Policy pathways for addressing informality

By Juan R. de Laiglesia, Senior Economist, OECD Development Centre

street-vendor-informality
Vendor selling fresh vegetables in Galle, Sri Lanka

The prevailing international discourse on informality has shifted. The conceptual “discovery” of the informal sector by the ILO’s Kenya mission in 1972 noted not only its scale but also that it was “…economically efficient and profit-making…” Today, the view that informality is a drag on productivity growth and progress has gained ground in the international community and is consistent with the recommendation that the informal economy should be formalised.

One contention is that balanced development and policy action that lifts the financial, technological, institutional and human capital constraints to productivity will also enable higher productivity in informal firms and thereby formalisation. A growth-inducing productivity agenda is a necessity, but growth alone is not enough to reduce informality.
Continue reading

Girls’ Leadership Matters!

By Alda, an 18 year old Plan International girl activist from Indonesia


 To mark the 2017 International Day of the Girl today, the author was tapped to serve as Secretary-General of the OECD on 11 October 2017
during a special girlstake over event organised by Plan International.


day-of-the-girlWhen someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. However, I know that the reality is still so much different from what I have in mind.

When I was 12 years old, my friend in school was pregnant. As soon as everyone in her family and school knew, she dropped out of school and I have never heard about her again. Three years later, I attended the wedding of another friend, who was pregnant at the age of 16. I was really confused at her wedding and feeling sad for her because she looked unhappy and very quiet. I imagine that it was a hard time for my friend to accept. After the wedding, she dropped out of school and moved in with her husband’s family.
Continue reading

Financing African SMEs: can more of the same help bridge the gap?

Forum Afrique2017-Visual Identity - FR-3

By Rodrigo Deiana, Junior Policy Analyst, and Arthur Minsat, Head of Unit for Europe, Middle East and Africa (acting), OECD Development Centre


The topic discussed here builds on the success of the 2017 Africa Forum


Africa-SMEsAfrican firms don’t have it easy. Among the many constraints faced by formal companies, access to finance consistently ranks as a top issue. Almost 20% of formal African companies cite access to finance as a constraint to their business.1 Overall, African micro, small and medium enterprises (SMEs) face a financing shortfall of about USD 190 billion from the traditional banking sector.2 African firms are 19% less likely to have a bank loan, compared to other regions of the world. Within Africa, small enterprises are 30% less likely to obtain bank loans than large ones and medium-sized enterprises are 13% less likely.3

To bridge this gap, governments and market players need to strengthen existing credit channels as well as expand new financing mechanisms.

Continue reading

La promesse du « made in Africa » ne sera tenue qu’en misant sur les entrepreneurs locaux

Par Victor Harison, commissaire aux affaires économiques de la Commission de l’UA. et Mario Pezzini est directeur du Centre de développement de l’OCDE et conseiller spécial auprès du secrétaire général de l’OCDE chargé du développement.


The topic discussed here builds on the success of the 2017 Africa Forum


Les politiques et stratégies industrielles joueront certes un rôle essentiel, mais elles doivent être repensées profondément. D’abord parce que les efforts d’industrialisation après les indépendances n’ont remporté qu’un succès limité, mais aussi parce que les technologies de production ont subi une révolution, qui n’est pas seulement numérique. L’économie mondiale a radicalement changé, et l’Afrique aussi.
Continue reading

Services, informality and productivity in Africa

Forum Afrique2017-Visual Identity - FR-3

By Tabea Lakemann, Research Fellow, GIGA Institute of African Affairs and University of Göttingen, and Jann Lay, Acting Director, GIGA Institute of African Affairs, and Head of GIGA Research Programme Growth and Development


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa


Services, informality and productivity in AfricaEconomic development and a sustained, broad-based increase in living standards on the African1 continent are critically connected to the capacity of African economies to create decent jobs at a rate that keeps up with the rapid growth of the workforce. This, in turn, depends on the ability of African governments to develop innovative, tailor-made strategies towards private sector development taking full advantage of countries’ comparative advantages. Private sector development strategies require governments to recognise the significance of informality and to look beyond industrialisation — to the service sector — for private sector growth and job creation.

The potential of informal firms

On average, the informal economy is estimated to make up almost 40% of GPD in Africa.2 Informal firms are typically much smaller than formal ones, but even when controlling for size, they are on average less productive, less likely to access external finance and have less educated managers.3 At the same time, heterogeneity between informal firms is considerable. Some firms exhibit very high marginal returns to capital, and between 28% and 58% of informal entrepreneurs in West Africa are identified as “constrained gazelles” with low capital stocks, but some unrealised growth potential.4 Many informal firms thus have the likely potential to provide an improved livelihood to their self-employed owners and family members engaged in the business.
Continue reading

Helping entrepreneurs thrive in Africa

Forum Afrique2017-Visual Identity - FR-3

By Rémy Rioux, Director General of Agence Française de Développement


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
Register to attend


Africa-AFDAfrican entrepreneurs are a key driving force for the continent’s emergence. 80% of Africans view entrepreneurship as a good career opportunity. Take African start-ups. They pioneer social innovations. Thanks to the fintech industry, for example, the diaspora can connect with their relatives and directly finance their health expenses, as in the case of Leea. This company benefitted from Digital Africa, an initiative of the Agence Française de Développement (AFD) to help African start-ups through financing, coaching and business training. African entrepreneurs and customers show the way forward and accelerate the continent’s leapfrogging in terms of technology innovation in banking, health, agriculture, urban mobility, education, and more.

However, at a macro level, 80% of Africa’s labour force works in the informal sector. Unemployment is high, especially amongst the youth, who are three times more likely to be unemployed than adults. Development banks can play a role in addressing the macro policy, nurturing job-intensive growth across the continent and financing gaps. How?
Continue reading

Building Africa’s entrepreneurial culture

Forum Afrique2017-Visual Identity - FR-3

By Giulia Ajmone Marsan and Jonathan Potter, OECD Centre for Entrepreneurship, SMEs, Local Development and Tourism


Learn more about this timely topic at the upcoming
17th International Economic Forum on Africa
Register to attend


Africa-Idea-[Converted]Over the last decade, Africa has witnessed the emergence of a dynamic start-up scene in some of its countries. The district of Yaba, in Lagos, Nigeria is one example. In Yaba, young educated people are supported by a network of incubators, accelerators and other support facilities. This entrepreneurship cluster has taken advantage of the nearby presence of many Nigerian higher education institutions, such as the Yaba College of Technology, the University of Lagos, or the Federal Science and Technical College for students and facilities.

Another well-known case is the so-called Silicon Savannah in Kenya, a highly entrepreneurial eco-system that has given birth to innovative tech companies like M-Pesa, the worldwide money transfer and financing service operating via mobile phones, and Ushahidi, the well-known crowdsourcing platform. As in Nigeria, some of the universities based in Nairobi, notably the University of Nairobi and Strathmore University, are important actors in this eco-system.
Continue reading