Informal economy worker-led social protection schemes are certainly not a substitute for universal social protection, but they can play a key role in its realization.
Research shows that while these schemes face myriad challenges, from lack of funding to absence of a legislative framework in which to operate, they provide a lifeline for informal economy workers, who are often cut off from formal financial and social services.
A WIEGO and Streetnet International study of worker-led schemes in Nigeria, Uganda and Togo found that, in the context of weak formal protections for workers in these countries, they help in meeting the social protection and economic empowerment needs of their members.
Social protection coverage is generally low in developing countries, with the situation particularly fraught for informal workers because their jobs are as precarious as they are low-paying.
The three case studies – two built on the cooperative model and the third on the mutual model – provide insights for developing more inclusive social protection programmes. The Federation of Informal Workers’ Organizations of Nigeria (FIWON) multipurpose cooperative, the Kampala Metropolitan Boda-boda Entrepreneurs’ (KAMBE) savings and credit cooperative, and the Mutual Social Protection Scheme for Workers in the Informal Sector (MUPROSI) health mutual in Togo have relative success in catering to especially vulnerable groups (women in the case of FIWON and youth in the case of KAMBE).
To build on this, advocates of worker rights could support strategic thinking around how these schemes fit within the broader landscape of social protection and how their position can be advanced. Scheme leaders could be trained and supported in identifying potential allies within government structures and negotiating favourable arrangements for their members within the limits of those structures.
Critical to the success of worker-led informal economy social protection schemes is a clear set of laws to guide their functioning and governance. This was made evident in the Togo study, where the survival of worker-led health mutuals is threatened by the lack of a clear legislative framework.
But even where such frameworks exist, attitudinal biases in the political context often curb the growth of worker-led schemes. In Nigeria, for instance, where the government’s relationship with the informal sector has been fraught, FIWON’s attempts to partner with the state in its schemes have repeatedly failed.
And in Uganda, amid the general atmosphere of distrust between the government and motorbike taxi (boda-boda) riders, a section of the industry has been hijacked by narrow political interests, effectively destroying the ethos of solidarity and cooperation that defines the workers’ movement.
These experiences underscore the need to pay attention to how countries’ political and policy environments undermine worker-led schemes’ capacity to flourish, irrespective of their individual merits.
External support for these schemes is crucial, as is funding. From the experiences of all three case studies, it is clear that the likelihood of worker-led social protection schemes achieving long-term financial viability on their own is very low.
For the schemes to attract and sustain support from donors and other external resources, they need to be able to demonstrate capacity to function effectively and profitably. They need business and technical skills and good governance.
Capacity building is required for managers and members to understand their respective roles in maintaining democratic governance of the scheme. One way to do this is to adopt a train-the-trainer model in which leaders who undergo training on the principles of cooperative governance are required to devolve the training to their members. This can foster the transparency and accountability needed to inspire trust within individual schemes, as well as with external actors.
In light of the serious challenges that worker-led social protection schemes face, it seems reasonable to ask whether continuing to advocate for them is the most productive route to achieving social protection for informal workers, or whether that goal might be more effectively advanced by redirecting available resources toward advocacy for publicly funded universal schemes.
The evidence from the case studies in Nigeria, Togo and Uganda and elsewhere indicate that these strategies are not mutually exclusive; indeed, they can be complementary. The long-term goal of setting up universal social protection regimes can be bolstered by strengthening existing worker-led schemes. This is consistent with the argument that self-help schemes, while responsive to local realities, should not absolve governments of the responsibility to safeguard the welfare of all their citizens.
This article is based on a report written by Temilade Sesan for the WIEGO and Streetnet International research project “New Forms of Social Insurance for the Economic Inclusion of Women & Young Informal Workers”. The project has also produced a series of podcasts in English and French, From Health Care to Helmets: Common Concerns at the Heart of Cooperatives.