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The Informal Economy in African Cities: Key to Inclusive and Sustainable Urban Development

Blogs 04/04/2017

By Martha Alter Chen, Harvard University and WIEGO Network

The informal economy consists of economic activities and units that are not registered with the state and workers who do not receive social protection through their work, both wage-employed and self-employed. The reality of the informal economy in Africa cannot be denied. In fact, informal employment accounts for two-thirds (66%) of non-agricultural employment in Sub-Saharan Africa. But, variation within the region is significant. Informal employment accounts for a smaller share of non-agricultural employment in southern Africa (33% in South Africa and 44% in Namibia) relative to countries in other sub-regions (82% in Mali and 76% in Tanzania) (Vanek et al 2014). Informal employment is a greater source of non-agricultural employment for women (74%) than for men (61%) in the region overall. In seven cities in West Africa with data, informal employment comprises between 76% (Niamey) and 83% (Lomé) of employment. In all seven cities, proportionally more women than men are in informal employment (Herrera et al 2012).

A deeper analysis shows that self-employment accounts for two thirds of all employment, both formal and informal, in Sub-Saharan Africa (UN Statistics Division 2015). Self-employment is comprised of employers, own account workers and contributing family workers. In Sub-Saharan Africa, employers represent only 2% of informal employment outside agriculture, own account workers (those who do not hire others) represent 53% and contributing family workers represent 11%. A higher percentage of women informal workers (76%) than men informal workers (58%) are self-employed in Sub-Saharan Africa, with women far more likely to be own account and contributing family workers while men are far more likely to be employers. The same pattern holds true in the seven cities with data in West Africa: with women more likely to be self-employed than men, particularly as own account and contributing family workers (Herrera et al 2012).

Read the full blog on Development Matters

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