Microscopic attention has been paid to the role of the informal sector in furthering growth- even though it is a huge opportunity for reasonable income generation for many people.

Read More: https://afrikanexcellence.thelovetablet.com/2023/01/26/why-african-investors-must-master-the-gdp-simplified/

Informal businesses typically face many challenges:

1. Non-inclusion of financial services and access to credit for useful investments.
2. Lack of secure income including employment benefits and collective protection.
3. Informal businesses struggle to secure access to traditional banking services.

How Might African Economies Promote The Informal Sector?

1. Aptly address the risks associated with financing informal businesses. African governments should intend to allow better access to financing, and foster the availability of information on the sector.
2. Facilitation of access to formal financing channels in boosting informal businesses could be, among other things, a way to incentivize them to embrace formality.
3. Policy makers could work with the informal sector and embrace access to information and generation of knowledge on the sector.
4. Competency development may be crucial for lenders such as banks and other financial institutions to better manage risks associated with lending to informal businesses.
5. Kenya has done a commendable job at accommodating medical coverage through NHIF, a proposal by Kenya’s National Health Insurance Fund Amendment Bill 2021 that has helped guarantee a comprehensive health coverage. The bill makes it mandatory for all Kenyans 18 years or older to have NHIF membership either through employment or by voluntary nature for the self-employed.
6. Seize and leverage available opportunities in digitization and partnerships through digital technologies that may reduce risks, increase transparency, and lower costs. Strategic partnerships can be low-hanging fruit for financing to informal businesses.
7. Innovative financing mechanisms have seen a rise across Africa by leveraging technology. Kenya is for example leveraging and thriving on innovative ideas like the use of mobile payment platforms, legalizing chamas (self-help groups) and partnerships with microfinance institutions to tap into the informal sector.

Read More: https://afrikanexcellence.thelovetablet.com/2023/01/10/mwai-kibaki-the-president-who-grew-the-kenyan-economy-5-times-larger/

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