34 Per cent Of African Economies Still Informal

International Monetary Fund The Wire

 

About 34 per cent of the Gross Domestic Product in Sub-Saharan African economies are made up of informal activities. 

This is according to figures cited from the International Monetary Fund in a report by Proshare on Wednesday.

The report notes that informality in economic activities globally are dropping but more work is still needed. 

The major challenge for policy makers however, is the difficulty of capturing these transactions. 

This, the report notes, makes it hard to estimate what percentage of value is added to the entire economy by these shadow trades.

“People and companies engaged in the informal economy usually operate on a small scale. 

"This means there are no official statistics on the informal or shadow economy as it's sometimes called, so economists need to estimate its size,” the report notes. 

It is not just African policy makers that have it all to do to capture more of the economic activities in their domain the publication notes. 

This is also a problem in the Caribbean as well as the region that spans South and Central America.

“The regions with the highest share of informality during 2010-17 are sub-Saharan Africa and Latin America and the Caribbean both at 34 per cent of GDP. 

"This compares with 9 per cent of GDP for North America. 

"In the Organisation for Economic Co-operation and Development, the informal sector is equivalent to nearly 15 per cent of GDP.” 

In what is a generally held view, economies where most of its activities are uncaptured, are seen as those with poverty, low productivity, slow growth and high unemployment.

Analysts at Proshare do not call for that aspect of living to be eradicated completely though. 

It instead suggests further ease in carrying out business activities and better access to financial services.

These are steps the Central Bank of Nigeria say they have been executing. 

In its 2018 financial Stability Report, the bank said it had reduced financial exclusion in the Nigerian economy from 41 per cent in 2016 to 36.80 per cent. 

The World Bank recognised Nigeria’s efforts in making credit more available to citizens, by scoring it 15th globally, above Germany and Ireland – a rating some experts are skeptical about.

Proshare also disclosed in its report that the International Monetary Fund will in its seventh statistical forum, focus on measuring the informal economy. 

It also added that the summit will x-ray the use of technologies such as night lights from satellites to measure the size of informal activities across the globe.

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