IF there was no informal sector most Africans would have been destitute. African territorial markets and the informal sector are the real unsung heroes of the African continent. For decades, these self-organised institutions have quietly embraced the burden of helping poor people move up the economic ladder, preventing the worsening of destitution and poverty. While formal education has often been touted as a solution to socio-economic mobility, high levels of graduate unemployment in Africa suggest education is not a panacea. If anything, educated people are becoming more frustrated as most are shy to work in the informal sector and mass markets.
Countless barriers continue to prevent millions of Africans in poverty from moving up the economic ladder. The situation is worse in rural areas where the biggest barrier is the absence of a reliable market for agricultural commodities that poor people produce. A viable market can create opportunities for everyone to succeed and enjoy the dignity of hard work rather than depend on handouts. For countries blessed with abundant natural resources like Zambia, Zimbabwe and many others, there should be several avenues to increase people’s movement away from poverty without migrating from their communities to cities or the diaspora.
Where is the formal education system in this dilemma?
The onus is on scholars and institutions of higher learning to create new tools that improve equitable access and unlock funding needed by mass markets and the informal sector. Unfortunately, the colonial education system has trained African scholars to think of social mobility only in terms of economic success expressed through income and wealth. The formal education system does not have space for the level of entrepreneurship in African territorial markets and informal sectors where power and autonomy are major forms of mobility that prevent many poor people from falling into destitution. Another critical form of mobility that is prevalent in African mass markets and the informal sector is a strong sense of belonging through which people feel valued and engaged in an ecosystem in which they belong. The same cannot be said for imported formal economic systems that tend to be very exclusive and a preserve for those who have acquired foreign education.
Mass markets and the informal sector value people for their knowledge
The informal sector and mass markets have realised that people want to be valued for their knowledge, expertise and contribution to societal well-being rather than depend on food aid and government handouts. Autonomy and a sense of belonging enable people to apply their full potential in using existing resources.
Mass markets and the informal sector give people a sense of momentum that comes from people being able to feed themselves, earn income from their sweat and contribute to local development. That is also how they acquire a voice, enabling them to feel connected to other people in ways that fuel the urgency to be successful. All these things are more important than money or handouts.
Why formalisation should be carefully thought out
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By providing refuge to millions of people who would otherwise be more vulnerable to poverty and various forms of indignity, mass markets and the informal sector close social gaps that would be worse if they did not exist. Instead of formalising the informal sector for the sake of collecting tax, there are several things African governments need to do to facilitate socio-economic security and stability. The starting point is conducting thorough research to understand challenges faced by ordinary people in accessing opportunities and basic services like identity documents as well as registering companies. In agriculture-driven economies and communities that depend on natural resources, key challenges include navigating complex government systems to access basic services like fair prices for agricultural commodities or food provided by mother nature.
The other important piece is empowering local government and traditional leadership structures. These are key decision-makers who sit across many systems that shape what daily life looks and feels like for millions of ordinary people. If these institutions are not armed with the right attitude and knowledge, poverty will remain difficult to tackle. Most of these institutions do not have knowledge management strategies that can enable them to craft investment guides for their communities based on existing natural resources. It is important to address challenges faced by many people daily. For instance, African rural roads are a nightmare during the rainy season and that limits the capacity of remote communities to get their commodities to the market and ensure a decent income.
The dry season also brings a different set of issues that need to be understood at a granular level by policymakers and development organisations.
Tapping into a lived experience
Providing relevant solutions should not just be based on evidence from periodic studies like crop and livestock assessment. More important is the lived experience of local people whose stories should affirm and reflect diverse moments of truths not captured in formal studies commissioned by government and development agencies. Stories of what people are saying about their own lives and what matters daily, weekly or annually are a powerful source of impactful knowledge for correct decisions. People who experience food insecurity and loss of income know the impossible weight of the barriers and challenges they encounter daily than policymakers.
Designing policies related to taxation can benefit more by leaning on lived experience. That will enable policymakers to ensure that people’s actual daily experiences inform every decision rather than depending on academic reports such as Finscope surveys.
When attention is paid to what matters to smallholder farmers, vendors and low-income households everyday, it becomes possible to carefully direct resources and policy weight behind what matters to ordinary people.
African universities and innovation hubs should be working on some of these challenges and coming up with a wide range of financial products relevant to the informal sector and mass market traders. Rather than make policy decisions from their ivory towers, African policymakers like ministries of finance should sharpen their curiosity to learn about the informal economy and mass markets.
Sometimes policymakers think if something is not in the national news, it is not important. Seeing local people taking matters into their own hands in deeply personal ways should inspire them to learn how ordinary people can contribute to genuine transformation if properly consulted.
- Charles Dhewa is a proactive knowledge broker and management specialist.
