Technology

Digitalisation of East Africa’s Informal Sector

November 15, 2019

The informal sector constitutes a large part of employment in African countries with the International Labour Organization(ILO) estimating that more than 66% of total employment is Sub-Saharan Africa is from the informal sector. Informal economies are typically characterised by low productivity and non-exportable goods and services.

On the other hand, the sector also provides crucial livelihoods to the most vulnerable of the urban poor. It is projected that the informal sector is likely to absorb many of the continent’s young employment seekers who are mainly today’s millennial digital natives – educated, learned and very adaptive to global trends. It is with this regard that the Inter Region Economic Network (IREN) has held its 18th Africa Resource Bank Forum in Nairobi in collaboration with the Friedrich Naumann Foundation for Freedom(FNF), under the theme: “The Future of Africa’s Informal Industry in the Era of Digitalization.”

“The emerging economic informality operators are vastly different from traditional informal economy actors. Economic informality is no longer synonymous to street vending. The street is now Facebook, Twitter etc,” said James Shikwati, IREN Director and Founder.

The aim of the forum is to identify ways in which Africa’s informal sector can leverage on emerging digital technologies to meet Africa’s and global market needs.

“There is need to close the digital divide for our enterprises to be competitive in the global market,” said Stefanie Steinbach, Head East Africa Office of the Friedrich Naumann Foundation for Freedom(FNF).

“Digital technologies are opening up new opportunities for the informal sector to innovate and grow. It is important we foster inclusive multi-sectoral collaboration to tap into the opportunities of this sector, “said Tobias Alando, Head of Membership and Board Affairs, Kenya Association of Manufacturers(KAM).

Contrary to the old forecasts, informality has not diminished over time and is even increasing in many countries. African governments have been struggling with how best to respond to the pervasive sectors by focusing on punitive and regulatory measures to enforce formalization or evicting vendors outside cities. However, other approaches focus on unleashing the untapped entrepreneurial potential of the informal sector; digitalisation is such an approach.

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