According to a report published by the International Monetary Fund (IMF), the informal market represents between 20 and 65% of the gross domestic product (GDP) of countries in sub-Saharan Africa. The document specifies that in this geographic space, the informal economy is very heterogeneous.
Thus, in countries such as Mauritius, South Africa or even Namibia, it varies between 20 and 25% of the GDP while in others such as Benin, Tanzania or Nigeria, it varies between 50 and 65%. of GDP. The Study indicates that the informal sector shrinks with rising income levels, which seems to reflect a greater capacity for effective governance and beneficial incentives to reduce the phenomenon.
In Africa, the informal sector accounts for around 40% of GDP, on average, for low-income countries and 35% of GDP for middle-income countries.
It should be noted, however, that oil-exporting countries and fragile economies are more likely to be niches for the development of an informal economy. Thus, in most of these countries, the informal sector accounts for more than 40% of GDP, regardless of the level of per capita income.
Sub-Saharan Africa is one of the regions where the informal economy weighs the most with an average of around 38% of GDP between 2010 and 2014 against 34% for Southeast Asia and 23% for Europe. . The continent is second only to Latin America (40%).
Among the factors stimulating the development of the informal sector, the authors of the report identify tax and social charges, the quality of institutions, and the size of the market and economic activity. Thus, the greater the difference between the total cost of labor in an official economy and that of the informal economy, the greater the temptation to move towards the informal. In addition, an ineffective judicial system, excessive bureaucracy, lack of transparency, and difficulty in accessing credit can push towards this alternative, especially when the government’s repressive capacities are weak.
Ranking of sub-Saharan African countries according to the percentage of the informal sector in their economy
Between 20 and 30%
Between 30% and 40%
17-Democratic Republic of Congo
Between 40% and 50%
31-Central African Republic
More than 50%