Formalizing the Informal Sector

Abstract

The role of entrepreneurship in Africa's future economic growth and social development opportunities for youth, women, and others, including indigenous people, is increasingly being recognized. Expanding informalities in the African entrepreneurial environment has attracted the attention of scholars and development economists who are calling for the formalization of the informal sector in Africa to promote economic growth. Researchers point to distortion and weaknesses in the legal and institutional frameworks as reasons why Africa's entrepreneurship business environment, which is considered “informal,” is failing to meet the continent's economic and social needs. This chapter draws attention to the existing gaps and contends that informal entrepreneurship in Africa cannot be harnessed and harmonized without a deeper understanding of the continent's past and cultural diversity that predates the post-colonial era, and why a policy approach of “normalization” rather than “formalization” is appropriate for the African entrepreneurial landscape.