Immersion with the actors of the informal sector in Congo: the Ethnography of basic financial mechanisms

2 novembre 2021

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UNDP in Congo is working to support informal sector actors to facilitate their resilience to the effects of the COVID-19 pandemic. This support is justified by the sector's ability to absorb mass unemployment in the country, and by the volume of its annual turnover, estimated at more than 3000 billion FCFA. To this end, the implementation by the Country Office of a mechanism for the management of a Revolving Credit Fund in favour of these actors has been recorded by an agreement with the Ministry of Small and Medium Enterprises, crafts and the informal sector.

Therefore, the AccLab Congo team immerse itself with informal sector actors in Brazzaville from 18 to 31 August. The proximity with these communities aimed to capitalize on the financial practices and trends of the sector, via the solutions developed to better guide the implementation of the management mechanism of this Fund.

Brazzaville our sample!

According to the numerical data of the report of the mapping of the informal sector in Congo ( , our capital is full of almost half of the employees (46%) of the sector in the country. Hence the choice of the AccLab to deploy exclusively there.

This mapping mission in the field, conducted in the major markets of Brazzaville, and with incubators, startups, microfinance and commercial banks, allowed us to know a little more about the difficulties faced by these actors on a daily basis.

The difficulties encountered by the actors, a brake on the recovery of the informal sector.

Actors in the sector in general, mainly face very limited access to credit because of their lack of structure, entrepreneurial training and their inability to provide financial and material guarantees to financial entities. We found that there is a disagreement between traders and some microfinance institutions. They require them to provide guarantees even before they get the credit.

These guarantees are not returned to them by some microfinance, even when the loans are well repaid.

Conversely, some microfinance companies find it difficult to establish themselves in the city's markets due to a lack of guarantees for traders. The tax and customs pressure exerted on these actors, through the level of taxation of their activities by the State services, sometimes exceeds their turnover. The absence of the State throughout the chain of support for actors in this sector is a major bottleneck.

To better the approach, these challenges, some solutions with a financial majority developed were mapped during this mission. They made it possible to observe developments in the financing of the informal sector in Congo in order to contribute effectively to the UNDP Revolving Credit Fund mechanism.

Emerging practices and trends in informal sector financing in Congo

We have pinpointed some financial practices and trends in this sector, through the innovative and basic solutions, collected on this occasion and which are as follows:

  1. Solidarity credits, solidarity microcredits: this is a group of people of the same social proximity in general or the same activity in particular, who take in common a credit with clauses of solidarity guarantee between them. Four innovative solutions have been mapped in this context, namely: digital platforms for managing financial services (solidarity credit and WUDEF), and two solidarity microcredit mechanisms developed by microfinance institutions in Brazzaville (HOPE CONGO S.A and CAPPED).
  2. Loans from Traders' and Sellers' Associations to Small Businesses
  3.  Financing and self-financing in kind (loans of goods from wholesalers to retailers or the approach to securing goodwill in goods between deliveries). Several solutions have been mapped on this subject.
  4. Tontines and rebates: traditional savings or investment schemes for individuals, individually or collectively.
  5. Social security approaches between actors via compulsory contributions

A total of seventeen (17) solutions were mapped during these ten days. Others are developed in the form of money transfer services, mobile-phone accounts to bank accounts between members. A FABLAB is also being created in Congo, to accelerate the speed of work of certain categories of actors in the informal sector.

The support of the State is more than urgent. A partnership with intermediary private structures such as firms to supervise the actors of the informal sector, would reassure the financial institutions providing credit.

A session on filtering the autographed solutions and classifying them according to their level of age, in collaboration with the partners, will be organised.

By Matt SEINZOR, Head of Solution Mapping-AccLab Congo