This paper was first published in the Nomura Journal of Asian Capital Markets, Autumn 2021 available here.

The COVID-19 pandemic had a visible effect on the self-employed, casual gig-workers, and small-scale entrepreneurs and businesses – commonly described as people and enterprises in the informal economy. In the developing world, the informal sector is a pervasive phenomenon, with more than 2 billion people representing 60% of workers and 80% of enterprises.

While this large informal sector has been a source of livelihood for many, it is challenging for those in the informal sector to access incentives provided by governments as well as formal financing facilities as they continue to operate under the business registry radar and outside government purview. Absence from formal business registry and poor transparency will continue to significantly impair the sector’s capacity to enter into legally binding contractual obligations and access to capital markets for further growth.

There is a need for the informal economy to coexist alongside the formal economy. Street traders, social marketeers or white-collar professionals contribute to the economy and their country. Policy makers need to improve engagement with the informal economy to help them become more productive, efficient and effective.

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