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


By Martha Alter Chen, Harvard University and WIEGO Network

Learn more about this timely topic at the upcoming
Global Forum on Development on 5 April 2017

Market porters in Accra, Ghana
Photo Credit: Jonathan Torgovnik/Getty Images Reportage

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).

The informal economy not only accounts for a high share of employment in Africa but also contributes to poverty reduction. Income from informal employment is what keeps many households across the continent out of extreme poverty. Even in countries where informal employment accounts for a relatively small share of employment, such as South Africa, it has a significant impact on poverty reduction (Rogan and Cichello 2017).

Also consider other ways in which informal workers and their livelihood activities contribute to sustainable development.

Street vendors play a key role in food security. A survey of over 6 000 households in 11 cities in Southern Africa found that around 70% of households buy food daily or weekly from informal outlets (Crush and Frayne 2011). The more food-insecure the household the more likely it is to buy food from informal vendors or traders (Ibid.).

Key groups within the informal economy play an important role in climate change mitigation too. The carbon footprint of informal workers and enterprises is often smaller than that of their formal counterparts. In comparison to their formal counterparts, home-based producers tend to use less electricity, packaging and vehicular transport; street vendors use less packaging, generate less waste and use less vehicular transport; and waste pickers use less vehicular transport. Moreover, waste pickers reduce greenhouse gas emissions by reclaiming waste that would otherwise end up in landfills or (worse still) incinerators. Yet, informal workers and the informal economy are often overlooked in climate change deliberations and green economy debates.

Given the sheer size and the important contributions of the informal economy in Africa and elsewhere, protecting the earnings and promoting the livelihoods of urban informal workers will be key to realising, at least, four of the Sustainable Development Goals (SDGs) in the region. Here’s how.

SDG #1: Since the majority of urban workers in Africa are informally employed and since average earnings are low in the informal economy, the goal of reducing income poverty cannot be met without increasing and protecting the earnings of the working poor in the informal economy.

SDG #5: Since women are more likely than men to be informally employed in Africa and since gender segmentation and earnings gaps within the informal workforce persist, the goal of gender equality cannot be met without increasing the earnings and reducing the disadvantages of women workers in the informal economy.

SDG #8: Since the majority of urban workers in Africa are informally employed and since informal workers face greater decent work deficits than formal workers, the goal of achieving decent work for all cannot be met without addressing the challenges faced by informal workers in pursuing their livelihoods.

SDG #11: Since informal workers contribute to a green economy but are often excluded from city plans and services, the goal of inclusive and sustainable cities cannot be met without recognising the economic and environmental contributions of informal workers to cities, integrating their livelihood activities into city plans and policies, and extending access to public land, public services and public procurement to informal workers.

Indeed, the New Urban Agenda ratified at Habitat III in Quito, Ecuador in October 2016 mandates that cities should recognise the contribution of the informal economy by:

  • supporting informal enterprises (clause #18);
  • improving the livelihoods of the working poor in the informal economy, particularly women, by increasing their access to productive resources and services as well as legal and social protection and by enhancing their voice and representation (clause #59); and
  • regulating access to public spaces and streets by street vendors and local markets for commercial purposes (clause #100).

More generally, the New Urban Agenda calls for a progressive formalisation of the informal economy, combining incentives and compliance measures while preserving and improving existing livelihoods (clause #59).

Advancing the SDGs and the New Urban Agenda by recognising, protecting and promoting the urban informal economy in Africa is possible so long as cities work closely with organisations of informal workers. Consider the following promising examples from Durban, South Africa and Accra, Ghana.

The Warwick Junction precinct of Durban, South Africa is home to a natural market with 7 000 street vendors and an historic wholesale market, adjacent to the main city transport node. For the past two decades, a dedicated team has worked with local authorities, street vendors and their leaders to create an inclusive, attractive and safe market area in Warwick Junction. Initially working within the municipal government and later forming their own non-profit organisation, Asiye eTafuleni (AeT), the team focused on participatory planning and design by the vendors as well as collective management (security and cleaning) of the market areas together with design interventions (shelter and equipment), legal education, and occupational safety and health measures. When the historic market was threatened by commercial development, the street vendors and market traders with the support of AeT, activist academics, pro-bono lawyers and the WIEGO network filed cases against the city to preserve the historic market and the rights of vendors to public space. (Read a case study about AeT’s campaign to save Warwick Junction market.) Consequently, the city withdrew its plans to build a mall where the historic market stands. Moreover, when a local licensed street vendor leader had his goods confiscated by a local policewoman, that street vendor with the support of AeT and the same allies filed a successful precedent-setting case that ruled that confiscation of street vendor goods is illegal, immoral and unconstitutional.

In Accra, Ghana, associations of street vendors and market traders, with support from the WIEGO network, worked to mobilise other vendors and traders to collectively demand improved occupational health and safety (OHS) from the municipality. They conducted a study on OHS issues, disseminated information and trained workers in advocacy skills to engage with local authorities. In the process, street vendors, market traders and market porters from across the city shared common needs and demands and began to engage with municipal and national governments on an ongoing basis. The municipality agreed to install fire extinguishers and provide more regular garbage collection services to the built markets. The market porters, who carry goods on their heads for market traders and their customers, also gained two victories in the process: registration of some 2 000 market porters in the National Health Insurance Service and the banning of an unfair toll (or tax) on market porters by the newly-elected government.

Despite the size and contribution of the informal economy and the promising examples of good practices in support of informal workers, cities across Africa and other regions routinely stigmatise, penalise and even criminalise informal workers and their livelihood activities. But if cities are to join the global campaign to implement the SDGs and the New Urban Agenda, they will need to recognise, validate and support the urban working poor in the informal economy and their livelihood activities. In so doing, cities will uphold the guiding principle of the SDGs to “leave no one behind.” And in so doing, cities should engage with the organisations of home-based workers, street vendors and waste pickers across Africa whose common motto is “nothing for us, without us.”


Crush, J. and B. Frayne. 2011. “Supermarket expansion and the informal food economy in southern African cities: Implications for urban food security” in Journal of Southern African Studies, 37 (4) (2011), pp. 781–807

Herrera, Javier, Mathias Kuépié, Christophe J. Nordman, Xavier Oudin and François Roubaud. 2012. “Informal Sector and Informal Employment: Overview of Data for 11 Cities in 10 Developing Countries”. WIEGO Working Paper (Statistics) No. 9.  Cambridge, USA: WIEGO.

Rogan, Mike and Paul Cichello. 2017. “Can informal employment actually reduce poverty?” WIEGO Blog.

UN Statistics Division. 2015. The World’s Women 2015. New York, USA: UN Statistics Division.

Vanek, Joann, Martha Chen, Françoise Carré, James Heintz and Ralf Hussmanns. 2014. “Statistics on the Informal Economy: Definitions, Regional Estimates and Challenges”. WIEGO Working Paper (Statistics) No. 2. Cambridge, USA: WIEGO.

1. For more details of AeT’s work in support of the Warwick Junction market, kindly view the book Working in Warwick by Richard Dobson (AeT) and Caroline Skinner (WIEGO).

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