Around 83 percent of jobs in Africa were in the informal sector in 2024, underlining the continued dominance of unregulated economic activity across the continent, according to United Nations data.
Figures compiled by the United Nations Economic Commission for Africa show only a marginal decline in informality over the past two decades, from 84.3 percent in 2005 to roughly 83 percent last year.
The data highlight the resilience of an economic model that provides livelihoods for millions but poses challenges for taxation, governance and social protection.
Estimates from UNCTAD and the World Bank suggest the informal economy accounts for between 30 and 40 percent of Africa’s gross domestic product.
In Nigeria, the sector represents about 42.5 percent of GDP following a recent revision, reflecting its central role in economic activity despite limited contribution to public revenues.
More Read
Economists say high levels of informality significantly constrain government finances. According to World Bank estimates, countries with large informal sectors can lose between five and 12 percentage points of GDP in potential tax revenue.
This shortfall limits the ability of governments to fund essential services such as healthcare, education and social protection programmes.
The International Labour Organization estimates that between 60 and 80 percent of African workers lack access to formal social protection systems, a gap closely linked to the prevalence of informal employment.
Analysts say structural factors continue to drive informality across the continent. These include low levels of business capitalisation, limited access to education and training, rapid population growth and the dominance of rural economies where activities often remain unregistered.
The ILO also notes that for many workers and small businesses, operating informally is a practical response to high taxes and complex regulatory requirements in the formal sector.
Women and young people are disproportionately represented in informal work. In several African countries, women account for more than 85 percent of informal employment, particularly in sectors such as retail trade and domestic services.
Youth employment patterns show a similar trend. In Nigeria, for example, nearly all workers aged 15 to 24 are employed in the informal sector, according to ILO data.
While the informal economy provides critical income opportunities, especially in contexts where formal job creation is limited, experts warn that its scale presents long-term development challenges.
Workers in the informal sector typically lack job security, legal protections and access to benefits such as pensions or health insurance, making them more vulnerable to economic shocks.
More Read
At the same time, governments face difficulties in broadening the tax base and implementing inclusive economic policies.
Efforts to reduce informality have often focused on improving business conditions, simplifying tax systems and expanding access to finance and education. However, progress has been gradual, reflecting the complexity of shifting deeply entrenched economic structures.
The latest figures suggest that without significant reforms and sustained economic transformation, informal employment is likely to remain a defining feature of Africa’s labour markets for the foreseeable future.
