Informal Economy in Africa: Which Way Forward?

April 17, 2022

Image: Aisha Jemila Daniels/UNDP


Informal Economy in Africa: Which Way Forward? Making Policy Responsive, Inclusive and Sustainable

Date: 10-11 May 2022

Location: Virtual/Victoria Falls, Zimbabwe

Registration: Zoom (English/French interpretation)

Download the concept note and agenda.

In the evolving aftermath of the impacts of the COVID-19 pandemic, the eyes of African governments are now cautiously but optimistically turning towards an era of recovery and building back better. Indeed, the tremendous challenges, underlying vulnerabilities and inequities exposed by the pandemic have firmly brought about this defining moment and opportunity for African governments to make bold decisions towards a recovery that is more inclusive, resilient, sustainable and prosperous. One of the most prominent policy decisions confronting African governments today, which has been brought to centre stage, is the role of the informal economy in this recovery and the beyond.

Nearly 83% of employment in Africa and 85% in Sub-Saharan Africa is informal, absorbing many of the continent’s young employment seekers. However, in the past, policy narratives in Africa tended to either neglect informal economies or even viewed them as potentially threatening to formal economies – therefore needing elimination and control rather than support and investment for inclusive structural economic transformation. Over time an alternative policy narrative began to take root. While this narrative still viewed the informal economy as outside formal arrangements, and often found on the edge of high vulnerability to poverty, low earnings, irregular incomes, and bad working conditions, it brought significant attention to welfarist policies to ensure safety nets, minimum floors, and access to basic social protection.

More recently, with increased visibility of the informal economy in the evolving COVID-19 era, greater recognition of both the vulnerability of workers and economic units in the informal economy and the significant contribution it makes to GDP, income, and employment in Africa, and how inextricably it is linked to impacts on the formal economy has been made. This counter policy narrative – spearheaded in academia, development agencies and select governments circles - while recognizing the precarious nature of the informal economy has also brought marked attention to the resilience of the informal economy and its creative energies to not only cope and adapt to change, but also as its potential as an untapped engine of innovation and growth that is worthy of policy attention, investment and support towards inclusive structural transformations and pathways to formality. 

This policy dialogue, organized by the United Nations Development Programme (UNDP) and the International Labour Organization (ILO), intends to play a connecting and enabling role by assembling analysis and findings, and bridging current gaps, including through direct interaction with informal economy actors, on the impacts, their agility, needs, solutions and innovations. It will provide an inclusive dialogue space to discuss the increasing importance of the informal economy in Africa, understand the gaps between current programmatic approaches and needs on the ground, and build collective intelligence on more effective policy responses and solutions to trigger inclusive, resilient, sustainable and prosperous recovery.

The policy dialogue will bring together informal actors, governments, representatives from governments, employers and workers’ organizations, informal economy organizations as well as development partners to identify challenges, share good practices and learn from each other’s perspectives including on fostering effective pathways to formality in Africa.