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Integrate the informal sector into mainstream economy – UNDP

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Image Credits: STEFAN HEUNIS / AFP.

The United Nations Development Programme (UNDP) has called on African governments to seek more creative ways of harnessing the economic potentials of the informal sector to deepen resilience in their economies.

Mr Raymond Gilpin, Chief Economist and Head of Strategy, Analysis and Research at UNDP Africa, said this on Tuesday at a news briefing on the sidelines of the ongoing African Economic Conference 2020.

A mineral exploration drilling team drills holes to identify the location and the quality of gold deposits at the Segilola Gold Project site in the village of Iperindo-Odo Ijesha, near the city of Ilesha, Osun State, Nigeria, on May 29, 2018. – Nigeria is working to diversify its economy, which has been dependent on the oil and gas sector for decades, through formalising the artisanal mining sector. (Photo by STEFAN HEUNIS / AFP)

The ongoing virtual conference is jointly organised by the African Development Bank (AfDB), the United Nations Economic Commission for Africa (UNECA) and UNDP, under the  theme, “Africa beyond COVID-19: Accelerating towards inclusive sustainable development.”

Gilpin described Africa’s informal sector as its survival economy that contributed to the economic growth of the continent and urged stakeholders to see it as the lifeline of the African economy.

“For a sector that is daily waged, has to go out daily to earn a living to support families, quarantine is not really an option; we have to think more imaginatively on how we approach this and in a more comprehensive way rather than just thinking about the textbook approach to an epidemiological crisis.

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“It is what puts food on the table for millions of Africans every day and they pay more taxes than the formal sector because they pay indirect taxes, council taxes and taxes through extortion.

“They accomplish tremendous things against incredible odds and if we start seeing them as part of the lifeline of the economy, the way we think about economic policies and private sector development changes automatically.

“We should see what we can learn from them that will help us build a more resilient and inclusive economy.”

The UNDP representative suggested that the sector should henceforth be called non-formal, as the only thing informal about them was that the main actors in the sector were not registered in African governments’ systems.

Earlier, Mr Bartholomew Armah, Director, Macroeconomics and Governance Division, UNECA, called for the registration of those in the sector so that government could reach them with targeted resources, especially in crises situations.

“The digitisation of identity of an individual is critical, so one can identify and target resources to such individuals, otherwise, corruption can arise where individuals impersonate one another and these resources cannot be tracked and effectively monitored.

“To overcome the challenge, first is for individuals to be beneficiaries of social protection going forward. We need to use that as an opportunity to have them register for this service.

“The registration begins the process of documenting the informal sector workers and then more effectively target the interventions and by providing this support, including on-the-job training, they are gradually integrated into the formal economy without forcing them to do so and as it becomes more effective and they are productive members of the society, the tax base expands.”

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The UNECA representative also noted that his organisation was considering options for green investments in Africa, especially renewable energy, which, he observed, was “a critical driver of development”.

“We are also looking at how countries can recalibrate their development plans in the light of this pandemic.

“We have developed what is called integrated planning and reporting tool that helps countries alternate the alignment of their national development plans to international and global commitments”, he said, adding that the tool would assist governments analyse likely impacts of their policy decisions”, he said.

Also speaking, Dr Hanan Morsy, Director of the Macroeconomic Policy, Forecasting and Research Department, AfDB, said policy measures such as quarantines, closures and curfews of essential businesses impacted on all stages of the agriculture value chain.

Morsy said the agriculture sector was among the most vulnerable sectors affected by the pandemic, emphasising the need for  governments’ continued support to the sector, to promote food integration within the continent.

“We  see this as an area that needs particular support, but also an area of opportunity going forward to increase inter-regional integration, to increase resilience against external shocks, for agriculture and food security.”

The conference brought together various stakeholders, including policymakers and researchers, to examine the socioeconomic impact of COVID-19 and measures to mitigate and recover from the pandemic.

In particular, the conference focused on how African countries could build resilience and also be better prepared to deal with future crises, in addition to how African economies could accelerate progress towards the achievement of the Sustainable Development Goals  (SDGs) and the AU aspirations of Agenda 2063. (NAN)

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