HakiPensheni

This factor is important to consider as the United Nations Economic Commission for Africa asserts that 93 per cent of new jobs created in Africa during the 1990s were in the informal sector.

As it stands, most African governments have yet to design strategies to formalise the informal economy and make it productive in a manner that alleviates poverty.

Issues such as taxation and regulation currently act as disincentives for formalisation. Informal businesses are reluctant to be pulled into the tax net.

Further the long, complicated and often bureaucratic requirements for registration as well as licensing and inspection are also barriers informal sector faces.

Further, it struggles with raising capital, are often unable to fully access or leverage technology and innovation and typically suffer poor infrastructure.

Finally, a conundrum exists for the informal sector because on the one hand the sector is an important source of employment, income and spurs economic growth.

It is not clear if formalisation may negatively affect the positive elements of the informal sector.

On the other hand, poverty incidences are higher in the informal sector households, employment is socially insecure and the informality undermines development prospects through loss of revenue and unfair competition.

What is clear is that it is time for Africa to tackle the sizeable element of informality in their economies and develop creative strategies to magnify the positive while reducing the negatives.

Ms Were is a development economist. Email: anzetsew@gmail.com