The rural informal economy: Understanding drivers and livelihood impacts in agriculture, timber and mining

Working paper
PDF (258.77 KB)
Published: April 2015
ISBN: 9781784311728
Product code:16590IIED

The informal economy – broadly defined as economic activity that is not subject to government regulation or taxation – supports some of the most vulnerable in society. In sub-Saharan Africa, it generates 90 per cent of employment opportunities in some countries, and contributes up to 38 per cent of GDP in others. In rural areas, the informal economy sustains livelihoods of~impoverished populations through natural resource and land based economic activities such as farming, logging and mining.

The rural informal economy is messy and complex: activities are at times classified as illegal yet are often rooted in traditional resource and land rights. Local communities may receive significant income, but sustainability of resource use is a pressing concern as informal trade increasingly serves ever-expanding urban and international markets.

This paper examines the drivers and livelihood implications of informality in agriculture, logging, and mining in sub-Saharan Africa. It finds commonalities and differences across three areas: rights, regulations and economic factors. Aimed at researchers and practitioners, the paper demonstrates that development interventions in resource governance need to be strongly grounded in the complex reality of the rural informal economy in order to benefit impoverished communities.