Across Africa, the real engine of growth is not always found in corporate boardrooms or high-rise offices, but rather in open-air markets, roadside stalls, and small workshops. This is the informal sector in Africa, a space where millions of entrepreneurs operate every day, driving the continent’s economy from the ground up.
The International Labour Organisation estimates that more than 80% of Africa’s workforce is engaged in informal trade or services. From street hawkers in Lagos to mechanics in Nairobi and traders in Harare, this sector showcases resilience, creativity, and entrepreneurship. Yet many of these businesses face an invisible ceiling: the transition from informal trading to formal business.
Zimbabwe’s Mbare Musika market vividly captures this dilemma. Known as the country’s largest agricultural trading hub, it is home to thousands of traders. Some generate revenues comparable to small and medium-sized enterprises (SMEs), yet few are formally registered.
“I sell close to two tonnes of tomatoes a week,” says Tendai, a vendor in her thirties. “If I add everything, I make more than some people in offices. But I don’t know how to move from this stall to running a proper company.”
For many, the barriers are daunting: complex paperwork, high compliance costs, and limited knowledge of corporate systems. Instead of formalising, traders expand sideways, opening multiple stalls in different parts of the market while remaining firmly informal. The result is growth without structure, profit without sustainability.
Remaining in the shadows comes at a price. Informal businesses struggle to access loans, partnerships, or investment that could help them scale. They operate without legal protections, leaving them vulnerable to exploitation, eviction or arbitrary shutdowns. They cannot easily tap into larger supply chains or export markets, even when demand exists.
“I’ve tried to get a loan before, but the bank wanted financial records and collateral,” explains Blessing, a trader who runs three clothing stalls. “Everything I have is in cash, and the papers they ask for, I don’t have. So, I keep opening more stalls in different places instead.”
This dynamic risks creating a paradox: Africa has some of the most entrepreneurial people in the world, yet many are excluded from the full benefits of the very economies they drive.
Analysts argue the problem is bigger than knowledge gaps. Governments often view the informal economy as a nuisance rather than an opportunity. Business registration processes can take months, involve several agencies, and require fees that many traders cannot afford.
Even when training is offered, it tends to focus on basic bookkeeping instead of equipping entrepreneurs with strategic tools for scaling. For a vendor who spends 14 hours a day managing stock and customers, navigating bureaucracy can feel impossible.
Still, there are glimmers of progress. Some African countries are simplifying registration, digitising tax systems, and introducing tiered tax models that make formalisation less intimidating. Fintech startups in Africa are also making a significant contribution, offering digital payments, mobile-based accounting tools, and microloans designed explicitly for informal traders.
NGOs are stepping in with mentorship networks that guide entrepreneurs through formalisation, while private-sector initiatives are piloting solutions to bridge the gap.
Yet, the change is patchy, and far more is needed. Experts warn that the goal should not be to push businesses into formality for its own sake but to make formalisation accessible, rewarding, and growth-oriented.
The question is no longer whether the informal sector can grow; it has already done so. The challenge is to ensure that this growth evolves into sustainable, scalable enterprises that create jobs, pay taxes, and compete effectively globally.
Without systemic reform, Africa risks leaving millions of entrepreneurs in limbo: successful but excluded, dynamic yet constrained.
Mbare Musika, with its vibrant stalls and untapped potential, reflects both the triumph and tragedy of Africa’s informal economy. Behind every stall lies not just a business, but an opportunity – one that, if unlocked, could redefine the continent’s economic future.
