Paper short abstract:

The paper considers how best to promote and regulate the informal sector as a vital resource for sustainable development in Africa.

Paper long abstract:

As Africa seeks to achieve the new the Sustainable Development Goals, greater priority should be given to the vital resource in the informal sector for increased self-reliance and sustainable development. UN-Habitat and the ILO estimate that between 50 and 70 per cent of townspeople in sub-Saharan Africa cities work in the informal sector. Although critics dismiss this sector as "a chaotic jumble of unproductive activities", and an obstacle to the development of a modern market economy, the fact is that the informal sector has greatly helped to promote local entrepreneurship, employment and income, and thus to alleviate poverty and strengthen social protection. The main policy challenge is how best to support and regulate the 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 sector has developed over the last 50 years; the constraints imposed on the informal economy by official prejudice and neglect, and the main elements of a strategy for informal sector promotion and management. It underscores the importance of good and inclusive governance; appropriate macro-economic and legislative reforms to remove pointless restrictions which place informal sector operators at a disadvantage. Government needs to provide small amounts of credits and other forms of financial and business services to the poor; to promote skills training for unemployed youths; and consider policies that foster complementary links between the formal and informal economies.