made a request but they haven’t got back to me. Several officials need to approve it before I can get that pass.”
He said that his main challenges are weather or a day where he can’t make enough money.
Myth
In his bestselling book ’23 Things They Don’t Tell You about Capitalism’ Korean economist Ha-Joon Chang dispels the myth that people from developing countries are not enterprising enough.
“People who live in poor countries have to be very entrepreneurial even just to survive. For every loiterer in a developing country, you have two or three children shining shoes and four or five people hawing things,” he writes.
Chang clarifies that the poor in developing nations do not lack an enterprising spirit, but rather don’t have productive technologies nor developed social organisations.
In contrast to these go-getter entrepreneurs in the global South, Chang says that most people in rich countries don’t dare take the leap to set up their own business because it is a difficult and risky thing to do. “As a result most people from rich countries spend their working lives implementing someone else’s entrepreneurial vision, and not their own”.
The book quotes a study from the Organisation for Economic Co-operation and Development which observed that in some of the poorest countries, the ratio of people working as one-person entrepreneurs is larger; 66.9 percent in Ghana, 75.4 percent in Bangladesh and a staggering 88.7 percent in Benin. In contrast, the ratio does not even reach one in ten in developed countries; 6.7 percent in Norway, 7.5 percent in the U.S. and 8.6 percent in France.
Problems
Prof. Nimal Hennayake, Department of Business Economics, Faculty of Management and Finance, University of Colombo, highlights several problems in Sri Lanka’s informal business sector such as the lack of know-how and regulation.
“There are no formal guidelines for these types of business in Sri Lanka. Street food is becoming popular and short-eats are the easiest to sell. Even those who lost their jobs recently have taken up this pursuit. This is good and indicates that people are working hard to survive. I don’t call them ‘small-businesses’ and they don’t drive the economy forward that much,” he said.
According to Prof. Hennayake, the informal sector has a long way to go. He cited one example. “Street food businesses are unhygienic. They serve food without gloves or utensils and they don’t display the price of food although they are legally mandated to do so,” he said adding that international travellers always look for popular food franchises such as MacDonald’s or KFC because you can expect the same standard in any restaurant anywhere around the world.
“There are adventurous tourists who might check the local food scene, but if we are to really attract visitors to partake in the local scene we must raise the standard. For example, many countries in Asia have vibrant street food scenes and maintain strict hygiene,” he said.
Prof. Hennayake gave an anecdote, “In Japan, servers always wear face masks and hairnets. They do that not to inconvenience their customers.” In contrast, local eateries serve items fried in old oil. “There is no guarantee,” he said, “We tolerate this kind of thing in Sri Lanka because we know it’s probably useless calling the authorities and letting the matter drag on in long inquiries.”
Financial literacy
Prof. Hennayake said that Sri Lankan society in general is not financially literate and many of these informal traders, despite their enterprising attitude, won’t improve their lot no matter what they do. “Paying taxes is a very serious matter in other countries and even small businesses compile their books carefully. For example, when I was studying in Japan, I did several part-time jobs and observed my employers keep very accurate books. Even a farmer I worked under was doing it”.
In his book, Chang states microfinance is a bane to the growth of the informal sector. Microfinance was introduced in Asia to help those have limited access to financial services. Advocates say microfinance is good since it does not rely on Government subsidies and international aid; in addition they say that the wealth created in the process is good for the overall economy.
“However, it turns out that, without subsidies from governments or international donors, microfinance institutions have to charge and have been charging, near-usurious rates,” he writes.
A research article published by Groundviews in December 2022 highlights the huge problems with microfinance’s exorbitant interest rates. “...as far as the microcredit facilities provided by various financial institutions are concerned, poor and marginalised communities with little or no assets are the core target audience of those initiatives providing access to finance. In many local areas, the overwhelming majority who have received credit facilities from a range of financial institutions and have, in turn, faced potential rights violations, are women and members of women’s groups.”
Given all these challenges; lack of knowledge, financial illiteracy and microfinance, leaves little hope to this tiny business class. The deck is stacked against them, but their determination is something worth appreciating. Perhaps in the coming years, the informal sector could become sophisticated to the point that it would supplement Sri Lanka’s booming tourist trade. But there also something more profound that begs our attention; It’s not just man or woman on the street trying to make a living, but it is Sri Lanka herself struggling against all odds to survive.