Introduction
With approximately 460,000,000 poor people in Sub-Saharan Africa, the challenges of survival and with the Human Development Index close to 0, it became necessary to readapt in order to improve the BIP and the quality of life through free businesses or informal trade.
Informal Trade: An Evil or An Opportunity?
The concept of informal trade emerged in 1970, which designated a set of activities that facilitated the survival of the new inhabitants of the third world. Currently, informal trade refers to a set of commercial activities that occur outside the forms of records or statistics. Although there was an improvement of around 30% in the Human Development Index (HDI) between 2000 and 2019, in Sub-Saharan Africa. Despite the development, Sub-Saharan Africa still has the lowest HDI in the 20% of countries. One of the areas that has seen the most significant development is informal trade, with emphasis on the sale of basic necessities, clothing, etc. It employs over 90% of people and generates around $750,000,000,000.00 in Sub-Saharan Africa alone. In this context, informal trade is a gateway of opportunity for many African citizens. However, it is clear that commercial disorganization, failure to pay taxes and social security deductions harm not only the trader but also the country’s government.
Challenges of Informality: Low Economic Productivity in Sub-Saharan Africa
Due to the lack of payment of taxes, it is almost always based on redirecting the tax amounts to purchase products for sale or family use. Another challenge of the informal sector is the lack of economic awareness of the social security payments that guarantee the survival of the individual, due to accidents and other misfortunes. Some suggestions are necessary: to make the transition of resources from the informal sector to the formal sector, to support family businesses by providing a safety net, to reduce Value Added Tax rates and to facilitate the process of opening formal documents for banks. Develop informal fairs, supervised by the government and encourage the establishment of informal trade development funds, where individuals present their projects and the government finances them. Over time, the proposal for economic development in formal and business markets.
Conclusion
Informal trade is the means of survival for the majority of the population of Sub-Saharan Africa, it helps more than 90% of families in the region, opening spaces for the human and integral development of individuals. The preparation and organization of the informal market become necessary, through the reduction of registration fees for economic activities by the government, the sponsorship of economic activities and the exploitation of the family trade network.