Informality is a Symptom, Not a Strategy
85% of jobs in Africa are informal. That’s not a statistic, it’s a system failure. And no, this is not about grit, hustle, or cultural preferences for open-air markets. It’s about the structural absence of choice.
Informality in Africa is a survival response. It reflects an economy that hasn’t worked for the majority. It’s the default setting—not the designed one.
The Data Behind the Narrative
The International Labour Organization (ILO) estimates that over 85% of jobs in sub-Saharan Africa fall under the informal economy. That includes street vendors, market sellers, domestic workers, informal transport providers, and more.
These jobs are unregulated, untaxed, and unprotected. There’s no pension, no medical cover, no safety net—just daily grind. And while they may contribute to GDP in some form, they rarely offer a pathway out of poverty.
Not a Choice, But a Constraint
Let’s be clear: most informal workers aren’t entrepreneurs by design, they’re excluded by default.
What’s driving this?
• High unemployment rates, especially among youth, force people into informal work as a fallback.
• Complex regulations and costly registration processes make formalization a luxury.
• No access to capital—banks don’t lend to people without collateral or credit histories.
• Education and skills mismatches, with too many trained for white-collar work in economies that can’t absorb them.
Informality isn’t a badge of creativity. It’s a symptom of broken policy architecture and governance failures.
It’s a Poverty Trap, Not a Stepping Stone
Informal jobs come with unstable incomes, limited scalability, and zero resilience to shocks—whether it’s COVID, a family illness, or market disruptions.
• Without financial inclusion, informal workers can’t build credit, access investment, or expand operations.
• Without legal recognition, they can’t claim rights or protections.
• Without productivity tools, they remain stuck in low-value economic activity.
This is not upward mobility. It’s economic treadmill syndrome—lots of effort, little movement.
Systemic Failures Power the Informal Economy
Africa’s informal dominance is policy-induced, not culture-driven. It’s the by-product of:
• Poor economic planning that prioritizes raw material exports over value-added industry.
• Underinvestment in infrastructure, from electricity to logistics to broadband.
• Bureaucracies that punish compliance and reward informality.
• Corruption and elite capture, where institutions are run to extract, not empower.
These aren’t bugs in the system. They’re features of how our economies have been wired.
Reform Starts with a New Deal for Work
So what can be done?
• Simplify business registration and cut red tape to encourage formalization.
• Digitize financial services to expand access to credit through mobile money and microfinance.
• Invest in skills training aligned to actual market demand—especially in tech, trades, and services.
• Design social protection floors that don’t exclude informal workers—universal health, cash transfers, and contributory schemes.
Above all, governments must stop mistaking informal resilience for progress. Endurance is not transformation.
Final Thoughts
The informal economy may be massive, but it’s not sustainable. It’s an indictment of policy, not a celebration of hustle. Africa doesn’t need more vendors struggling to survive; it needs more entrepreneurs positioned to thrive.
Let’s stop applauding survival. Let’s build systems that enable prosperity.
