For decades, Africa’s vast informal economy has been one of the continent’s most persistent development challenges, limiting tax collection, weakening productivity, and keeping millions of workers and businesses outside the formal financial system.
While many countries continue to struggle with the problem, a small group of African nations is beginning to show that progress is possible.
According to a new report by Moody’s Ratings, Rwanda, Benin, Tanzania, and Côte d’Ivoire have emerged among the strongest performers in reducing informality, thanks to reforms that improved governance, strengthened institutions, and made it easier for businesses to operate within the formal economy.
The findings offer a rare bright spot for a region that continues to have the world’s largest informal economy.
Moody’s estimates that the median informal economy in Sub-Saharan Africa accounts for around 36% of official GDP, compared with about 25% globally. Informal employment across the region stands at roughly 88% of total employment, making it the most informal region in the world.
