A majority working in the shadows

Informal economy actors are excluded from much of the security and protection that the state extents to the formal economy. Forming associations, cooperatives and self-help groups may be the most promising way in which informal economy actors can obtain social security, political weight, economic opportunities and a shared identity. In the six surveyed countries about half of all informally employed people are organized in a group. On average throughout the six countries, saving clubs are the most popular, followed by religious associations, neighborhood groups, and cooperatives. Political parties, cultural groups and trade unions lag far behind.

Because of the insufficient access to social protection and health services among the informally employed, they are more vulnerable to external shocks such as the pandemic. While most social assistance packages were targeted only to the formal sector, the economic effects of the Covid-19 pandemic caused a sharp increase in income poverty among the informally employed in most of the countries. A comparison of two different social relief programmes (Kenya and Senegal) indicate that a more comprehensive approach could even reduce poverty and inequality despite the economic effects of the pandemic.

According to UNDP (2020) about 408 million people in sub-Saharan Africa remain without access to health care. Workers in informal employment and their family members are disproportionately affected by health coverage gaps, even in relation to national health systems that provide access to free health care. It comes therefore with no surprise that the majority of workers in the informal economy identify access to health care as their key demand, when asked about their expectations in better state services. There is also a great willingness to pay for health insurance among the informally employed – even by the poor. 

Trust in institutions is crucial for ensuring the success of a wide range of public policies. For example, public trust leads to greater compliance with public health responses, regulations and the tax system. The survey shows that there is a high demand for redistribution among the informally employed. People who work in the informal sector even show a high readiness to pay fees and taxes, if the government delivers on core demands such as health services. Unfortunately, there is a low level of trust in government institutions and political parties. People tend to trust traditional and religious leaders instead.