Informal Sector in West Africa: Overcoming the Challenge of Formalization for a Better Contribution to Sustainable Development and its Financing

Abstract

The report examines the challenges and opportunities of formalizing the informal sector in West Africa to enhance its contribution to sustainable development and financing. Highlighting the sector's significant role in GDP (30–50%) and employment (60–90%), the study identifies key barriers to formalization, including high costs, regulatory complexity, corruption, and limited access to financing. It explores tax harmonization efforts within ECOWAS and the potential impacts of the African Continental Free Trade Area (AfCFTA) on informal sector modernization. The findings emphasize the need for policy reforms, simplified taxation, and incentives to integrate informal businesses into the formal economy, thereby boosting tax revenues and economic resilience in the region.