“Teeth do not see poverty.” This African proverb reminds us that people still manage to find something to smile about even when circumstances are dire. This is what we learned during COVID-19 notwithstanding. The impact on the economy, which translated to lost jobs, income and enterprise opportunities for the over 1.3 billion people in Africa, had far and wide-reaching effects in compounding a very precarious scenario – where the region already needs to create about 13 million jobs every year.
This is at the backdrop of climate change. We continuously see millions across the continent lose their home and farmland to erosion due to flooding, forcing them to flee their homes to places where they lack opportunities. This is the story of millions of children displaced by climate change impacts. Many of them are unlikely to ever return to school - a reality that could lead to new inter-generational cycles of poverty.
As fossil fuel emissions that drive climate change continue to rise, efforts to hold global warming to 1.5 degrees Celsius are lagging despite legions of net-zero promises. Scientists say there is now a 50% chance
the key barrier will be passed at least temporarily within five years - with worrying implications for everyone, especially the informal sector.
A critical rethinking of the informal economy in Africa
Africa’s informal sector accounts for over 80%
of all employment in sub-Saharan Africa. This, therefore, means anything that impacts this informal sector needs to be taken with serious consideration. This is a sector that doesn’t understand the language of bank accounts and VAT but at the end of the day, this is the sector that drives the realities of Africa’s economies. These are the unsung heroes of Africa’s growth and have been so for a long time.
Therefore, it is essential to imagine how bridging support to the informal sector can extend beyond project initiatives. Most projects are time-bound, with limited budgets. If not implemented with longevity in mind, such interventions can create dependencies rather than solve them.
Longer-term, more sustainable solutions must be imagined to bring the formal and informal economies closer together; without this kind of lateral thinking, we will continue leaving most informal sectors stranded on the ground floor, looking upwards. Such structural inequality is unsustainable.
It’s reasonably fair to ask some fundamental questions: How will these people, who depend upon daily sales for their sustenance, be able to provide for themselves and their families?
For example, Africa’s agro-market is estimated to be worth up to $150 billion
each year in 5 years. While it is open to global competition, empowering the local informal sector to take the lead in developing competitive local products that can compete for shelf space with goods from elsewhere offers an opportunity for developmental strides in the continent. Enabling this long-term perspective is the trajectory that stimulus packages in Africa should take. Not short-term cash transfers as is the traditional approach currently been used. And for this, the following policy measures can be taken.
First, prioritize buffering informal sector players in the continent’s catalytic sectors. These are economically inclusive sectors – meaning they engage the majority of the population. This implies that maximizing their productivity through value addition means putting more money in more pockets. In addition, these sectors can meet both climate and socio-economic priorities simultaneously. For example, decentralizing solar driers among cassava farmers – where cassava is converted into dried cassava chips that can be preserved for longer, sold to millers to be further processed into cassava flour or eaten as is/or fried into cassava chips, has seen incomes increase by 150% and reduce loss by 30%.