A lot is changing in Africa these days. From democracy taking over, to economies performing better, Africa is arguably certainly getting better. One realm where things are changing is in role of women in the economy. But before that, let me to two terms being used in development reports these days.
What Are The Informal Economy and The Formal Economy?
The terms informal and formal economy are two terms being tossed around by development scholars and other people, especially when it comes to the developing world (perhaps that’s why you may not have come across it before). Basically, both terms divide economic activity into two domains.
The first domain is that part of the economy that is constitutionally recognised and it gets institutional, financial and other widespread support. Its activities are taxed and monitored by the government. This is the formal economy.
While the second domain is that part of the economy which is neither taxed, monitored by the government nor does it get widespread institutional support. Also, its activities are not captured in the GDP statistics or reports. This is the informal economy.
Gender Issues in Africa’s Economy
In Africa, like elsewhere, economic resources are not equally shared. But the issue is a bit unique here. Inequality is exacerbated by not just generally relatable issues, but compounded by gender discrimination.
Despite improving statistics on discrimination, it is still more common for a male child to be educated than it is for the female child. And the economic impact of this is that less and less women would have the requirements or credentials to work in the formal sector.
Women In The Informal Economy
Yet this does not completely incapacitate women from climbing up the social ladder. In a deft move, African women, who have never been historically economically idle or conformed to “Victorian Age” view of women, took to the informal economy and have completely dominated it.
True story! In Senegal, Zimbabwe, Nigeria, Lesotho, etc, women have made dazzling strides in the informal economy. They engage in petty trading and small-medium scale businesses. They run fast food outlets that could feed hundreds daily. Women sell fresh food items and vegetables that are essential for any meal on the African continent. They even sell a lot of items on the highways, believe me, the hustle is real. In the typical African market, women traders outnumber the males 5 to 1 anytime. And this has been a powerful outlet for women to rise on the social ladder and command respect and power.
One major reason for this situation is because the informal sector practices a system of easy entry. It reduces the barrier to entry to just possessing start-up capital, and voila! Just about anybody can setup shop. There’s no burden on traders to be certified, educate, etc.
Some scholars agree that the informal economy could actually be very important for the development of Africa. Political economist Fantu Cheru explains that:
… a closer look at the informal sector in Africa provides a glimpse of what could be achieved if Africa’s economies and financial policies were more attuned to the continent’s everyday realities.
Challenges Still Exist in The Informal Economy
Despite all these, I must admit that the formal sector still poises some challenges for women. For one thing, financing does not come easily for women in this sector. Due to their “unrecognised” status, banks most times don’t like to give loans to businesses in this industry.
Microsfinance banks are helping to tackle this issue gradually. Micro-finance banks are now readily available to finance the growth of businesses in this sector, albeit with a high interest rates.
Additionally, the informal economy in Africa is extremely marginalised. It gets very few support from the government. Few laws exist to support people who ply their trade their. Lack of strong collective voice is a key reason why this is so.
But still, things are changing a bit. With the rise of traditional women support groups that assist women to rise funds and address market issues.
So, even though women are not enjoying as much equality as male folks in the economy and formal economy, they have carved a powerful niche for themselves in the informal sector. It hasn’t all being rosy, but their status is certainly greatly improving.