Informal sector contributes about 55% to sub-Saharan Africa’s GDP – Prof Ncube

Despite getting little attention, the informal sector is contributing about 55% of sub-Saharan Africa’s GDP, a top African economist has said.

Unrecognised, the sector is known for creating more jobs especially when many African countries, in recent times, have experienced a growth revival but that has not necessarily generated decent jobs as unemployment remains high among youth and the adult African population.

In his latest blog post titled “Recognizing Africa’s Informal Sector”, Professor Mthuli Ncube, Chief Economist of the African Development Bank (AfDB), stated that “… the informal sector contributes about 55% of sub-Saharan Africa’s GDP and 80% of the labour force.”

According to Prof Ncube, nine in ten rural and urban workers have informal jobs in Africa and most employees are women and youth, but “little attention has been paid to the role of informal sector in fostering growth and creating jobs.”

Ncube wrote “The prominence of the informal sector in most African economies stems from the opportunities it offers to the most vulnerable populations such as the poorest, women and youth.”

Even though the informal sector is an opportunity for generating reasonable incomes for many people, Ncube made the point that most informal workers are without secure income, employments benefits and social protection.

“This explains why informality often overlaps with poverty,” he added citing an instance that “in countries where informality is decreasing, the number of working poor is also decreasing and vice versa.”

Prof Ncube mentioned that it is associated with the increasing poverty and weak employment conditions on the continent.

Citing the AfDB, Prof Ncube said middle-income countries have smaller informal sectors but higher unemployment rates than the poorest countries.

Prof Ncube opined that organizing Africa’s informal sector and recognizing its role as a profitable activity may contribute to economic development. “This”, Ncube says “can also improve the capacity of informal workers to meet their basic needs by increasing their incomes and strengthening their legal status.”

Africa’s informal sector can be promoted to achieve results by raising government awareness, allowing better access to financing, and fostering the availability of information on the sector, Prof Ncube asserted.

By Ekow Quandzie