Determining the push factors to involve in street vending activities and their challenges: in the case of Ethiopia

Abstract

The study’s primary goal was to analyse the driving forces behind street vending operations and the difficulties they face in the targeted area. The research was conducted using both quantitative and qualitative methods, utilizing explanatory and descriptive designs in the technique. There was use of both primary and secondary data sources. Four government officials and 222 street businesses were chosen for the study using purposive sampling procedures. Structured questionnaires were used to collect the data. The study findings clearly display that economic and social factors have a significant influence on street vending in the study area. The study went on to look into the difficulties that street sellers in the study area deal with, including things like a lack of funding, a space to work, and credit availability. In conclusion, the study recommends that governments should develop a policy for street vending, fortify stakeholder interactions, and expand the capacity of street sellers when contemplating legalizing the practice and selecting a suitable place in urban centres.

Introduction

Around the world, street vendors and market traders play a crucial role in urban economies by providing easy access to a large variety of reasonably priced goods and services in public areas. Fresh veggies and cooked dishes are sold there, along with building supplies, clothing, crafts, consumer electronics, auto repairs, and haircuts. In spite of their contributions, street vendors have several difficulties, are frequently disregarded as economic agents and, in contrast to other enterprises, are frequently harmed rather than assisted by local laws and regulations.

In many less developed countries, formalization is seen as a necessary first step toward increasing overall productivity; therefore, there is room for research in the informal sector, but little has been done, particularly in Ethiopia. Further research in Ethiopia or other global contexts will benefit the economy, even though informality contributes to fiscal issues. This is because these businesses are increasingly likely to be less effective. This could be because they are typically small, lack access to capital, or lack the state-provided infrastructure of legal protection. Igudia (2020) highlights that rather than criminalizing its participants, urban planners must adopt practical policies to address these demand-side drivers of street vending and use of urban space. The need to address economic, social, and political inequalities has resulted in an increase of interest in studying the dynamics of informal street vending within the last 10 years. The study called attention to the areas of informal street vending research that have not received enough attention, and it identified street vending as an understudied field (Peimani & Hasam, 2022). According to Tolera (2012), an explicit and comprehensive policy for vendor activities is urgently needed because street vending appears to be a permanent element of Ethiopia’s urban economy. Due consideration must therefore be given to the issue of the informal sector, particularly street vending. The recent study by Ewnetu (2019) focuses on the wide concept of informality, factors contributing to economic informality, and how these factors affect household livelihood in Ethiopia. It also examines the situation of street vendors in the same research field. Therefore, giving urban planners and policymakers’ information about vendors and their clients may aid them in developing long-term policies towards vendors in the nation as a whole and in the studied area in particular.

Illegal markets and street hawking are big problems in many countries, including Ethiopia. Ethiopia, along with many other sub-Saharan African countries, is witnessing fast population expansion as a result of increased migration into metropolitan regions and large towns. Most of these individuals struggle to find work in the formal economic sectors of cities and towns because they lack the necessary education and skills for the jobs they seek. In their pursuit of a living, many of these individuals have little choice but to take to the streets and engage in street vending. However, street selling is still not a part of urban economies in most countries, especially in emerging or developing nations.

The rationale behind the researchers’ investigation was the absence of empirical data and research in this field regarding operators and other variables, like the vendors’ entry into street vending. Therefore, by analysing the motivators and contributing variables behind informal sector engagements as well as the difficulties they encounter, this study aims to fill the gap. Regarding the study’s applicability, the researchers are urged to investigate this topic and this area because, to the best of their knowledge, few studies have been done on the nation that particularly addresses this subject in the study area. Therefore, this study which focuses on the street vending industry in one of the developing countries would be the most important to investigate the elements of informal sector participation. Because of this, research in the informal sector is warranted, though it has not been done much especially in Ethiopia. Therefore, more investigation is needed in this context to comprehend the economic impact of the sector and the challenges or opportunities that it faces. The present investigation was motivated by this research gap. Another reason we were motivated to investigate this was the abundance of street vendors operating covertly throughout the city. The main objective of this research is to assess the factors that lead individuals to participate in informal economy activities as well as the challenges they face, especially when running a street vendor business in the study area. The introduction, literature review, research methodology, results, discussions of the main findings, recommendations, implications for practice, and future research directions are among the study’s main sections.

The specific objectives of the study are:

• 1. To analyse the effect of economic factors on individuals participation in street vending business in Bahir Dar city.

• 2. To examine the effect of social factors on individuals participation in street vending business in the study area.

• 3. Evaluating the effect of legal factors on individual’s participation in street vending business in Bahir Dar city.

• 4. To analyse obstacles and challenges faced by street vendors.

Research questions

• 1. What are the effects of economic factors on individual participation in street vending business in Bahir Dar city?

• 2. What are the effects of social factors on individual’s participation in street vending business in the study area?

• 3. What is the effect of legal factor on individual’s participation in street vending business in the case area?

• 4. What are the obstacles and challenges faced by street vendors?

Literature review

Theories and concepts

The push–pull–mooring framework’s (PPM) theory

Since migration can be further extended to other daily activities, it signifies more than just moving across geographic locations. For this reason, the PPM model, which was developed from the theory of human migration, is essential to understanding migration or shifting intentions. Despite the lack of physical movement involved, these activities frequently point to behavioural shifts in people. In this way, changing careers or industries can also be considered migration to a certain degree. According to the PPM model, people are primarily motivated to move from their original residence by satisfaction, and the perceived benefits of policies may act as a pull factor. PPM theory is currently widely applied across numerous academic fields, particularly information management systems and consumer behaviour. We selected the PPM model as the theoretical foundation for this investigation because the intention of individual vendors to change their business in to informal and the consequences are the focuses of our research. The intention of the individual vendors to switch business is comparable to migration that may be open to altering their current business models if doing so will enable them to reap greater benefits. As a result, we believe that the PPM model serves as a suitable theoretical foundation for this study.

There are currently two opposing views regarding how street vending will develop. One is that the street vendor informal economy is a catalyst for economic expansion, a successful means of lowering unemployment, and a means of easing the living conditions of impoverished urban people. As part of reducing poverty, Becker (2004) noted that the informal economy (such as street vending, etc.) should be incorporated into general urban economic planning. On the other hand, some argue that the street vending informal economy is an encroachment on public space that poses a number of issues for human rights protection and social development. According to Skinner (2009), good urban planning is important at all costs, even if it means sacrificing the lives of the impoverished. According to Amegah and Jaakkola (2016), environmental pollution endangers the health of individual peddlers as they are exposed to the outdoors. Developing nations should strengthen their financial resources, reform their educational systems, and stop these practices. These researchers, however, disregarded the reality that earning a livelihood is far more crucial than protecting oneself from the negative effects of environmental pollution. For individual street vendors, safeguarding and promoting their businesses is far more crucial than purportedly sophisticated urban governance. Thus, this study is best fit with and contributes to the above theoretical aspect.

Subsistence entrepreneurship theory: Aloysius Newenham-Kusi is a prominent figure in the theory of subsistence entrepreneurship, having studied entrepreneurship in Ghana’s informal sector during the late 1980s. His research brought to light the ways in which people turned to entrepreneurship as their last option when official job alternatives were few in order to satisfy their fundamental survival needs. Understanding entrepreneurial activities intended to satisfy fundamental survival requirements is the main goal of subsistence entrepreneurship theory, especially in low-income and marginalized populations. This theory underlines the special possibilities and problems encountered by entrepreneurs working in informal economies, as well as the role that entrepreneurship plays in reducing poverty. The development of Subsistence Entrepreneurship Theory resulted from the realization that conventional entrepreneurship models sometimes fail to take into account the realities that face people who operate in environments marked by institutional limitations, poverty, and inadequate assets. In addition to stressing the special possibilities and problems encountered by entrepreneurs in low-income and marginalized regions, it highlights the role that entrepreneurship plays in promoting economic empowerment and reducing poverty.

Hybridity theory: Researchers from a variety of fields, including sociology, anthropology, and entrepreneurship studies, have come up with the theory of hybridity in entrepreneurship, which examines how entrepreneurs operating in various socioeconomic contexts blend formal and informal strategies, institutions, and identities. In contrast to certain theories that have a distinct creator, hybridity theory has developed because of the contributions of several scholars. Bill Frost, a sociologist who has researched hybrid organizations and the nexus of official and informal economic activity, is one of the leading academics in this field. The sociologist and management expert Mauro F. Guillén made a significant contribution to the creation of hybridity theory. In addition, researchers studying hybrid organizations and entrepreneurship have benefited greatly from the work of scholars like Julie Battilana, Silvia Dorado, and Johanna Mair. The coexistence of many economic practices and institutional configurations, as well as the blurred boundaries between formal and informal economic activity, are recognized by hybridity theory. Within the field of entrepreneurship, the theory of hybridity highlights how entrepreneurs functioning in various socioeconomic environments combine formal and informal strategies, organizations, and personalities. A paradigm for comprehending the flexible and dynamic character of entrepreneurial activities has arisen in the field of entrepreneurship: hybridity theory. This is especially true in environments where socioeconomic change, institutional complexity, and cultural diversity are prevalent. Although the idea did not have a single creator, it developed because of the combined efforts of academics who investigated the hybrid character of modern organizational structures and entrepreneurship.

These theories give frameworks for examining the socioeconomic dynamics, institutional configurations, and entrepreneurial behaviours within informal sectors, and they offer insightful information on the complex connections between entrepreneurship and informal economies. These concepts are still being refined and expanded upon by on-going research, which also addresses new concerns including globalization, technological advancement, and governmental reactions to informal market activity.

Informal sector: The International Labour Office (2013) defined “informality” as a category of businesses, workers, and activities that function outside of legal and regulatory frameworks. It implies that a large number of people and business ventures operate outside the constraints of the established legal and institutional framework. It can take many different forms, ranging from the small, unregistered business to the large, registered street vendor. Few quantitative studies have examined the spatial structure of the informal economy from a macroscopic perspective, despite the fact that it now plays a significant role in the urban landscape of the modern world. Thus, there is still much debate regarding the necessity and viability of vending zones. To meet the varying needs of different vendors, the government could implement both fixed and flexible vending zones. Additionally, there is no need to expand the area, and the area with the least amount of formal commerce supply would be given preference (Yanji et al., 2017).

Street vending: The term “street vending” typically describes a kind of commercial activity that takes place in cities. A street vendor is a person who sets up a temporary static structure or mobile stall (also known as a head-load) to sell goods or services to the public instead of having a permanently constructed structure. Most cities in the world have some form of street vending as a side industry. A lot of developing nations use this type of economy. Disadvantaged groups can earn a living in cities through street vending (Onodugo et al., 2016).

Social factors: People prefer it to other low-wage urban jobs like daily labourer and housemaid because it allows them more freedom and autonomy, is simple to run, and has unpredictable hours that allow them to fulfil other obligations like social obligations and household chores (Webster & Fidler, 1996). When viewed through a dualistic lens, the motivations for people to engage in the grave market are simpler to explain: they are driven by either opportunity or necessity. They may also go into business for themselves so that they can set their own hours and work on days that best suit them, exercise their creativity, or pursue other interests (Williams, 2009).

Definition of social, economic, legal and other factors: The majority prefer it over other low-paying urban occupations like housekeeping, daily labour, etc., in part because it relieves them of additional burdens from their employer and allows them to meet social commitments, schoolwork, and other duties (Webster & Fidler, 1996). Government regulations that are too onerous and ineffective create expensive obstacles and hinder formal economic activity. And the government’s deficit in the functioning of the informal sector is its failure to put in place effective legal and institutional regulatory mechanisms. Sisay Seifu (2005) explored the motivations behind working in the informal sector, positing that individuals are often driven by both necessity and opportunity. While some choose the informal economy out of necessity, others opt for it to enjoy the freedom of running their own business, flexibility in scheduling work hours, and the opportunity to innovate and express creativity. .

Government rules and regulations: The tax burden is what is causing the growth of the informal sector. According to the neoclassical economic model, as marginal tax rates rise, people will choose leisure over work in the same way that they will shift their labour from the formal sector to the informal sector (Belev, 2003).

Economic factors: According to Chen (2002), capital intensification results in a decrease of the workforce, or what is known as “dawn sizing” in the US. Workers who are unable to land desirable positions in the modern economy frequently become part of the informal workforce. Compared to low-skill industrial occupations, it often creates more high-skill service sector jobs. In these situations, those who lack the necessary abilities to compete for high-tech formal positions find employment or stay employed in the informal sector. The small business and micro-business sectors are create more jobs than the formal sector.

Challenges of street vendors: The informal sector as a whole asserts that activities like those done at home, including trash collectors, shoe shiners, street vendors, etc., are not conducted in the official economy, according to a number of works of literature. They are both essentially battling the same problem. However, certain consequences differ according on the particular job circumstances. The site of business, the right to a trading area, environmental conditions, security, transportation, municipal services, and finances provide the biggest challenges for street vendors and informal traders (Mitullah, 2003).

Due to the fact that these areas were not designated for commerce, the majority of the locations that traders use are seen as unlawful. When they are permitted to function, the locations are thought of as transitory, and the city authorities have the right to remove them at any time. Conflicts of many kinds exist in relation to their operational locations. When suppliers are compelled to relocate so that planned construction may proceed, a serious disagreement frequently results. They end up in a fight with city officials and real estate investors as a result. The majority of the areas that the traders occupy are unoccupied, and neither they nor the civic authorities have assigned or approved them. The merchants are at odds with official store owners and landlords who claim that the traders are interfering with their operations.

Empirical reviews

This study topic has a variety of linked research projects, some of which are reviewed below. The study by Matamanda et. al. (2023) investigates the day-to-day experiences of street vendors who work along Maseru, Lesotho’s Main North 1 Road. This investigation looks at the methods used by street vendors to obtain and defend their claim to the street. Examined are the difficulties these vendors face on a daily basis, including COVID-19 limitations. This article is based on data gathered from interviews with street vendors in Maseru who were specifically chosen using a narrative inquiry research design. The research reveals tactics that vendors use, such as merging with official businesses, expanding their line of work, opposing and obstructing local government decisions, and fostering urban decay. The article makes a strong case for the government to figure out more responsible ways to include street vending in the development of cities.

The formation of new ventures presents a variety of challenges that call for unique and extraordinary abilities and traits from an entrepreneur (Carayannis & Stewart, 2013). Santos et al. (2021) state that observations have also shown how investor trust in entrepreneurs influences business investment decisions. This trust is relevant to the degree of informal entrepreneurship and the extent to which governments can regulate it. Since most studies on this topic concentrate on developing nations, we have opted to look into the realities of European nations because there are not many studies on the impact of informal entrepreneurship in these settings. The purpose of the study is to evaluate the impact of informal entrepreneurship on venture capital flows. The study’s findings show that venture capital flows and GDP are negatively moderated by informal entrepreneurship.

It has been stated that street vending is becoming a more viable option and that it draws people who have few options for finding formal employment. Consensual measures to end street vending include regularizing trade policy and providing financial support to street vendors and start-ups in designated free markets by the government. However, the impact of these measures was minimal in comparison to the output (Ndikubwimana, 2020). The majority of people who started street hawking in the city have a low level of education, according to Ewnetu’s (2019) research on the topic of economic informality’s causes and effects on household livelihood in Ethiopia. The research examines the case of street sellers in Bahir Dar. In addition, the average family size of the street vendors was 1.6, and their typical working age group was between 18 and 30 years old. In order to start their own families apart from their parents, young people were either getting married soon or had recently gotten married. For these young people, street vending would therefore be a desirable option. It was also found that street vending provided a substantial income and employment opportunity for individuals of all genders. The market was dominated by one vendor, and the representation of women was lower than that of men. According to this, vending primarily serves as a coping strategy for people facing increased unemployment and underemployment, with the aim of generating income for self-sufficiency in order to lessen poverty and hunger. However, Fransen and Dijk (2008) discovered that all households engage in informal business, accounting for 26% of urban employment, and that there is a high degree of informality in employment, services, land, and housing. Additionally, there is a relatively low and declining value added per person for informal businesses.

Pambudi (2020) found that street vendors are found in urban areas in developing and developed nations. However, street vendors could improve the practice by learning about the community’s rights and respecting their public space. A well-organized street vendor benefits tourists and the local economy. This study examines the effectiveness of government street vendor regulation in Yogyakarta and nearby areas. Qualitative descriptive analysis was used to create a conceptual model of the hidden phenomenon. Data for the study came from observations, interviews, and literature reviews. The results showed that Yogyakarta’s mayor’s licensing regulations are not followed. A licensing rule evaluation shows that they have not yet yielded the best results. The importance of their economic survival, the non-financial “costs” they would incur, and their lack of knowledge about the policies governing street vendors prevent some from implementing them. Etsubdink (2008) found that informal operators’ decision to enter the informal sector was motivated by their inability to meet the formal sector’s requirements and their lack of employment opportunities there. The study, Cause and Effect of Informal Sector in Addis Abeba, Ethiopia examined this issue. The study claims that the informal economy gives the underprivileged access to jobs and acts as a springboard for the formal economy.

However, Mramba (2022) underlined that street vendors are crucial since they provide low-cost goods and jobs as well as a means of subsistence and income. Nevertheless, despite their significance, street vendors are marginalized and the targets of laws, policies, and regulations because they are socially excluded from the mainstream economic structure. This study looks into the social exclusion domains that street vendors face in Tanzania and looks into ways to lessen those domains. The study made use of qualitative information gathered from non-governmental organizations, legislators, and street vendors operating in the industry. The findings demonstrate how street vendors are shut out of numerous spheres of influence, such as the legal, financial, urban planning, tax, and business location domains. The study found various approaches to bringing street vendors into society. The results contribute to the on-going discussion about how to include the informal sector and make it more responsive to the goals of reducing poverty and promoting economic growth.

Arguments and gaps: The aforementioned theoretical and empirical reviews demonstrate how the researchers discovered a variety of arguments and opportunities for additional research on the subject under investigation. First off, there is a debate about this topic that needs more research. Some researchers contend that street vending activities are vital to the community and the economy as a whole, while other researchers stress that street vendors are illegal and require government oversight. The theories also suggested that various factors, such as push or pool factors, will encourage people to engage in street vending; however, these claims need to be backed up with concrete data. The other gap is that research to date, conducted primarily in various countries, including Ethiopia, has relied solely on qualitative data gathered from street vendors and has used a broad definition of informality that encompasses all employment in informal businesses. Furthermore, the study attempts to provide adequate consideration to address the issues that street vendors have encountered and the seller’s and customer’s choice of sectors. Lastly, this study uses a mixed approach and focuses solely on street vendors, gathering data from informal business owners, government representatives, and local residents. This research can close a gap in the literature and add to the body of knowledge on the subject, thus after reviewing the theoretical and empirical evidences the following conceptual framework is developed (See Fig. 1).

Fig. 1

Conceptual framework

 Research Hypotheses 

• Ha₁: The economic factor has a significant effect on street vending in the study area.

• Ha₂: There is a significant relationship between social factors and street vending businesses.

• Ha₃: The legal factor significantly affects the street vendor’s choice of informal business.

Research methods

The research philosophy

A research philosophy is an opinion on how information about a phenomenon should be obtained, examined, and applied. Research approach philosophies are grouped together under the term epistemology, which refers to what is known to be true as opposed to doxology, which refers to what is believed to be true. Therefore, the process of changing what is believed to what is known from doxa to episteme is the goal of science. Philosophically, this research adheres to the positivist tradition of epistemology since, in accordance with this philosophy, predictions can be made based on previously observed and explained realities and their interrelationships, and it is better for survey studies. With surveys, a researcher can use questionnaires or interviews to gather information about practices, circumstances, or viewpoints at a particular moment in time. Subsequently, conclusions about current relationships are drawn from this data using quantitative analytical techniques. With the help of surveys, researchers can gather information about real-world settings while studying more variables at once than is usually feasible in lab or field experiments. The research philosophy and design for this study is presented below (See Fig. 2).

Fig. 2

Research philosophy and design

Research design and approach

In this study, an explanatory and descriptive design was employed to examine the cause-and-effect relationship between dependent and independent variables and to provide explanations concerning the determinants of street vending participation in Bahir Dar city. Descriptive research is used to describe the characteristics of the population that already exists as well as the mean and frequency distribution of responses. Additionally, to evaluate the variables, both quantitative and qualitative methods are employed because mixed research approaches are better to get the reliable data to answer the research questions of the study.

Research strategies and time horizon

This research employed the cross-sectional survey design to answer the research objectives of the study. Studies using cross-sectional surveys examine population data collected at one particular point in time. This strategy is frequently employed to quantify the frequency of outcomes, comprehend the factors that influence or correlate variables, and describe the characteristics of a population. In order to achieve the specified research goals, this kind of survey design has been selected as a research strategy.

Data collection and sampling methods

The data were gathered using a structured questionnaire and an interview from street vendors. The data sources used in this study were primary data, which provide reliable and first-hand information, and secondary data, which allow the researchers to produce an accurate analysis of the study topic at hand. The original information was obtained from street vendors. Secondary data were gathered from relevant documents such as reports, published papers, and books. The study was conducted in Bahir Dar, the capital of the Amhara regional state, because it has a high population and a large number of street vending activities. The market centres were chosen because they are well known for hosting a large number of street vendors as part of their regular business dealings. Because the population in the sector, particularly in street vending, differs in terms of employment characteristics, the researchers used purposive sampling to ensure population representativeness and homogeneity. To accomplish this, 222 sample respondents’ responses were used to assess the push factors involved in street vending activities. Following Cochran’s (1963) sample size determination formula, a whole sample of the population was taken:

$$n = \frac{{z^{2} pq}}{{e^{2} }},$$

where n is the sample size, z is the selected critical value of desired confidence level, 1.96; p is the estimated percentage of respondents of informal sector; q = 1 − p and e is the desired level of precision 0.06. p = 0.5 is used to calculate the sample size. By substituting the values in the above formula, sample of size (n = 222) respondents were be selected.

Data analysis method

To evaluate the relationship between factors and to gauge the impact of independent variables on the dependent variable in the research area, survey data were analysed and interpreted using correlation and regression analysis. The analysis was carried out using the programme SPSS. Both quantitative and qualitative methods were used to conduct the data analysis for this study. Data analysis employed descriptive statistics including mean, standard deviation, frequency, and others. It is applied to the analysis of crucial factors. The dependent variable for this study is participation in the informal sector, particularly street vending. The independent variables of this research were economic, social, and legal factors for being a street vendor.

Model specification

For this study, the researchers were used the following multiple regression model equation:

$$Y = B_{0} + \beta_{1} X_{1} + \beta_{2} X_{2} + \beta_{3} X_{3} + e,$$

where Y = participation on informal business; X₁ = economic factors; X₂ = social factors; X₃ = legal factors; β = beta coefficient. B₀ = constant, e = other factors not included in the study (0.05 random error).

Results

Descriptive statistics

Education background of respondents: The following table result shows that about 42.80% of the respondents are primary level, 29.28% of the respondents are at the high school level, and also the rest 16.66% and 11.26% of the respondents hold a diploma and above and are illiterate, respectively. This result indicates that most vendors’ are educated at the primary level and high school level since more than 72% of the respondents are under these two education statuses (See Table 1).

Table 1 Education background of the vendors’.

Migration status: According to the data on respondents’ migration status, the majority (62.3%) are migrants to Bahir Dar. Approximately 37.7% of those polled were born in the city. This lends credence to the argument that the informal sector is the source of employment for rural–urban migrants.

Mean and standard deviation: The mean in the following descriptive statistics was analysed using the standard to decide the relative importance for interpretation whether it fails in 3.39 is low, a mean score of 3.4 to 3.79 is moderate, and a score of > 3.8 is high. On a 7-point Likert scale, a data mean score of 4 is low, a score of 4 to 5 is moderate, and a score of 5 or higher is high. So, the mean score of the study is presented below.

Table 2 shows that informal sector participation has the lowest (< 3.39) mean score of 3.02, and this shows that the vendors’ participation in measures of this variable is relatively low. And also, legal factors, economic factors, and social factors have a moderate mean score of 3.8793, 4.0240, and 4.9171, respectively. This demonstrates that vendors’ answers to the independent variables are closer to their agreement on the measures. Generally, social factors have a higher mean score than informal sector participation, legal factors, and economic factors.

Table 2 Descriptive statistics (mean and standard deviation).

Inferential statistics

Correlation statistics: Given that the study chose this suitable correlation strategy to explore their links, The Pearson correlation analysis table result in the next part makes it evident how strong the association between those dependent and independent variables is (See Table 3). The Pearson product–moment correlation coefficient’s (r) value typically ranges from − 1 to + 1 (Pallant, 2020).

Table 3 Correlation result table.

The aforementioned Pearson correlation result verifies that the independent variables social and economic factors have a significant relationship with the dependent variable participation in the informal sector (r = 0.666 and 0.311, p < 0.01), respectively, while the independent variable legal factor did not significantly correlate with participation in the informal sector (p = 0.057). Overall, the relationship between the two variables is that the social factor has a moderately positive significant relationship and the economic factor has a strong positive significant relationship with participation in the informal sector. This indicates that the decision of street vendors to engage in the informal sector will increase as determinant factors are increased in the stated percent, if the other things remain constant.

Assumption tests

Test of multi-colinearity: This study has not faced a multi-co-linearity problem because no correlation coefficient value is above 0.9 or 90%. Hair et al. (2006) said that the correlation coefficient between each pair of independent variables in Pearson’s correlation should not exceed 0.90. On the other hand, the researchers tested multi-co-linearity with tolerance and variance inflation factors (VIF). Statistically, when the tolerance value ranges from 0.1 to 1.0 and the VIF ranges from 1 to 10, multi-co-linearity does not exist (See Table 4).

Table 4 Coefficient table for EF, SF and LF.

No tolerance value is below 0.1 and above 1.0, and no VIF value is below 1 and above 10, according to the coefficient table above. According to the premise, there isn’t a multi-colinearity issue in this study.

Normality test: A normality test is conducted for this study by using histograms, kurtosis, and skewness. According to Tabachnick and Fidell (2013), the acceptable range for skewness and kurtosis is below + 1.5 and above − 1.5. The analysis result showed that the kurtosis value for all the independent and dependent variables is less than 1.5, which is acceptable. On the other hand, the skewness for all the variables ranges from − 0.171 to − 0.635. So the result evidently proves that all the independent and dependent variables are acceptable in terms of the normality assumption (Table 5).

Table 5 Skewness and kurtosis.

Histogram: The dependent variable must be examined for a normal distribution, which is the second and most crucial premise in regression analysis. The histogram provides a general indication of how well the data comply with the normalcy assumption. A symmetrical, bell-shaped curve with the highest frequency of scores in the middle and lower frequencies towards the extremes is referred to as normal (Pallant, 2020).

In the next histogram result, there is a normal curve placed over and the black line ruled on the histogram symbolizes the bell-shaped and “normal” curve, it implied that there is no problem with the assumption of normality of frequencies (See Fig. 3).

Fig. 3

(Source: own survey, 2020)

Histogram

Regression/effect analysis

The researchers examined the relationship between the dependent variable participation in the informal sectors and the independent variables economic factors, social factors, and legal factors using a regression model. To determine how much of street vending is explained by the mentioned factor forces, the study looked at the R2 results. The proportion of a dependent variable’s variation that is explained by independent or predictor variables is measured by the coefficient of determination modified R2 (Hair et al., 1998). The following table’s regression model result shows that the independent variables economic factor, social factor, and legal factor explained street vending with 48.6%, and the rest 51.4% of the variation in street vending is explained by other factors not included in this study (See Table 6).

Table 6 Multiple regression model analysis.

To show whether the regression model is significantly better at explaining dependent variables (street vending), an analysis of variance (ANOVA) is most appropriate. This study’s ANOVA result in Table 7 below gives a significant result of F = 68.585 at p/sig = 0.00 (p < 0.01, F > 1). Because, statistically, if the model value of F > 1 and p < 0.05, the model is fit to predict the effect of independent variables on the dependent variables. For that reason, the multiple linear regression models are suitable for this research to predict the effects of social factor and economic factor independent variables on the dependent variable (participation in informal sectors).

Table 7 ANOVA table for regression model.

The results, as displayed in Table 8  below, clearly demonstrate that the social factor has a beta value of 0.163 at a significance level of 0.001 and the unstandardized beta coefficient for the economic factor is B = 0.506 at sig. 0.000. However, at a significant level of 0.459, the independent variable legal factor has no significant impact on street vending. This means that assuming all other factors stay constant, an increase of one unit in the economic factor standard deviation will increase to 0.506 units in street vending participation. However, there is a strong and positive correlation between social factors and street vending. In other words, a 0.163 unit increase in the dependent variable will result from a unit increase in social factors. Thus, it can be seen from the regression coefficient that the relative predictive power of the two variables among the three variables was revealed by calculating the average change in driving factors caused by a unit of change in street vending participation.

Table 8 Coefficient table.

Based on the regression analysis result regression model equation was seems like the following:

$$Y = B_{0} + \beta_{1} X_{1} + \beta_{2} X_{2} + \beta_{3} X_{3} + e,$$

$$Y = 1.653 + 0.506X_{1} + 0.163X_{2} + 0X_{3} + 0.05.$$

Discussion of results and arguments

The main objective of the study is to evaluate the variables that affect people’s decision to engage in street vending and to ascertain the challenges faced by newly established street vendors in the study area. According to the study result, the majority of locals who engage in street vending, according to the study’s findings, have not received much formal education. Furthermore, the age range of the majority of street vendors was 25 to 34. To start their own families apart from their parents, young people were either getting married soon or were already engaged. Therefore, street vending would be a desirable alternative for these young people. It suggests that the majority of vending’s coping mechanisms are employed in reaction to rising rates of underemployment and unemployment, with the goal of making money for their own initiatives to combat poverty and hunger. According to the study, people who engage in street vending activities are driven by a number of factors, including migration, unemployment, low education, a lack of start-up capital, being inaccessible to customers, a lack of market connection, and excessive regulation. In addition, the government has been implementing policies to force vendors to leave the streets in connection with the measures implemented to combat street vending. According to a study by Alebachew (2017), there are a variety of factors, including migration, low education, the inability to find a formal employment, social obligation, and a lack of family support, that can motivate someone to work as a street vendor. Additionally, Edmealem (2018) mentioned in his paper that the inability to meet the requirements of the formal sector and a lack of funding to launch a formal business are the primary factors determining the reason for the informal sector. The study also shows that the informal sector serves as a foundation for the formal sector and provides work opportunities and money for the underprivileged.

The correlation result indicates that the independent variables economic factors and social factors have a significant relationship with the dependent variable participation in the informal sector. Contrarily, the independent variable legal factor was not significantly correlated with participation in the informal sector. Also, the regression coefficient clarifies that the average amount of change in driving factors caused by a unit of change in street vending participation, it revealed the relative predictive power of the two variables among the three variables. The overall study findings showed that economic and social factors have a significant effect on participation in informal sectors. Because the law does not recognize their operation within metropolitan areas, the majority of street sellers around the world operate under harassment and eviction threats. However, other nations, including India, Singapore, South Africa, and Thailand, according to Kusakabe (2014) in have accepted street vending as an economic sector. Since every street vendor would be registered, it would be simpler to regulate the industry, allow it to expand in an orderly manner, and let the vendors organize themselves. Street vendors can be found in both developed and developing countries’ urban areas, according to Pambudi (2020). Street vendors could, however, make the practice better by being aware of the rights of the community and showing respect for their public areas. Both tourists and the local economy gain from a well-run street vendor. According to the study by Matamanda et. al. (2023), vendors employ strategies like expanding their business, merging with official businesses, opposing and obstructing local government decisions, and encouraging urban decay. The study presents compelling evidence that the government should find more responsible means of integrating street vending into urban development.

According to our investigations, two entwined contradictions reflect the paradox of how street vending uses and regulates public spaces. The first contradiction relates to the regulatory framework’s on-going ambiguity and street trade’s widespread existence. The second inconsistency addresses the false belief that street vending is a “temporary” and “unorganized” activity. The findings of Sylvain et al. (2018) demonstrate how conflictual uses of public space, like streets that are partially fragmented and privatized by traders, are fuelled by ambiguous legal and institutional frameworks and a hostile operating environment. However, opinions differ on whether evicting street vendors is a sustainable solution to informality. While owners of formal businesses and government representatives argue that street vendors should be outlawed, others, such as street vendors themselves, contend that street vending should be supported and that the appropriate legal framework should be developed to allow it. Additionally, the study looked in to the difficulties new street sellers faced after starting their businesses. As a result, the findings show that accessibility to customers, the presence of more dependence, and low costs influenced people to select street vendors over traditional stores and small and micro-businesses. When compared to street sellers, tiny businesses, and micro-enterprises, the choice of conventional shops is significantly more associated with quality service and safety. Ethiopia (2020) study revealed that major pushing factors for women to be engaged in the informal sectors are social responsibility mainly associated with divorce and taking responsibilities of children, absence of access to join school, economic problems mainly survival issues, freedom to own their business, inherited business and peer pressure. Another study looks into the entrepreneurial opportunities available to young people who sell and hawk on the streets of Accra, Ghana. Due to a lack of formal job opportunities, street vending and hawking are taking on new dimensions. Street hawking and vending of newspapers, textbooks, toffees, and fruits are examples of informal entrepreneurship. The study sought to identify the youth’s short, medium and long-term plans for innovating entrepreneurial opportunities in trades. Crossing roads, chasing moving vehicles, working in the scorching sun, and dealing with torrential rain and cops all had a negative impact on their business activities. It was also revealed that the youth have plans to innovate and expand their businesses, but the high cost of credit is a barrier. The issue of credit collateral came up. Government quasi-financial institutions and non-bank financial institutions should be proactive in providing financial, advisory, and technical assistance to the youth in Ghana in order for them to capitalize on entrepreneurial opportunities (Biney, 2019).

All of the aforementioned studies are entirely consistent with the findings of the current study, which demonstrate that people engage in street selling activities as a result of social and economic factors but there are different views on the need for existence of street vendors and is still it creates a debate with different scholars. The study also looked into the difficulties those street sellers in the study area experience, including a lack of capital, a lack of a workplace, and access to credit. In summary, this clearly reveals that the economic factor has a high positive significant association with informal sector involvement and the social factor has a moderate positive significant relationship with informal sector participation, thus the study supports that these factors are pushing the street vendors to engage in the informal market but there are many challenges and administrative issues to be managed, should go through steps to register and give a licence to these street vendors to minimize illegal practices, allow them to have a healthier business and economic environment of the country. Despite these businesses have various advantages in terms of employment, economic benefit, filling the market gap and others, it will affect the country’s economy and the legal business practices if it is not managed well (See Table 9).

Table 9 Hypothesis testing

Conclusions and suggestions

The main objective of the study was to examine the factors that influence people to be street vendors and the challenges they encounter in the intended area. The study’s conclusions clearly show that social and economic variables significantly affect street vending businesses in the research area. The study continued by examining the challenges faced by street vendors in the research region, such as a lack of capital, a location for their operations, and credit availability. According to the study result, people who engage in street vending activities are driven and influenced by several challenges, including migration, unemployment, low education, a lack of start-up capital, being inaccessible to customers, a lack of market connection, and excessive regulation and they have stated that it is too challenging to perform businesses on the street as the government does not support these activities. Even though the government does not permit street vending, many vendors are engaging in the business to survive their lives and satisfy their basic needs. In light of the aforementioned findings, the study recommends that policymakers consider legalizing street vending and planning for an appropriate location for street vending in urban areas, registering and licensing street vendors, building street vendor capacity, developing a street vending policy, and strengthening stakeholder relationships. The majority of street sellers around the world face harassment and eviction threats because the law does not recognize their operation within metropolitan areas. Those with a license should have access to a variety of benefits, including training, bank credit, micro-finance, and other available benefits. The survey found that street vendors’ placement depends on accessibility and customers, even if location or working conditions are their biggest challenges. To help street vendors find business sites, the municipals administration should create city-specific, defined, and well-planned restriction-free street vending zones. The government will find it easier to follow and drive them into the formal economy and earn tax after establishing their market area. Those business sites should consider city and nearby sellers and buyers’ interests. In order to create comprehensive policy frameworks and inclusive governance structures, the relevant entities should seek to promote cooperation between government agencies, representatives of street vendors, players in the private sector, and civil society groups. This can be accomplished by forming advisory committees, task groups, or multi-stakeholder platforms to manage the development, execution, and monitoring of street vending policies. Motivate stakeholders to engage in conversation, negotiation, and consensus-building in order to address a range of interests and perspectives.

Theoretical implications

To the best of the researchers’ knowledge, there are not enough studies conducted on the study area and most prior studies did not fully examine the push factors for street vending instead of assessing their challenges and disadvantages. As a result, the study makes a significant contribution to both the development of future theories and the body of existing theories by assessing the push factors, both contribution and negative effects and challenges of street vending. The proposed conceptual model of the study advances the theoretical foundation of street vending by suggesting dimensions based on empirical evidence and a thorough review of the literature.

Practical implications

This study offers a number of policy implications that can guide the creation of successful laws that assist street vendors, control informal markets, and foster equitable economic growth. Policy-makers and officials can use this study to show how important it is to manage informal businesses in the same way that formal businesses do for the nation’s economy. Moreover, practitioners who wish to investigate the various factors that influence marketers’ decision to participate in the informal business sector in the future may find great utility in this model. The paper’s actual conclusion offers policymakers recommendations on how to create more effective plans to reduce the number of illegal industries, especially street vending, by improving mechanisms and implementing resilience and renewal strategies. Specifically, the government needs to acknowledge the value that street vendors bring to the community’s economy and establish procedures for formalizing their operations. This would entail creating a simplified licensing and permit application process for street vendors, guaranteeing their accessibility and affordability. Establish frequent enforcement procedures and inspections to maintain regulatory compliance while avoiding overbearing bureaucracy. In order to find appropriate places for street vendors and create accessible public spaces, engage in participatory planning procedures with local communities, urban planners, and legislators. Lawmakers can develop pension plans, health insurance policies, and social security programmes just for street vendors. They can also provide street vendors access to formal marketplaces, supply networks, and value-added activities. In general, policymakers may foster an environment that supports the socioeconomic integration, self-determination, and welfare of street vendors while advancing more inclusive and sustainable urban development by putting these policy measures and strategies which are based on the study on the subject into practice.

Limitations and direction for future research

Only one city in the Amhara Region was studied to determine the factors that influence participation in informal economic activity and the difficulties associated with it. However, the situation may differ in other countries and places. As a result, sufficient research that considers the rest of the nation or the world will be valuable in order to conclude the entire region and generally at the national level. As a result, academics recommend conducting additional research to investigate the various other driving forces behind street selling.