The resilient informal economy in the milieu of African development

Abstract

This chapter examines the economic and institutional factors supporting the informal economic setting that weakens formal economic operations in an African context. In carrying out the research that underpins the chapter, a panel regression was employed among selected countries from Southern Africa, West Africa and the East and Central Africa subregions. In this approach three estimation techniques were utilized: pooled regression, fixed effect regression and random effect regression with the Hausman test of significance. The findings from this study suggest that unemployment, governance and a low level of education have significantly contributed to the proliferation of informal economic settings in African economies while retarding formal economic development. This chapter posits, therefore, that considerable government attention should be given to the transformation and development of informal economic operations through socially inclusive policy strategies. This will stimulate and facilitate the rapid development of African economies.