examples from Africa

Two articles on Africa show the importance of engaging the informal economy.

First, The Daily Trust from Nigeria points out that government policies must be retooled "to encourage our small entrepreneurs who constitute the informal sector with a view to developing and enhancing their businesses." The writer suggests that 5 to 10 million Naira per local government per year (a pittance: $30,000 to $60,000) is all it would take to make the local economies bloom.

Second, the BBC points to the Eastleigh neighborhood of Nairobi, one of the most run down communities in the Kenyan capital -- but, significantly, not one of the poorest.

Marketplaces, and a million little lean-to repair shops and small-scale factories are what most urban Africans rely upon for a living. But such is their distrust of government officials that most businesspeople in the informal sector avoid all contact with the authorities.

Kenyan architect and town planner Mumo Museva took me to the bustling Eastleigh area of Nairobi, where traders have created a booming economy despite the place being almost completely abandoned by the government. Eastleigh is a filthy part of the city where rubbish lies uncollected, the potholes in the roads are the size of swimming pools, and the drains have collapsed. But one indication of the success of the traders, Mr Museva said, was the high per-square-foot rents there. "You'll be surprised to note that Eastleigh is the most expensive real estate in Nairobi."

Though the architect suggests that, if the businesses trusted the government, they might pay some taxes, that's not necessarily the most important determinant of success. If the government would participate in the commercial growth and communal well-being of Eastleigh, businesses would grow, employment and salaries would grow, and new businesses would start up, thus bolstering the economy, improving public safety, and helping the city and the nation.