News

    Study Says Africa's 'Gray' Economy Helps Fight Poverty

    The African Union has been presented with startling new statistics on the extent and importance of the informal, or gray, economy in alleviating poverty and boosting economic growth. From AU headquarters in Addis Ababa, VOA's Peter Heinlein reports the informal sector makes up the bulk of all economic activity in some African countries.

    In much of Africa, the informal, or gray economy that escapes tax collectors and government regulators, is the hidden dynamic driving economic growth. That's the conclusion of a study presented at an African Union Labor and Social Affairs Commission session this week.

    The gray economy is often talked about in whispers, partly because it is technically illegal, or at best semi-legal.

    But statistics presented this week indicate that in countries such as Ethiopia and Cameroon, 90 percent of all non-farm jobs are in the gray sector. Figures suggest that most young people in African countries south of the Sahara initially enter the work force informally.

    AU Social Affairs Commissioner Bience Gawanas says it is time to accept that the informal economy is a significant force in fighting poverty in countries where government overregulation forces economic activity underground.

    "That part of the economy has always played second fiddle. It has always played the kind of stepdaughter of the formal economy. We must recognize that sector as having potential of poverty alleviation," Gawanas said.

    A study concludes that the majority of informal sector workers remain poor, unprotected by labor laws, uncovered by social security schemes, and underserved by formal education systems.

    Commissioner Gawanas noted that across Africa, women are much more likely to be engaged in informal sector work. More than four out of five women are informally employed, as compared to about two-thirds of men. She says bringing the gray economy out of the shadows is the modern day equivalent of the move a few decades ago to recognize the value of women's work.

    "It's like formally many, many years ago, the work women did in the household wasn't ever regarded as work. There was no value attached to it, but today because of the battles that were fought and won, there is at least a value attached to women's work. And that is the same value we are fighting for in terms of the informal economy," she said.

    Recent studies from seven African countries suggest the informal economy is a significant factor throughout the continent. South Africa's informal sector was the smallest, making up 30 percent of the Gross National Income, while in Benin, Cameroon, Senegal, Tanzania and Zimbabwe, the figure was above 60 percent.

    Azad Jeetun, secretary-general of the Pan African Employers Confederation, says government overregulation is preventing the formation of small business that could create the formal sector jobs needed for economic growth.

    "Many enterprises become informal because of the cost of doing business, the cost of obtaining a permit is very high. The time it requires to get a permit is very high, and there are so many administrative bottlenecks, and therefore it becomes quite difficult to operate in the formal sector, so they go to work in the informal economy. So what is important here is that we have to simplify the procedures for enterprises to obtain licenses and permits to operate. We have to simplify the procedures for taxation," she said.

    Jeetun was one of several speakers advocating deregulation as a key to poverty alleviation across Africa. They pointed to statistics showing a sharp decline in the formal sector during the 1990s, when more than nine out of 10 new jobs created south of the Sahara, excluding South Africa, were in the informal, gray sector.

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora