Africa's Informal Economies: Thirty Years on

It is almost exactly thirty years since the term informal sector emerged from Keith Hart's fieldwork in Accra, Ghana, and was internationalized by the work of the World Employment Mission to Kenya in 1972. The term itself has been much criticized, but it has proven remarkably robust in French, English, Portuguese, and Spanish; and it has also taken on all kinds of local meanings in different languages. ¹ On the eve of the thirtieth anniversary of the term, it may be useful to examine some of the principal developments in the knowledge of the informal economy in Africa. In particular, this article will explore the special character of the informal sector in the countries of sub-Saharan Africa. Ghana and Kenya, two of the countries where the term was first used, will be examined in detail, but illustration will also be drawn from elsewhere, including South Africa and Tanzania. The article will also look at the ways in which the self-employment potential of the informal sector appears to have influenced other sectors, such as education and training systems. Some of the most stubborn problems that continue to surround this area will be discussed, and a set of agenda items for the future will be offered.

The Evolution of the Informal Economy: From an Isolated Artisanal Sector to a National Phenomenon?

The earliest work on the informal sector focused on the towns and cities of Africa. Its appearance was a very welcome antidote to fears about the consequences of emerging large-scale urban unemployment so shortly after many African countries had achieved independence from colonial rule in the 1960s. Later, the existence of the informal economy in rural areas was also recognized, although scholarship in this area tended to concentrate on the non-farm productive activities of rural dwellers rather than on subsistence or cash-crop agriculture. During the 1980s and early 1990s, the disruptive impact of structural adjustment measures on the formal sector led to widespread factory closures and to a reduction in once-secure government and parastatal employment. Economic growth rates were low or often negative, and foreign direct investment was minuscule.

Our understanding of the informal sector has changed from something limited to particular artisan groups in many Third World cities to something that cuts across entire economies. This transformation has resulted significantly from the continuing fragility of the formal sector of the economy in many African states. As a result, public-sector wages have proven to be inadequate, and large numbers of so-called formal sector workers have taken on additional informal income-generating activities. In one way, this development parallels the multiple wage-earning activities that have characterized rural areas of Africa for a very long time. Just as rural workers have for decades combined subsistence and cash-crop agriculture and non-farm microenterprise, so it has become commonplace for teachers, office workers, police officers, and many other formal sector employees to have more than a single source of income. The old certainties of being a full-time pastor, primary school teacher, or government clerk have been replaced by a new world in which many individuals switch back and forth between a main job and other types of work.

The Informalization of the Formal Sector

Although the majority of these second or third jobs often go untaxed, they are not necessarily considered illegal activities. In a number of countries, including Tanzania, spending leisure time on informal productive activities has been formally endorsed in the 1990s at the very highest level. In Kenya, the government formally allowed civil servants to combine their public-service jobs with other sources of work. Instances such as these amount to the informalization of the formal sector, as the second and third "jobs" begin to affect the first, main job. Many of the important obligations of the original full-time job cease to be fulfilled as the income-generating demands of the additional jobs erode the time available for the first job. This has...