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uy
Philipp Heinrigs
philipp.heinrigs@oecd.org
www.oecd.org/swac
The biggest ‘private sector’: What place for the informal
economy in green and inclusive growth?
Session 2. Informality and rural
transition –
Urbanisation, food economy and
changing rural livelihoods
London, 25 February 2016
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West Africa - a peopling region Sub-Saharan Africa
x15
300 million
Sub-Saharan Africa
x3
540 million
36% in Sub-Saharan Africa
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The West African urban network in 1950
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A reshaped human, social and economic
geography
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Rural and urban populations are moving closer
together
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Urbanisation, rural transformation and the food economy
economy
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The food economy – the biggest informal
economy
Uganda - 40% of rural households
operate non-farm informal enterprises
Peru – 99% of rural enterprises informal
(agriculture, trade, transport, etc.)
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The success of meeting growing food
demand is largely down to informal
domestic and regional trade
East Africa: ~3 million tonnes
of food staples traded
informally in 2013
Regional maize flows
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The informal economy – inclusiveness and green
growth
Rural livelihoods and rural economies are transforming - they are transforming fast, faster than most rural development policies. Informal activities and networks are at the core of these transformations.
The main driver of these transformations in West Africa, as elsewhere in sub-Saharan Africa, are the spectacular population dynamics of the past 60 years that have completely re-shaped the economic, social and political geography of the region.
In particular urbanisation and urbanisation-driven changes in the food economy are central to the changes in rural economies. The informal rural economy has been the vector of change – small holder farmers have produced increasing foods for a rapidly growing urban population and informal value chain actors have processed, transported and distributed these goods to urban and rural markets.
development of the domestic food markets and value chains is based on a series of small-scale and family enterprises where activities are often mixed with domestic work; It ranges from agricultural production to transportation, processing, retailing, catering, and a number of “intermediate consumption practices”
Inclusive green growth policies will depend on a much better appreciation of these realities.
In the following slides I will
Understanding the role and the importance of the informal economy in SSA.
These evolutions are inextricably linked to the spectacular growth in the number of towns and cities. There are now 130 million people living in cities, 22 times more than in 1950. Urban growth has manifested in the growth of the largest cities and the development of a network of small and medium-sized towns.
Development does not happen everywhere at the same time nor at the same pace.
Advantages of proximity and closeness outweight the disadvantages of density
Informal activities produce and distribute goods and services required by the majority of people
Consequently much of the food consumed is supplied by informal networks and/or depends on relations between formal and informal channels
This food economy is increasingly developing outside agriculture. 40% of the sector's value added is no longer produced by agriculture. Post-harvest segments of the agro-food value chains are developing quickly as markets are expanding. More and more men and women work in the processing, logistics and retail of food products, the majority of them in the informal sector. In Senegal, for instance, the agribusiness sector is the employer with the largest potential in the informal sector in 2009. These off-farm activities are increasingly key to agricultural and rural development.
The informal economy is deeply rooted in the local environment and geared towards meeting the basic needs of the population. the development of the domestic food markets and value chains is based on a series of small-scale and family enterprises where activities are often mixed with domestic work; It ranges from agricultural production to transportation, processing, retailing, catering, and a number of “intermediate consumption practices” (Bricas et al., 2015). These activities, often performed by women, constitute an informal sector that is unable to access essential services, despite their important role in job creation and food security.
Agriculture and the informal economy are essential elements of the West African social structure. As the region is urbanising, there is a dramatic movement of the agricultural sector’s population to the informal sector. Statistical instruments however account poorly for the dichotomy between the formal and informal sectors that goes with development.
Some of the actors in this trade are very large, very important in food security and very influential in local politics, initiating dialogue with them can improve food security management.
Import need in Nigeria 1.4 million tonnes
The rural informal economy plays a central role in inclusive green growth, leveraging its contribution will depend on a better appreciation of these realities
Importance of informal food sector for food security in particular for the poorest urban and rural populations
Existence of informal economy appears as a structural element linked to internal and external factors – importance for policy makers
Policies and institutions need to integrate the vitality and success of informal rural enterprises in its development strategies by adapting institutions and laws. The contrary would further weaken the competitiveness and lowers employment potential. It require a more realistic, more participatory and more equitable form of state intervention – a framework more compatible with local conditions and inclusive green growth strategies. Collective negotiations, professional organisations and associations, providing skill development are real needs and will be welcomed in negotiations. Africa has ample of its own successful experience such as Dakar and Monrovia, and it can also learn from other experiences such as in Peru.
