Employment in the Informal Sector

Describes the characteristics of employment in the nonfarm informal sector in Sub-Saharan Africa. Based on data from household surveys in Ghana, Kenya, Nigeria, Rwanda, and Tanzania, the nonfarm informal sector can be defined as including the self-employed, contributing family members, and wage workers in small, unregulated enterprises. Seventy percent of the 36 million people working off the farm in these five countries work in the informal sector. They earn more than those who remain on the farm, and in some cases, more than those in the formal sector. The informal sector is disproportionately urban and more likely to employ women and youths. Within the nonfarm sector, the proportion of informal employment ranges from a low of 47 percent in Tanzania to a high of 79 percent in Rwanda. For people leaving the farm, informal employment is often the “first stop” and is usually in petty trades and services where the barriers to entry are low.