Kenya has the highest informal sector employment among nine countries covered in a new report by the United Nations’ Economic Commission for Africa.
Employment in the sector stands at 77.9 per cent of the total ahead of Rwanda’s 73.4 per cent, Uganda’s 59.2 and Tanzania’s 8.5 per cent. In Egypt, Liberia, Madagascar, Mauritius and South Africa, the sector offers jobs to 51.2, 49.5, 51.8, 9.3 and 17.8 per cent of workers, respectively.
The study, launched Thursday in Nairobi, looked at the informal employment outside the agricultural sector with the overall focus being industrialisation through trade.
“In Kenya and Rwanda, three out of four workers are employed in the informal sector, a proportion that increases to over 80 per cent among women,” said the report.
The study attributes the high level of informal sector workers to inability of the formal sector to absorb the huge number of job seekers.
“As the formal sector — public and private — cannot absorb the increased tide of job seekers, informal employment usually drives job creation in most countries,” says the report. It notes that over 70 per cent of jobs in eastern, central, western and southern Africa in the past 10 years have been in the informal sector.
In Africa, abundant labour supply is compounded by the fact that there are no social safety nets, making it difficult for most low-skilled workers to quit the labour market.
The coverage of social protection of informal workers in Africa is estimated at about 10 per cent compared to 50 per cent in Latin America and the Caribbean.
“Most of these workers operate under a high degree of informality and vulnerability, resulting in small and unpredictable incomes, poor working conditions and low productivity. Such informality is likely to trap people into poverty,” says the report.
According to data from Kenya’s Economic Survey 2015, the informal sector employed 11.8 million people in 2014 against 2.4 million in the modern or formal sector.
Total recorded employment stands at 14.3 million. Out of the 799,700 jobs created last year, 693,400 were in the informal sector.
The number of new formal sector jobs fell in 2014 to 106,400 from 134,200 in the previous year.
“Majority of the small businesses such as retailers, hawkers, boda boda operators and other service providers fall in this sector but (it) excludes drug trafficking and any other illegal activity,” said the Economic Survey.
The survey further noted that the sector had expanded over the years to include people engaged in small-scale manufacturing, transport, information, communication and technology.
The wholesale and retail trade put together with hotels and restaurants form the largest part of the informal sector with 6,733,200 people employed, followed by manufacturing with 2,236,300 people while the community, social and personal services sub sector employs 1,089,500 people.
There are 991,000 people employed in the transport and communications sector. The UN report notes that informal cross-border trade in the Southern African Development Community (SADC) bloc accounts for 30 to 40 per cent of the total intra-SADC trade.
In Uganda, informal exports of industrial goods to its neighbours was 96 per cent of official industrial exports in 2006.