Africa’s informal Sector at risk during COVID-19 lockdowns

In this article, we highlight the ignored reality of the informal sector. Lockdowns have been put in place across Africa to curb the spread of COVID-19. Some countries have acted to protect their self-employed, informal traders while for others, their situations do not allow.

The novel Coronavirus (COVID-19) has forced most African countries to impose full border closures. Furthermore, many have also limited people’s movement in order to curb the widespread of the pandemic, taking a rather safe than sorry stance on the issue.

As of Friday, 10^th April, Unmask Africa’s COVID-19 tally showed that there was a total of 12,816 cases, 1,641 (12.80%) recoveries, and 598 (4.67%) fatalities. 53 of the continent’s 58 countries, dependencies and other territories have confirmed infections.

With economic activity coming to a grinding halt, life for self-employed, informal traders who depend on day to day income could take an unfortunate and disastrous turn.

Some African countries with informal economies

Research on informal economies in Africa suggests that this sector is an important economic contributor on the continent. It accounts for up to 90% of the jobs in low-income Sub-Saharan countries. The breakdown of this sector includes vegetable vendors, metal workers, tailors and many more.

Zimbabwe has one of the largest informal economies, first in Africa and second in the world, according to TechZim. Estimates have skyrocketed to 90% of total employment in the country. Another player, Kenya, recorded that its informal sector in 2018 accounted for 83.6% of the total employment.

Africa’s most populous country, Nigeria, has an informal sector that is estimated as high as 65% of the economy. This is according to a report by Independent News (IOL).

“The lockdown creates a tough situation for the whole North African region because occupying the street is the main feature of a heavy informal economy,” says Rachid Aourraz, an economist at Rabat-based Moroccan Institute for Policy Analysis, in a report by IOL.

On paper, projections on the loss of jobs seem to only measure formal employment. In effect, this turns a side-eye on the largely hidden informal sector, where the reality of loss in jobs could be unimaginable.

Many in the formal economies may still work from home. However, informal traders have been denied access to market gatherings, where customers would come freely and purchase their goods or acquire their services.

The reality

The informal sector is not only stereotypically viewed as a makeshift measure for people to survive, but it is also neglected in most instances.

A bleak reality for most will be a high loss of income with no form of support. It will be an instant worry for those entrepreneurs who have been earning through their activities, dependent on hand-to-mouth-type self-employment.

Most governments have tabled some sort of relief package for formal economic players. The question worth asking is how inclusive these packages are in recognising informal traders who contribute to the region’s economy.

But some have acted. Ekiti state in the southwest region of Nigeria, announced a reactivation of the state food bank. Ekiti state is also considering providing a stipend to self-employed citizens whose daily incomes would be interrupted. Meanwhile, Nigeria’s largest city, Lagos, announced an emergency food response, but did not go to the extent of a relief stipend for the self-employed.

The Namibian government recently stated that it will release a stimulus and relief package amounting to N$8.1 billion (approximately USD500 million). Among other government assistance, N$5.9 billion (approximately USD300 million) of the amount will be in direct support of formal and informal businesses in sectors which are directly affected by the lockdown measures.

Households and the related labour market aspects such as job retention are also included in the package. This is to mitigate the negative impact on income and provide the basic amenities for households such as water to cope with the constraints as well as other conditions arising from the lockdown.

No relief for the Informal Sector

Zimbabwe, which has one of the largest formal vs informal contribution ratio as mentioned earlier, has put nothing in place for its informal sector. “It’s not practically possible to lock down in an informal economy without any form of relief to the needy,” said Shami Fred, an epidemiologist, in a report by Al Jazeera news.

Zimbabwe has been struggling economically and reports have shown the negative impact of the lockdown in relation to the situation in the country. For instance, the prevalent water shortages and power cuts hinder an effective lockdown as people continue to queue for water at borehole pumps and gas at local filling stations, defying social distancing principles.

Meanwhile, South Africa, which is the second biggest economic player in the region, did not stipulate clearly if some of their economic relief packages catered for the informal sector.

For African countries, the Coronavirus pandemic is an acid test for governments as it questions what development really means.

Reporting by Kupa Kambasha. Editing by Gaby Ndongo. Image from Pexels.