Chart of the Week: The Potential for Growth and Africa’s Informal Economy

By IMFBlog August 8, 2017 By 2035, sub-Saharan Africa will have added more working-age people to their workforce than the rest of the world’s regions combined. And this growing workforce will have to be met with jobs. In the region, up to 90 percent of jobs outside agriculture are in the informal sector. This includes household enterprises that are not formally registered, like street vendors or domestic workers. It also includes off-the-books activities by registered firms—for example, the taxi driver who offers a discount if the meter is not turned on. As our Chart of the Week shows, the informal economy in sub-Saharan Africa is the second-largest in the world, after Latin America and the Caribbean. From 2010 to 2014, sub-Saharan Africa’s informal economy accounted for 38 percent of GDP to the region. Within the region, however, there is significant variation in the size of informal economies. They range from a low of 20 to 25 percent of GDP in Mauritius, South Africa, and Namibia, to a high of 50 to 65 percent in Tanzania and Nigeria. As the chart shows, informality persists even in advanced economies, which means that the shift from informal to formal will take many years. What drives informality in the region? … Continue reading Chart of the Week: The Potential for Growth and Africa’s Informal Economy