Social Protection for the Informal Economy : Operational Lessons for Developing Countries in Africa and Beyond
The informal economy in Africa is large and diverse, and it is the main source of employment in the region. It is projected to grow and create more jobs. The informal economy is well established in the region, but it also faces a host of developmen...
| Main Authors: | , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2021
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| Online Access: | http://documents.worldbank.org/curated/undefined/946341635913066829/Social-Protection-for-the-Informal-Economy-Operational-Lessons-for-Developing-Countries-in-Africa-and-Beyond http://hdl.handle.net/10986/36584 |
| Summary: | The informal economy in Africa is
large and diverse, and it is the main source of employment
in the region. It is projected to grow and create more jobs.
The informal economy is well established in the region, but
it also faces a host of development challenges. It is
characterized by low human capital and productivity compared
with the formal economy and is typically associated with
limited access to resources such as electricity, finance,
land, and public services. People who work in the informal
economy are usually more susceptible to short-term shocks
and the more catastrophic consequences of idiosyncratic
shocks (acute short-term crises, such as illness) and
covariate shocks (chronic or widespread shocks affecting
entire communities). These vulnerabilities are exacerbated
because these people ordinarily have limited avenues to
formal financial institutions or risk mitigation
instruments. Women are more likely to work in the informal
economy in Africa and are therefore also more likely to
experience precarious work environments. The COVID-19
pandemic highlighted the vulnerabilities of the vast
informal economy, especially in urban areas. Social
protection cash transfers provided an essential platform for
delivering assistance in response to the COVID-19 shock in
the Africa region. In addition to macroeconomic measures to
support economic recovery, governments needed to limit the
damage to livelihoods, especially in the informal economy.
Many governments in the region added to their capacity to
extend coverage with innovations in targeting and delivering
payments by leveraging technology and using big data. In
many cases, registration was carried out using mobile
technology. Some governments opted to implement more direct
registration processes by creating dedicated websites or
relying on informal economy associations. These swift
responses were success stories in their own right, but they
were undertaken essentially as a response to an urgent
requirement to provide much-needed support to groups that
lacked social protection and to prevent them from slipping
into poverty. Governments allocated significant resources,
typically through external financing (US6.1 billion dollars
in additional spending in 30 countries across Africa). |
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