Most economies in Sub-Saharan Africa are dominated by the informal sector. The informal sector is a key component, contributing massively towards the continent’s GDP and employment. It is hugely dynamic, spanning a wide range of small and medium enterprises, workers, and self-employed.
More than 66% of total employment in Sub-Saharan African is in the informal sector.
International Labour Organization
According to The International Labour Organization (ILO), the informal economy’s average share of GDP is 41% in Sub-Saharan Africa. It is an even bigger employer, representing 66% of total employment in Sub-Saharan Africa. More than 90% of new employment opportunities created in some African countries are in the informal sector.
Opportunities are vast
The informal economy is experiencing rapid development in financial inclusion and digitization in recent years. Technology is disrupting the status quo – from financial access to health and education, from energy to water, as well as government measures.
Despite that, most farmers, self-employed workers, and businesses are trapped in cash-only systems. It makes it much harder for them to grow and forge their path to a better living.
Therein lies the opportunity – linking people in the informal economy to formal opportunities, bringing them the access to formal financial services and networks to help them save, expand and become financially secure. The good news is, companies with innovative technologies are already offering the platforms and services to build the link.
Businesses riding on the wave of digitization will provide a critical path for the informal economy to grow. It has already started with banks and mobile network operators, reaching the traditionally excluded population. The issue, however, is to ensure that these solutions are adopted and actively used.
The time is now
At Wakandi, digitally transforming the informal sector has remained at the heart of whatever we do. We focus on building products and services that can help African communities and informal financial groups digitize manual processes and contribute towards a more inclusive and sustainable society.
Building CAMS, or the Credit Association Management System, is our effort to digitally transform the informal economy. As most people rely on savings groups to access financial services, CAMS can help them transact digitally and store all records online. Working in collaboration with the communities helps us to gain constant feedback as we move forward.
We also understand that building a digitally-enabled society cannot happen overnight. It will require constant innovation and working together with banks, payment providers and other financial institutions. We aim to collaborate with the market players to strengthen financial services in the informal economy.
Africa has massive opportunities to use the digital economy as a driver of growth and innovation. While the informal economy may not be eliminated completely, we can continue to build a society ready for the future. It will not only help unlock the informal economy’s massive potential but also move millions of people towards formal transformation.