Introduction

In academic as well as policy circles, attitudes toward African informal economies have shifted markedly in the past decade. Once viewed as transitional or even inimical to development, the informal economy is increasingly accorded a dynamic role in Africa’s economic growth and governance processes. The foreword to the 2013 World Development Report (2013:xiii) argues that “some jobs do more for development than others. . . . Critically, these job are not only found in the formal sector; depending on the country context, informal jobs can also be transformational.” The dramatic expansion of the informal economy over the past forty years has certainly played a role in attracting renewed policy attention. Instead of shrinking in the face of liberalization and globalization, informal economic activity has burgeoned across the developing world, particularly in Africa.¹ According to the ILO (2002), sub-Saharan Africa is the most informalized region in the world, with 73 percent of the nonagricultural labor force working informally, rising to over 90 percent in parts of West Africa. Far from eliminating incentives for informality as predicted by neoliberal policy advisers, decades of market reforms have turned the informal economy into a central feature of popular livelihoods, urban service provision, and associational life (Meagher 2003, 2010; Lindell 2010; Hansen & Vaa 2004; Tostensen et al. 2001).

In the past few years, the challenges of the global financial crisis and disillusionment with the maximalist good governance agenda have contributed to a further rethinking of the role of the informal economy in contemporary development processes (CFS 2010; Guha Kasnobis et al. 2006). The combination of informal expansion, weakened state capacity, and declining opportunity in the global economy has given rise to a proliferation of books and articles with titles like Reconsidering Informality (Hansen & Vaa 2004), “Rethinking the Informal Economy” (Chen 2006), and “Informality Revisited” (Maloney 2004). A growing interest in “second best” approaches to governance has spawned a flurry of research on informal institutions, informal systems of service provision, and prospects for taxing the informal economy (CFS 2010; Allen et al. 2006; Joshi & Ayee 2008; Wilson et al. 2006). In the scramble to participate in the African growth renaissance, corporate investors have also revised their assessments of the informal economy, now seen as part of the solution to market failure rather than part of the problem (UNDP 2008; London & Hart 2011). Policy thinking has followed suit, moving away from an emphasis on eliminating or absorbing the informal economy toward policy discourses of collaborative interaction, expressed in such terms as “hybrid governance,” “coproduction,” and “formal–informal linkages” (CFS 2010; Joshi & Moore 2004; Guha-Khasnobis et al. 2006). Instead of being seen as backward or dysfunctional, informal economic systems are increasingly viewed as “arrangements that work,” and there are growing calls for “working with the grain” of African societies by incorporating informal economic practices (Kelsall 2008). In the process, standard policy approaches based on formalization of the informal economy seem to be shifting to a new ethos of “normalization,” opening new but largely unexplored possibilities for the social, fiscal, and political integration of Africa’s vast informal economies into the very heart of mainstream development processes (Jutting & de Laiglesia 2009).

At the same time, increasingly organized and confident informal actors have been forging their own channels of inclusion. During the long, hard years of structural adjustment, expanding shares of African populations were left to fend for themselves amid declining public services, diminishing real incomes, and mounting unemployment. Instead of withdrawing into subsistence activities, workers, traders, and small entrepreneurs have been tapping into value chains, insinuating themselves into urban service and housing provision, taking an active role in job creation, and hacking into the global economy through organized trading networks that reach as far as the United States and China (Meagher 2010; Neuwirth 2012; Hansen & Vaa 2004; Tostensen et al. 2001). Large numbers of active and increasingly globalized informal trading and occupational associations have fought their way into local and even national policy spaces, resisting agendas that threaten popular livelihoods and demanding a place at the policy table (Lindell 2010a, 2010b; Devenish & Skinner 2009). Does this represent a convergence of inclusive agendas from...