Background and rationale
In Sub-Saharan Africa as well as in North Africa, informality persists in practices as well as in the labor and production market statistics, despite numerous formalization policies or programs that have been deployed for several decades. In 2016, informal employment accounted for an average of 76.89% of non-agricultural continental employment (Bonnet et al., 2019), while informal production contributed to 36% of the official regional GDP between 2010 and 2018 (Ohnsorge Yu, 2022). Although slight decreases have been recorded in the last two decades, informality is destined to persist, according to Gutiérrez-Romero (2021), and optimistic macroeconomic scenarios are consistently out of step with this reality (Roubaud, 2013). Economic theory, especially models of dualist economy or structural change and urbanization, has long struggled to explain the persistence of the informal economy and especially its coexistence or even coevolution with the formal economy considered as an unsurpassable standard. It is now known that informal production units are both sources of flexibility and sub-efficiency for African economies. For example, informal employment allows a large part of the youth in Africa to find a job, especially for the many graduates who have difficulties in finding formal employment. However, at the same time, the financial and legal vulnerability of informal firms strongly conditions their future evolution, notably through the entrepreneurs investment behaviors.
In parallel, political interventions implemented over the last two decades have generally consisted of promoting the formalization of businesses and workers. The different types of interventions implemented, such as reducing entry costs and ongoing costs of formality, increasing its benefits, or strengthening the enforcement of taxes and regulations (Ohnsorge Yu, 2022; Jessen Kluve, 2021) have yielded very mixed results depending on the nature of the interventions (Ulyssea, 2020; Jessen Kluve, 2021; Floridi et al., 2020; Campos et al., 2023).
Since the 1990s, the perception of the role of the informal sector in the literature has nonetheless evolved, notably by giving increasing attention to small businesses and the efficiency elements of these informal units (Grimm et al., 2012). This evolution has been accompanied by growing optimism about their ability to create employment opportunities and contribute to the economic development of countries through informal activities and entrepreneurship. The paradigm of political action has also started to change, with the objective shifting from formalization at all costs to supporting informal activities in order to make them more efficient and contributory to the economy, including remaining informal. Whereas international institutions and public policies had traditionally focused on informal employment, the new paradigm also considers actions on the productive capacities of businesses and the investments underpinning them.
