Africa's informal economies have for long generated intense research and debates, primarily within academic and professional circles, i.e., university professors, students, economists, and economic development professionals. A most welcomed development is the recent foray of Africa's blogosphere into this discussion. Just as a side note, I guess it doesn't hurt to mention that the business section of Africa's blogosphere shares a similar line with the academic and professional circles mentioned above.
However, this is not what makes this story so fascinating. But, perhaps something which is fascinating is that the bloggers have done something which the academic and professional communities have not been able to do: expand the discussion outside of academic circles and into real world settings.
So with that said, let's move to the actual bloggers who are discussing informal economies in Africa.
Let's start with the grandmaster of Africa's economic development blogosphere, Emeka Okafor who talks about the “go ahead” spirit of the informal markets:
In Mali and Senegal, those who have work in what we call the formal sector of the economy are almost wholly limited to the urban elite…The informal economy includes much of the trade that takes place in the markets and that offers possibilities for those who are inventive and possess sufficient “go-ahead” spirit”
From there we move on to IBM, via their Global Innovation Outlook blog, as they discuss the roadblocks that Africa's informal entrepreneurs face:
“The existence of informal economies is not inherently a bad thing. In fact, many in the room saw these businesses as emblematic of
Africa’s burgeoning entrepreneurial spirit. And it serves as a means to put food on the table for millions of Africans.
“Think about this: most of Africans are rural dwellers… then wonder about how much government and the formal economy ever penetrated into rural Africa. People have been, and still are, involved in economic activities that are not captured by the official economic figures of the government. Even researchers into the informal economy in African countries, who have devoted much time to studying the informal sector in urban areas, have not paid sufficient attention to the livelihood of rural dwellers.”
Next we go back to Nigeria again with Imnakoya, who writes an insightful piece about the bottom of Nigeria's economic pyramid:
“As I mulled over the Robert’s documentary, the question that kept popping in my mind was what can be done to assist the several micro businesses operating in the slum? This is the “true bottom of the Nigerian pyramid” – and believe me you, none of the government economic policies have much meanings here, in fact majority of those not been designed to empower the folks here at all. What can be done beyond the mere “policy statements of micro-financing or micro-lending”
Here is someone who is taking a brilliant idea regarding informal economies and putting it to work in Africa, Nii Simmonds who lives in the United States but has his family ties in Ghana tells us how to grow Africa's informal sector:
My friend and colleague Mike Best has challenged me on the idea of whether the examples I’m offering are really “micro” enough. By that definition, he’s most interested in “picoinfrastructure”, ways that small communities can build data infrastructure for a few thousands of dollars, not the single-digit millions I’ve pointed to in my examples from the mobile phone business. The examples Mike is offering mostly outline a model of “self-provisioning”, one where you’re building a network to meet your own needs because no one else has built that infrastructure. Where self-provisioning meets incremental infrastructure, I think, is where you overbuild for your personal needs with the goal of selling that capacity to your neighbors. Mining and oil companies self-provision infrastructure all over the African continent. Visit a gold mining center in
Ghanaand you’ll find infrastructure that outpaces that in many secondary cities. But that infrastructure isn’t shared and resold – it might be vastly more cost-effective if it were, and would likely address some community concerns about the impact of extractive industries. That said, I can imagine incremental infrastructure being built at mini, micro and pico-levels. A farmer investing in water pumping equipment that could irrigate both his fields and neighboring fields might be builting pico-level incremental infrastructure, while a mobile phone company that built power plants to provide energy to mobile phone base stations, and used excess capacity to run irrigation pumps might be working on a micro or mini scale.
So far you have heard from bloggers who are either entrepreneurs or at one time were full time business persons, but now let's hear from someone who writes on a similar topic but from a very unique perspective: Sokwanele. Sokwanele is a Zimbabwean civic action support group that aims to address the needs of the everyday Zimbabwean. This post looks at the rise of Zimbabwe's informal gold mining sector:
“The then Mines Minister, Chris Anderson, said it was high time the panners were recognised as part of the informal sector. Instead of hunting them down, he said they should be encouraged to sell their gold to the reserve bank. He even suggested that small-scale miners should be paid a higher price than the market rate to prevent them from selling to the black market. Prospective panners were able to apply for permits to exploit the gold deposits from their respective councils.
Next we visit another blog from Zimbabwe, this time we visit a timeless piece that the Zimbabwe Pundit did explaining why Zimbabwe will never get rid of the informal economy that its current government tries to forbid:
The root of the problem is in the laws of the land. It's not enough to clamor for the protection of property rights; we need to hold our governments responsible for crafting laws that are accomodative of everyone and laws that make the formal market place easily accessible to all people. How do informals do that? They operate in their own market (which formals and the governmnent call “black) which has laws that are reasonable and negotiable by the informals. Don't worry
Zimbabwe, the “black” market will be back. You can't destroy it by demoliting infrustructure, it is precipitated in the mind that's where it resides.
Finally, here is the post that started it all. It is from South Africa's Gavin Chait or Whythawk, as he is also known. This post echoes what was written by the Zimbabwe Pundit, but it goes into deeper detail into not only the causes behind the informal markets but it also goes into what Gavin describes as the only cure too. It's a very good read. Here is an excerpt:
A centralised state exists largely to protect contract and the enforcement of property rights. Individual rights and the welfare state are a relatively recent development. And you can't have these without taxes. And taxes don't exist without businesses and incomes to tax. And those incomes and businesses require contract protection and the enforcement of their property rights.
When individuals believe that the cost of supporting the state is less than the benefits they derive from that state then a central government is stable. When the state starts intervening in the economy and property rights are under threat then investors and business owners withdraw their support.
If they are capable of flight they will travel to other nations where they feel safer. If they are not they remove their investments to the informal market.