Make informal the new normal

Every country has an informal economy. It’s a misconception that informality disappears with economic development. One common element is that the informal sector is a counterpart to the formal sector, as they are undeniably linked: the scale and scope of the informal economy may indicate that the state’s service provision for businesses is lacking or too complex, or that there are other issues preventing people from finding employment in the formal economy (1).

The share of informal employment varies between countries and is estimated at 86% in Sub-Saharan Africa (2). While many participate in informality out of necessity, others do so by choice, based on practical and strategic reasons, such as avoiding bureaucracy and avoiding taxation (1).

What is an ‘informal economy’ actually?

Despite its scale and significance, the informal economy is frequently stigmatised as backward or exploitative. Scholars have long debated its definition, but generally agree it includes employment without formal contracts or social protection, ranging from self-employment in small, unregistered businesses to wage labour in unprotected jobs. In Africa, enterprises often operate simultaneously in formal and informal spheres. Thus, the term “informal” must be used carefully to avoid oversimplification.

So, what distinguishes informal actors in food systems from their formal counterparts? Primarily, it’s the lack of formal registration and access to state-provided services. Yet, informal economies display high levels of self-governance, organisation, and internal structure. Regulation often comes from nonstate actors: entrepreneurs, community leaders, and associations. This results in what is known as hybrid governance, where the state shares regulatory influence with informal institutions. Within these systems, actors support each other with services such as financing, infrastructure, market access, and even social protection.

Why ‘formalisation’ has failed

This disconnect between formal policy frameworks and informal realities helps explain why conventional economic approaches so often fall short. Likewise, efforts to force formalisation have largely failed. Instead, to improve food system performance, we must work with and for the informal economy.

Governments and development partners must recognise that informal economic activities are vital for food access and livelihoods, especially among low-income populations since they provide affordable food. But also employment opportunities in situations where formal employment in not available. Unfortunately, many officials still hold biased views of informal actors. Policies need to be based on facts, not outdated perceptions, and tailored to strengthen, rather than replace, informal structures.

Well-functioning infrastructure, energy, roads, and digital connectivity can improve the efficiency of all food system actors. ICT tools like mobile phones have enabled better price setting and reduced food waste through faster information flows. Mobile money has also expanded financial inclusion for informal businesses. Targeted policies can bridge digital divides and support resilience in informal food chains. For instance, digital tools could incentivise better hygiene or waste reduction practices.

Treat informal as the new normal

Beyond government policies, other stakeholders can also influence informal actors. Consumer groups can advocate for healthier food; supermarkets can push for reduced food waste. These pressures can lead to new quality standards and packaging requirements. Informal actors can rise to meet these expectations when provided with knowledge, credit, or other support. However, much remains unknown about how to effectively align external incentives with informal actors’ motivations; a topic that demands further research.

What’s clear is that we should not attempt to force formalisation. Informal actors will formalize when the benefits outweigh the costs—when tax revenues fund infrastructure that benefits them, and when their voices are included in policymaking. Until then, informal actors can and do contribute meaningfully to food system goals. If we treat the informal as the new normal, allowing it to co-exist with the formal economy, then we can unlock greater potential for food system development.

Working examples from the field

In Ghana, “market queens” oversee, protect, and promote traditional market spaces. These influential women traders organize savings, offer informal insurance and credit, and act as a safety net for fellow traders. They play a crucial role in maintaining order and ensuring access to food.

In Northern Uganda, bulk sunflower trade offers another model. Formal contracts coexist with informal agreements between traders and farmers. These arrangements—based on trust and local practices—govern supply, pricing, and inputs like seeds. This blend of formal and informal strengthens local economies.

In Tanzania, small-scale female traders often lose income due to unsold, perishable goods. Unable to afford cooling equipment, they suffer daily losses. By involving a local bank, a credit scheme would enable registered resellers to invest in coolers, offering traders manageable installment plans. This intervention reduces waste, increases income, and builds a more resilient value chain.

In Benin, street vendors are key to urban food access, yet their offerings often lacked nutritional value. A local civil society group worked with hundreds of these vendors to integrate spinach—a highly nutritious crop—into their menus. The result: nearly half a million people gained access to healthier meals, and awareness about nutrition rose significantly.

The real work of feeding people

The informal economy is not a problem to be solved, but a system to be understood, supported, and integrated. It is diverse, dynamic, and central to food and nutrition security and livelihoods across Africa. Rather than pushing for formalisation, we should focus on creating conditions that support informal actors to thrive—and allow them to formalise on their own terms. Making the informal the new normal isn’t lowering the bar; it’s recognising where the real work of feeding people is already happening. It’s in the informal economy that a great potential for development is yet unexplored. To tap into this potential, we must adapt our conventional approaches to the reality of informality, not the other way round.

References

1. Termeer, E., van Berkum, S., Dijkxhoorn, Y., & de Steenhuijsen Piters, B. (2022). Unpacking the informal midstream: how the informal economy can and should contribute to enhanced food system outcomes. (Policy paper / Wageningen Economic Research; No. 2022-106). Wageningen Economic Research.
2. ILO. (2018). Women and men in the informal economy: a statistical picture (third edition) / International Labour Office – Geneva: ILO