Paper long abstract:

Most African economies appear to be experiencing jobless, non-inclusive growth, based on the extractive sector which provides increased revenue but only a few opportunities for decent work.. The austerity measures of structural adjustment in the 1980s and 90s brought about a general deterioration in labor relations, a drastic reduction in formal sector employment, and a trend towards greater informalization of economic activities. Almost everywhere in African cities today the informal sector constitutes a dominant part of the indigenous private sector. UN-Habitat and ILO estimate that between 50 and 70 per cent of city dwellers in Sub-Saharan Africa work in the informal sector. Although critics dismiss the sector as a temporary "chaotic jumble of unproductive activities", and an obstacle to the development of a modern economy, the fact is that the informal economy has come to stay, and has helped to promote local entrepreneurship, employment and income, and thus to alleviate poverty and provide some degree of social protection. The main policy challenge is how best to support and regulate this sector in a way that translates the enterprise, resourcefulness and innovation of its operators into higher productivity and income, while at the same time ensuring a healthy and socially acceptable environment.

The paper examines how the informal economy has developed in Nigeria and some other African countries over the last 50 years; the constraints imposed on informal economic activities by official prejudice and neglect, and the main elements of a strategy for informal sector promotion and management. It underscores the importance of appropriate macro-economic and legislative reforms to remove pointless restrictions which place people in the sector at a disadvantage. As Africa seeks to attain the Sustainable Development Goals, greater priority should be given to the vital resource in the informal sector for greater national self-reliance and more inclusive development. We need to strengthen the institutions that provide small amounts of credits and other forms of financial and business services to this sector; programmes that promote skills training for unemployed youths; and policies that foster complementary links between the formal and informal economies. Those who work in the informal sector should be encouraged and enabled to upgrade, better organize and self-regulate themselves in order to become more productive and competitive, and engage more constructively with government and other development agencies.