Ladies and gentlemen,

Thank you for joining me today to discuss a topic of great significance to the world’s economies and the livelihoods of countless individuals around the globe: the informal economy.

The informal economy represents a vast and often misunderstood segment of economic activity. In essence, it comprises all economic activities that are not regulated by the government or protected by labor laws. These activities range from street vendors and small-scale agriculture to domestic work, unregistered businesses, and even underground economies. In other words, it encompasses those parts of the economy that operate outside formal regulations and official statistics.

Now, you might be wondering, why should we care about the informal economy? What makes it so significant? The answer lies in its scale and its impact, both locally and globally.

  1. Scale of the Informal Economy:

First and foremost, the informal economy is enormous. In many developing countries, it can account for a significant portion of the total economic activity. Estimates suggest that in some regions, it can reach up to 50-70% of the non-agricultural labor force. This vast segment of the economy includes a wide range of activities, from microenterprises and household enterprises to casual labor and self-employment.

  1. Significance Across Regions:

The informal economy is not confined to specific geographic areas or regions. It is a global phenomenon that exists in varying degrees across both developing and developed nations. While it is often more visible in lower-income countries, the informal economy also plays a substantial role in advanced economies, where it includes activities like the gig economy, under-the-table work, and off-the-books employment.

  1. Contribution to Economic Growth:

The informal economy’s contribution to economic growth cannot be underestimated. It serves as a crucial source of income and employment for millions of people who would otherwise be unemployed or underemployed. Moreover, it provides essential goods and services to communities, often where formal systems fall short.

In many developing countries, the informal economy acts as a safety net, helping people survive economic downturns and shocks. During times of crisis, such as the COVID-19 pandemic, the resilience of the informal sector becomes especially apparent, as many individuals turn to these activities to make ends meet.

  1. Global Economic Impact:

On a global scale, the informal economy has profound effects. It contributes to the overall GDP of nations, even if it often goes unaccounted for in official statistics. It influences economic inequality, social inclusion, and poverty reduction. Additionally, it impacts the formal sector through labor market dynamics, competition, and supply chains.

In conclusion, the informal economy is not a peripheral or inconsequential part of our global economic landscape. Its significance is undeniable, as it touches the lives of billions of people and plays a crucial role in economic growth and stability.

In future discussions and initiatives, we will delve deeper into the challenges and opportunities within the informal economy, exploring strategies for its formalization, ways to enhance social protection, and its role in achieving sustainable development goals.

I hope that this introduction has shed light on the importance of the informal economy, and I look forward to engaging with you all as we work together to better understand and develop this vital sector of our global economy.

Thank you.

David Venter