Informal Markets Responsiveness to Sub-Saharan Africa’s Production Economy: Complementarity of the Institutional Theory and a Self-Reliance View

Abstract

The informal market in Sub-Saharan Africa (SSA) varies in size across SSA countries ranging from 20% to 65% across countries. Yet, these countries commonly agree to the huge impact of the informal market on their respective national economies. Despite the massive contribution of the sector to employment and economic development of the region, especially in terms of GDP contribution and business opportunities for the bottom line, there is an undisputable institutional void of SSA’s informal market. Our study focused on discussing institutional theorization and the self-reliance view as complementary perspectives to explain the responsiveness of informal markets to the production economy in SSA. Drawing from a systematic review of 42 studies sourced from the Scopus database, our study highlights critical channels in which the informal economy is advancing a production economy in SSA. We reported that the informal markets are noted to facilitate the SSA economy through the internationalization of business operations and collaborations, creating decent work (SDG 8) through the platform economy, supporting the living conditions of women and youths whose contribution to family livelihood is increasing across the region (SDG 10), strengthening cultural ties, and projecting the advancement of ICT adoption across the region’s economy, especially for enhancing the regional innovation and industrialization (SDG 9). We establish that the informal economy should be sustained for the period where SSA governments have not fully identified sustainable measures for absorbing almost 70% of the SSA population that earn their livelihood from the informal economy. Our study establishes critical theoretical, practical, and policy implications.