The informal sector plays a significant role in Africa’s economy. According to data, in some countries, it can contribute as much as 60% of the country’s GDP and is responsible for some 50% of total employment.
However, while the informal sector may be a big player, businesses that operate within it rarely reach their full potential. Without having access to financial systems and legal protection afforded to businesses in the formal sector, there’s usually a relatively low ceiling for how much success they can achieve.
The pathway towards growth lies in financial inclusion, which can have a transformative impact not just on the businesses themselves, but the community as a whole.
Informal Sector: Historically Excluded
While businesses in the informal sector contribute significantly to local economies, they’re usually excluded from the formal banking world. In the process, these businesses find it difficult — or impossible — to scale and grow. And they’re more insecure as a result.
This problem is intensified by the legal and compliance challenges that informal businesses face, which make it even more difficult for them to access the financial services they need to scale.
If things remain the same, and the informal sector continues to be excluded, then the outcome is guaranteed: these businesses will continue to be vulnerable and the economic potential for entire communities will be limited.
A change of events can get these businesses access to the products and services they need to scale and grow.
Making Changes
Chiamaka Mary-Claret Anyanwu, Head of Legal at Crediometer Inc., is one professional looking to remove the barriers that informal sector businesses face. She’s dedicated the entirety of her young career to helping informal sector businesses that are usually labeled “unbankable” make the transition to the formal sector.
It all began with the story of a family friend, who was rejected by a financial institution because they were “unbankable.” That injustice was the genesis of her career path. Having been admitted to the Nigerian Bar, Chiamaka has worked with companies that support the growth and development of informal sector businesses.
Her work with Crediometer had a transformative impact on the prosperity of informal businesses. With that tool by their side, informal businesses could begin receiving payments in just three clicks, helping to make banking accessible to the people who had been left behind by the existing formal economy.
Her career also includes working for Passportmonie, an innovative approach to cross-border transactions. According to one estimate, informal cross-border trade accounts for more than 30% of all intra-country trade across Africa. With Passportmonie, informal businesses could accept payments in a wide variety of currencies across the continent, without having to pay costly fees, helping to provide them with the capital they need to get ahead.
Chiamaka has also helped startups and informal businesses to develop in a more direct way, too. She’s participated at numerous startup events, providing guidance and practical advice on how startups can manage the legal and financial complexities of the business world, ultimately helping to protect their intellectual property and ensure that they’re primed for growth.
Lifting Entire Communities
It’s not just businesses that benefit from financial inclusion. The entire community does. When informal sector businesses have access to banking, they can reach their full potential — growth leads to more income, helping to create jobs that can uplift entire communities.
For too long, informal sector businesses have had to operate with one hand behind their backs. Now, thanks to the work of Chiamaka and others, these businesses can move into the future under a framework that is designed for them to succeed. Chiamaka’s work may primarily relate to legal compliance, but it’s really about creating pathways for entrepreneurs in developing countries to succeed. If they can do that, the continent’s economic future will be bright.
The Future is Bright
Even in her short career, Chiamaka Mary-Claret Anyanwu has already helped informal businesses to get ahead. And she’s not done yet — in fact, she might just be getting started. She has plans to expand her work to include even more informal businesses, as well as advocating for stronger legal frameworks in developing countries.
She’ll continue to be a voice for financial inclusion and empowerment for informal businesses across Africa. The financial institution that declared that Chiamaka’s family friend was “unbankable” perhaps never gave the situation a second thought. Little did they know that, many years later, their decision would be the fuel that lit the passion of a determined individual who might just change the continent.