88% of Africa’s workforce remains informal as governments struggle to collect taxes

Sub-Saharan Africa has the largest informal workforce in the world, with nearly 88% of workers operating outside the formal economy, a trend that is weakening government finances, limiting economic growth, and making it harder for countries to improve their creditworthiness, according to Moody’s Ratings.

In a report released on Tuesday, the ratings agency said informal employment in Sub-Saharan Africa accounts for a median 88% of total employment, compared with around 40% globally.

It is also estimated that the region’s informal economy represents about 36% of official GDP, significantly higher than the global average of roughly 25%.

The findings come as African governments face growing pressure to raise domestic revenue amid rising debt-servicing costs, shrinking development aid budgets, and increasing demands for spending on infrastructure, healthcare, and education.

International institutions, including the African Development Bank, IMF, and World Bank, have repeatedly argued that stronger domestic resource mobilization will be critical to financing Africa’s development ambitions.