Locating the Niche of the Informal Sector as a Driver of Social and Economic Development in Selected African Countries

Abstract

The development of informal sector in many African countries plagued by poverty and skyrocketing unemployment rates remains a panacea because of its potential to create employment. The aim of the paper is to locate the niche of the informal sector in selected African countries as a driver of social and economic development. Findings indicate that an informal sector serves as platform of employment and sustainable economies; offers an opportunity to exploit and tap indigenous knowledge systems. The sector can be strengthened by: access to appropriate information pertaining to goods and services as well as the market; enhancing their goods’ competitiveness; crafting friendly government legislation; having the sector to work in tandem with bigger industries/formalized sectors; having countries to borrow a leaf from countries with well-developed informal sector. The sector faces the following challenges: Inadequate support from governments; inadequate policy environment in support of the sector. The paper recommends: formalizing of the informal sector; putting in place a monitoring and evaluation process; Instituting associations to enhance administration and governance of the sector. The paper has been informed by endogenous growth theory.

DOI: 10.5901/mjss.2014.v5n27p1293