Social Capital And Urban Informal Economy: The Case Of Street Vendors In Addis Ababa

Abstract

This study explores the intricate relationship between social capital and the urban informal economy, with a specific focus on street vendors in Addis Ababa, Ethiopia. Recognizing the significance of informal economic activities as a means of livelihood for the urban poor, the research examines how social capital-defined through networks, trust, reciprocity, and mutual aid-affects the income generation and customer base of street vendors. The study also assesses the implications of urban redevelopment and gentrification on the social structures supporting these vendors. Employing a mixed-methods research design, primary data was collected through structured questionnaires and interviews from 267 street vendors across three major commercial areas in Addis Ababa. The data was analyzed using STATA software, incorporating descriptive statistics and multiple linear regression analysis to test the relationship between social capital indicators and economic outcomes. The findings reveal a significant positive relationship between social capital and the profitability of street vending. However, urban upgrading and corridor development were found to disrupt social networks and pose challenges to informal operators. The study concludes that social capital plays a critical role in enhancing the profitability of street vendors in Addis Ababa’s informal economy, while urban redevelopment efforts such as gentrification and corridor redevelopment disrupt these social networks and create new challenges for informal operators.