The Royal African Society

The Economics of Shoe Shining in Nairobi Author(s): Walter Elkan, T. C. I. Ryan and J. T. Mukui Reviewed work(s): Source: African Affairs, Vol. 81, No. 323 (Apr., 1982), pp. 247-256 Published by: Oxford University Press on behalf of The Royal African Society Stable URL: http://www.jstor.org/stable/721730 . Accessed: 23/10/2012 03:50
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THE ECONOMICS OF SHOE SHINING IN NAIROBI

WALTERELKAN;T.

C. I. RYAN AND J.T. MUKUI

HAVE FIGURED the development literature out of all proportion to in SHOE-SHINERS

the numbers who follow this occupation. In the 1950s and 1960s they were invariablycited as proof of the existence of disguised unemployment. In the 1970s they came to be an example of the newly discovered 'informalsector'. But no-one ever actuallytalkedto them or attempteda systematicstudy. The present paper is the result of three separateattempts--all in Nairobi-to do just that. The paper begins by placing shoe-shinersinto the context of past debates, then goes on to reportthe findingsof a survey undertakenby Ryanwith the help of some of his students and, finally, examinesthese findingsin the light of official attempts to regulate and control shoe-shiners'activities. The study incidentallyrepresents an interesting and unusual example of the economics of monopolisticcompetition. TheInformalSector Foreign economistsdo not always see very much of the countriesthey briefly visit, except what lies directly on the road from the airport or the route from their hotel to the Planning Bureau. One reason why shoe-shiners, along with newspaper vendors, have attracted so much attention is that they are very visible. Their visibility notwithstanding,they were often cited as proof of the existence of widespreaddisguisedunemploymentsince, it was assumed, no-one would choose to shine shoes if 'proper'paid employmentwere available.' Bauer and Yamey, in a famous article on economic development and occupational distribution in 1951, implicitly challenged this way of viewing occupations like shining shoes by pointing out that they provided a service that people wanted and were prepared to pay for and earned income in a way that was highly appropriate in an economy in which labour was in more ample supply than capital.2 Bauer and Yamey's article foreshadowed the discovery of the 'informal sector'. Those who have drawn attention to the important economic role performed by the informal sector have done so for precisely the reasonslisted by Bauerand Yamey.
The authors are respectively Professor of Economics at Brunel University, London, and Associate Professor, Department of Economics, and Junior Research Associate, Institute for Development Studies, at the University of Nairobi. They wish to thank Mr Douglas Rimmer for his critical reading of an earlier draft. 1. e.g. W. B. Reddaway, Development of the Indian Economy (London, 1962) p. 24. 2. P. T. Bauer and B. S. Yamey, 'Economic Progress and Occupational Distribution', Economic Journal, 61, (1951) pp. 741-55 reprinted in P. T. Bauer and B. S. Yamey, Markets, Marketing Control and Marketing Reform (London, 1968).

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It is necessary at this point to provide a brief reminderof the history of the idea of an informal sector for those not already familiar with it. The term 'informalsector' was coined by Keith Hart at a Sussex conference on Urban Unemploymentin Africa in 1971 where he reported on a study he had undertaken in Ghana.3 His paper greatly influenced several members of the ILO Kenya Mission who were present at the conference and whose report is usually taken as initiatingthe new way of viewing economic activity implicit in the idea of an informalsector.4 The report uses the term 'informalsector' to describe a portion of the urban economy that escapes enumeration in official statistics. The informalsector provides a whole host of goods and services on which city life depends, be they producedby self-employed artisans,shoe-shiners,or food kiosk operators. It provides goods and services for the majorityat prices they can afford. Since the publicationof the ILO Report the term 'informalsector' has been widely used and a large literature on the subject has grown up-by no means confined to the writings of economists.5 Some who have written about the informal sector have concerned themselves with its definition. For example, Rempel has argued that you should distinguish between those who have the capacityto develop and those who form a 'communityof the poor'.6 A widely held view is that the term 'informalsector' covers such diverse activities that no one label should be used to embrace them all. Others, notably Livingstone, Leys, Kaplinskyand the World Bank mission to Kenya, are sceptical about the potential of the informal sector.7 The World Bank mission sees the informal sector as a 'residual employer of those who failed to win the prize of formal sector employment in the rural-urbanmigrationlottery'.8 It goes on to state that 'we do not believe that the development of the informalsector can be the basis of an entire development strategy for Kenya'9and therefore the mission does not offer a generalpolicy for the urbaninformalsector.
3. K. Hart, 'InformalIncome Opportunitiesand Urban Employmentin Ghana', in RichardJolly, Emanuel de Kadt, Hans Singer, and Fiona Wilson (eds.), Third WorldEmployment: problemsand strategy(London, 1973), chapter 5. Incomesand Equality:a strategy increasing 4. InternationalLabour Office (ILO), Employment, for in productiveemployment Kenya (Geneva, 1972), chapter 13. 5. See, for example, the special issue of World Development, 6, (1978), subsequently reprinted as Ray Bromley (ed.), The Urban Informal Sector: perspectives on employment and housing policies (Oxford, 1979). For an excellent account by an economist, see Stuart W. Sinclair, Urbanisationand Labor Markets in Developing Countries(New York, 1978), especially chapter 5 and 6. 6. H. Rempel, 'The InformalSector', unpublishedpaper (Nairobi, March 1974). 7. I. Livingstone, 'Creating Employment in Kenya', Journal of AdministrationOverseas, 13, (1974), pp. 374-82; C. T. Leys, 'InterpretingAfrican Underdevelopment:reflections on the ILO Report on Employment, Incomes and Equality in Kenya', African Affairs, 73, (1973), pp. 419-29; in C. T. Leys, Underdevelopment Kenya: the political economyof neo-colonialism(London, 1975); R. M. Kaplinsky, 'Ideology in Development Theory: the new orthodoxy', (Nairobi, Institute for Development Studies working paper No. 224, 1975); World Bank, Kenya: into the seconddecade (Baltimore, 1975). 8. World Bank, Kenya, pp. 19-20. 9. World Bank, Kenya, p. 258.

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Leys argues that the informal sector is primarily'a system of very intense exploitationof labour'and that the links bindingthe informalsector to the formal sector are those of 'mutual dependence and mutual antagonism'. 'What the "informalsector" does', he continues, 'is to provide the "formal sector" with goods and services at a very low price which makes possible the high profits of the "formalsector".'" Kaplinskyargues that the informalsector is parasiticon the formalsector in the sense that it uses the latter'swaste materials. Enoughhas been saidto show that once the rangeof activitieshad been given a label, it called forth considerablediscussionand 'theorizing',not all of it, in our view, very illuminating. The Shoe-shiners Nairobi of We now return to the case of shoe-shinersand report the findingsof a study undertakenin Nairobi in January1978. Taking Nairobi as a whole, there were then something of the order of 500-600 shoe-shiners: if those working in Mombasa, Nakuru, Kericho, Kisuma, Thika, Nyeri and elsewhere are added, shoe shining probablyprovided employment, in the sense of an income earning opportunity,for abouta thousandpeople in Kenya. In the late 1950s there were none. A few appearedto have operatedearlier, but OperationAnvil duringthe Mau Mau Emergencyswept them off the streets of Nairobi together with Kambahawkersof wood carvingsand many thousands of others." Towards the end of the Emergency, it was noticed that beggars were drifting back into Nairobi and the two companies selling Wren and Kiwi shoe polish were persuadedto provide some of these beggarswith the equipment needed to shine shoes. The outlay was minimal, but the idea caught on. Nairobi City Council was not thrilled. Long before Independence and ever since, the Council was imbued with the idea that development must be orderly, plannedand controlled. If there was poverty in Nairobi, the way to deal with it was to sweep it out of sight so that it would not offend the sight of those who so proudly proclaimedNairobi the most modern city in tropicalAfrica. There is consequently a long history of trying to keep the number of shoe-shiners down. That they actuallyperform a service for which customersare willing to pay, and that the more of them there are, the shorterthe distancethat customers have to walk and the shorter the time they wait to be served, has never been recognizedby the City authorities. In one instance, there was even an attempt to hand over a whole informalsector activityto a transnational companyas a way of getting rid of poverty.'2
10. Leys, Underdevelopment Kenya, p. 267. in 11. Walter Elkan, 'The East African Trade in Woodcarvings', Africa, 28, (1958), pp. 314-23. 12. J. T. Mukui, 'Anatomy of the Urban Informal Sector: a study of food kiosks and shoeblacks in Nairobi', in Sidney B. Westley (ed.), The Informal Sector in Kenya, (Nairobi, Institute for Development Studies OccasionalPaper No. 25, 1977).

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The area looked at in the 1978 survey contained 211 stands or operatorsof which 132, or more than half, were in the three very centralstreets of Kenyatta Avenue, Moi Avenue and Tom Mboya Street. Interviews were conducted without the aid of formal questionnairesas these might have been viewed with suspicion by the respondents, and the results do not lend themselves to systematicstatisticalanalysisbut are no less illuminatingfor that. An excellent study of the Nairobi informal sector by William J. House which included 13 shoe-shinerscorroborates own findings.'3 our Shoe-shiners view their clients as falling into three quite distinct categories: city dwellers, those from the country, and foreign tourists. Justas the economic theory of the discriminating monopolist predicts, each was charged a different price: KShs.l.50 to city dwellers, KShs.3.00 to those newly arrived from the country and anythingbetween KShs.5.00 and KShs.15.00 to foreign tourists, in accordancewith what the marketwould bear. (Kenya shillingsare best thought of as being about eight to the US dollaror 16 to the pound sterlingthen). Contrary to common belief, the overwhelmingmajorityof customers are Kenyans and not tourists. The latter stay in hotels where shoe-cleaning is provided. Even amongst Kenyans and residents of overseas origin, the demand does not come from the more affluent, for the similar reason that they have servantswho clean their shoes for them at home. The poor are lucky to have a pair of shoes at all, and do not waste money on having them cleaned. This leaves as the principalcustomers the intermediatecategory of shop assistants, office clerks and civil servantsof the lower grades, none of whom have servants but all of whom like to look smart. Most live on the outskirtsof Nairobi along unpavedstreets, where shoes do not stay clean for long and they do not like to be seen at work wearingdirty shoes. This helps to explain the 'periodicity'in the demandfor shoe-shiners. The daily peak hours are first thing in the morning and at lunch time, whilst the monthly peaks tend to be in the days immediatelyfollowing pay day. The last few days of the month constitute a noticeable trough. The weather affects demand. An isolatedrain stormincreasesit but prolongedbad weatherreduces it because customersare reluctantto pay for a shoe-shine if they anticipatethat their shoes will be dirtyagainat once. Shoe-shining is best described as operatingunder conditionsof monopolistic competition-the monopolisticelement being the attemptslightlyto differentiate the product, while the price cannot be affected. Under perfect competition buyers are indifferent as between sellers. Shoe-shiners, however, attempt to create at any rate the nucleusof a regularclientele by offering customersbetter quality chairs, friendship, a reputationfor being entertainingor well informed and, most important,credit until pay day. But the price chargedto a particular
13. William J. House, 'Nairobi's Informal Sector: a reservoir of dynamic entrepreneurs or a residual pool of surplus labour?', (Nairobi, Institute for Development Studies working paper No. 347, 1978).

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class of customer is largely uniform. Formal barriers to entry are minimal except when the municipal authorities apply restrictions--about which more later. Shoe-shiners, though mostly Kikuyu from the surrounding Central Province, as one would expect, come also from other areas. Newcomers are sometimessubjectedto harassment existing operatorsanxiousnot to lose trade by but there is no trade organization, no formal apprenticeship or other device commonlyused to restrictentry to an occupation. Moreover, the capitalneeded to start up is very small:a stool, a seat, a set of brushes and a box to put them in constitute the fixed capital, whilst a few tins of polish and cream are all that are needed for working capital. Since revenue begins to be generatedimmediatelyit is not even necessaryto have the savingsor credit that wage earners need to tide them over until the end of the month or farmers to keep them alive until the first harvest. Although shoe-shiners usually end up being given their stools and footstools as an advertisementby one or other of the firmsmakingthe polishes, they neverthelessrequireinitialcapital of about KShs.100 to set up in business, as the superiorKiwi or CherryBlossom stands are only acquired once an operator has properly established himself. The brushes constitute the majorinitial outlay. There are two makes:Bataand Kiwi, at KShs.8 and 5 respectively. Kiwi brushes are not easily available, so Bata brushes are mainly in use. The average brush lasts for 8 months and a shoe-shiner normallyhas five. He also has at least one wire brush which costs kShs.7 and lasts 6 months. Sponges and cleaning rags cost about KSh.1 each and last for a monthand a half. The shoe-shinerhas three on average. He also has a protective cover to stop polish getting on a client's socks which costs KSh.1 and lasts for a year. The shoe-shiners also pay about KSh.1 a day to a night watchmanto look after their equipment, particularlythe box containing their workingcapital. If there are no real barriersto entry, either in the form of legal or institutional restrictionsto entry, or because the cost of establishingone self is high, why is it that not everyone becomes a shoe-shiner? There are, of course, invisible or psychological barriers to entry to every occupation and, in contrast to West Africa, there is still a markedpreference in Kenya for wage-employmentrather than for self-employment. But there are also straightforward economic explanationswhich are sometimes forgotten. First, even something requiring so little capitaland so little skill is not open to everyone. Not everyone can raise KShs.100 to 150 and what may seem to require hardlyany skill has to be learnt somehow, somewhereand from someone. It is rarelytaught at school, or in the homes of the majority,and in the end new entrantsseem invariably have had a to in the trade, who taught them. 'Learningthrough doing' only friend, already begins to operate once one has an initial foothold, and for that one needs the necessary entree. Not surprisingly,very few of the shoe-shiners were youngsters straightfrom school; the majoritywere at least eighteen years old and most were older. Their ages rangedfrom 17 to 34 but the greatmajoritywere around

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25 yearsold. There is, in other words, a filter process at work in this as in most other occupations. Even where there appears at first sight to be no barrierto entry at all, there are almostalways invisible barriers,if only in the imaginations of entrantswho might, in principle, be eligible. Second, and more obviously, any form of self-employmentdemandsthat one takes a risk and the risk of failure in so precarious an occupation must seem considerable even if in practice it probably is not. A survey is bad at establishing the risk of failure because those interviewed have manifestly not failed and may not be well informed about the numbers who have. Our impression, however, is that failure is less commonthan 'voluntaryliquidation'into a better occupation. That raises the question of how much shoe-shiners earn net of costs of production. Costs of polish and brushesvary with the numberof shoes cleaned, but typically appearedto be around KShs.100 a month plus a KShs.30 retainer to the night watchman. If, on average, a shoe-shiner cleaned 20 pairs a day at KShs.1.50 (which is what many of them claimedto do), this would imply a gross revenue of KShs.720 a month on the assumption,borne out by observation,that the usual working week was six days, often from before 7 am to about 5.30 pm. This would leave a net income of KShs.590. A previous survey by one of us found that the dispersion around the mean was not great, but it has to be conceded that figuresof net income in such an occupationcontaina large amount of guess-work. Some shoe-shiners earned a little more by selling shoe-laces, which also make the stand look more attractiveand therefore may slightly raise earnings. Average net earningsof around KShs.600 per month are a good deal higher than had been expected. It is of the natureof an averagethat some are above it and those above it were therefore certainly earning more than they would in regularunskilled wage employmentin the 'formalsector'. Yet almost to a man a regularwage job is what they saidthey would prefer, even if that involvedsome loss of pay, for the very naturalreason that shoe-shining, like all other forms of low level self-employment, is bound to be perceived as more precarious. Put anotherway, shoe-shinersare 'risk-averse'and behave rationallyin just the way predicted by economic theory. Given the opportunity, they will take a wage job; and that explainswhy only about one third of those interviewedhad been in with this occupationfor three years or more, which comparesvery unfavourably the length-of-servicerecordof establishedemployees in the formalsector.'4 Shoe-shining illustrates the theory of monopolistic competition. As that theory predicts, it suffers from excess capacity,in the sense that cleaning20 pairs of shoes is hardly a day's work. Large parts of the day are spent waiting for customers. It is this obvious excess capacity which, in part, explains why the
14. S. B. L. Nigam and H. W. Singer, 'Labour Turnover and Employment:some evidence from Kenya', InternationalLabourReview, 110, (1974-5), pp. 479-93.

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Nairobi City Council has been at pains to try to reduce the number and to 'regularize'the activitiesof shoe-shiners. Nairobi City Counciland the shoe-shiners The attemptto regularizeshoe-shinersis most easily documentedby reference to fairly recent experience. Apparently, there has been an especially great increase of shoe-shiners in Nairobi since the mid-1960s. In 1967 Nairobi City Council convened a meeting at which the three companieswho were at that time supplying polishes were represented. It was then agreed that the number of shoe-shiners must be reduced and each firm was asked to register fifty shoeshiners whose right to ply their trade was to be recognized by having a City Council licence issued at a cost of KShs.15 each. It was thought that this measurewould be heartilywelcomed by the shoe-shinersthemselves, as indeed it would by those lucky enough to obtain a licence and who would thereby be protectedfrom growingcompetitionand thus earn higherincomes. But nothing actuallycame of it. In 1969 the City Council became once more acutely aware that shoe-shiners, together with newspaper vendors, sweepstake kiosks and curio sellers were taking up increasingamountsof pavement space and detractingfrom the image of the clean, modern, prosperous 'City in the Sun' that the Council and the Governmentliked to projectto the worldat large. Moreover, a correspondence developed in the Press and letters of complaint began to arrive. Thus the chairmanof the Housewives Consumer Organizationwrote three times to the Town Clerk between January 1969 and April 1970 in ever more exasperated terms. The City Council once more attempted to introduce a licensing system to regulate and control the numbers and places where shoe-shiners and others might operate. A census was taken by the Town PlanningDepartmentin 1969, and at the same time a detailed street plan designating approved sites was produced. The area covered was the so-called Zone '10, which extends from Uhuru Highway to RacecourseRoad and from University Way to Haile Selassie Avenue-more than just the centre of the town. Around GovernmentOffices, there were to be no shoe-shiners, and elsewhere they were not to be at less than 100 metre intervals. A total of 102 sites was agreed upon, which even in 1969 was without question a far smallernumber than the number then practisingthis trade. But the problem of enforcement was recognized from the outset. As the Assistant Licensing Officer pointed out at the time, there was actually no City Bye-Law under which shoe-shiners could be licensed and the elaborate consultations that took place between the Planning Department, the Town Clerk's Office and the Licensing Officer were really so much pie in the sky. Once again, one subterfugeattemptedwas to persuadethe firmsproviding the polish to do the licensing and there had for some time been an agreement

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between the Council and the firms supplying the polishes that the latter should issue permitsto shoe-shinersto operate at specified sites, but this had no force of law and only one of the firms appears to have taken it seriously. In August 1970, this firmsubmitted90 forms giving namesand locationsof their clients and requestedthat their right to stay be recognized. But the City Councilwas not in practice able to take any action. The Council did indeed ask the Commissioner of Lands, who nominally owns Nairobi's streets, to request the AttorneyGeneralto introducea new bye-law, but without success. In the absence of a licensing bye-law, the City Council has tried to discourage shoe-shiners by requesting the City Inspectorateto enforce its plan under the Nuisance Bye-Laws No. 14(a) and 17 of 1961; the Council claimed that shoeshiners not on approved sites were causing an obstruction on the pavement. The Licensing Officer was even instructed to issue permits under these ByeLaws free of chargeand the street plan showing the approvedsites was duly sent to the City Inspectorate and the 'City Askaris' (as its members are more popularlyknown) who have in fact dutifully carriedout raidsat regularintervals of, apparently,about once a month. They select a different street each time, arrestall who cannot instantlyproduce a KShs.20 bribe, irrespectiveof whether they are on an approved site or not, put them in jail overnight at the Central Police Station and have them charged with obstructionin the City Magistrate's Court the next day. At any rate, this is what we were told by one respondent after another. The Court records for 1972, taken as a sample, show at least 60 prosecutionsunder Bye-Law 17 of which half were of shoe-shiners,and we were probably not shown all the files so that the actual numbers may have been greater. A few pleaded 'not guilty' and some of them were let off. The rest were fined-usually about KShs.25 to KShs.30 early in the year and KShs.70 later, when a differentmagistratewas in charge. In 1976, just before the opening of an internationalconference, there was anotherswoop of arrestsin a bid to rid the town of 'undesirables',but it was as ineffective as earlier attempts. So was the attempt to discourageall kinds of 'informal sector' activities by re-introducing licence fees, as reported in the Kenya Gazetteof 21 May of that year. By Octoberthe fees had not even begun to be collected. There was in any case disagreementwithin the City Council, and enforcementwas held back by fear of a public outcry. All the old problems cost of collecting small came once again to the fore, such as the administrative amountsfrom large numbersof people who were very unwillingto pay fees out of their low, and uncertain, incomes. There was also the problem of having separatelicenses for each of a great variety of occupationsin a situationwhere one person might well move through several in the course of a year, and would need to pay afreshon each move. Why has the City Council been so concerned? Partly because of a widely held view that people flock into informal sector occupations like shoe-shining because they are insufficientlymotivatedto do a proper day's work, lack a sense

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of direction, are a disgrace to society and a manifestationof the economy's shortcomings. Another, related, reason suggested earlier is the obsession to represent Nairobi as a modern Western city, giving it the appearance of prosperityby sweeping all signs of poverty off the streets. This attitudeis very understandable. Was it not always said by Europeansin colonialtimes that no African Governmentwould ever be able to maintainstandards,that as soon as Africanstook over, the streets would be lined with filth, and every squareinch of public park dug up by someone to grow maize? One can hardly blame an if African administration it were determinedthat no-one should be able to say 'we told you so'. Besides, interestingly, it appeared that some remaining Europeanofficialsof the City Council were in fact more obsessed with the need to regulateand control than some of the new Kenyan officers who showed more understandingand recognized the need to allow people to earn a living in the 'informalsector', given the failureof modernsector employmentopportunitiesto increasesufficiently. But it has also to be conceded that a great horde of shoe-shinersand newspaper vendors really could be a nuisanceand obstructthe pavements, especially as shoe-shinerstend to cluster in favouredlocations. Two factors, however, in practice limit this danger. First, most of the shoe-shiners themselves are touchingly considerate about not obstructing entrances and not putting themselves in front of shop windows and, where they are not, the shop keepers are quite effective in telling them to move on. One or two European businesses have at various times complainedto the City Council. Asian shop-keepers are too scaredto complainto the authoritieslest their own tradelicences be placed in jeopardy. Second, the number of shoe-shiners does not in fact multiply indefinitely. Some who had been at it for many years told us that the business had become a great deal more competitive and that earnings had declined in consequence. But if competition becomes too great and earningsfall below a certain level, then entry to the trade will be choked off, so that the market mechanismitself acts to control numbers. In addition, as we saw earlier, the trade is largely in the hands of Kikuyu, the largest tribe in Kenya comprising one-fifth of the population,and since one really needs a friend or relativewho is alreadya shoeshiner in order to gain entry to the trade this must to some extent act as a further brake. Whether would-be entrants are warned off by existing stall holders is impossible to ascertain. That it is denied need not be regardedas conclusiveevidence. But, clearly,anyonewho is not Kikuyu is unlikelyto have a Kikuyu friend to help him gain entry, and is thereforeipsofactoexcluded. Conclusion To conclude, shoe-shiners provide a service that their customers evidently want, as witness the willingnessto pay for it. At the same time the demandfor this service affords the shoe-shiners a better livelihood than they would

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otherwise have. It is preferable to be underemployedif the alternativeis no employment, and therefore no income whatsoever. The fact that fewer operatorswould have more workand higherincomeshas to be set againstthe fact that total numbersare in any case limitedby the operationof the marketand that the greaterthe numbers, the less far customershave to walk and the less likely they are to have to queue. Shoe-shiningis a classic example of an informalsector activity as that concept was first understood by the Kenya ILO Report. The industry operates competitivelyand withoutthe benefit of protectionor subsidy, unless the right to ply one's tradeon the public highwayis to be regardedas a form of subsidy. In a poor country,very shortof capitalandincome earningopportunities,the desire for tidiness and the appearanceof modernity,should be regardedas subservient to the paramount need not to forego any opportunityto providepoor people with whateveropportunitiesthere maybe to earnan incomeby satisfyinga demand.