Technological Leapfrogging and the Formalisation of Africa’s Informal Sector

The paper examines the role of technological leapfrogging in transitioning Africa's large informal economy into the formal sector. It highlights that in 2024, the informal sector accounted for 58% of the labour force and 27% of GDP, with projections suggesting a decline to 50% of the labour force and 24% of GDP by 2050. The author identifies digital ID systems as the critical first step for formalisation, noting that roughly half of the world's one billion people without official identification live in Africa. The document asserts that digitisation—including biometric IDs, mobile payment solutions, and PAYG models—can expand the tax base and improve access to credit and social protections without imposing heavy compliance costs on small-scale operators.

• Africa's informal sector represents a significant portion of the economy, though it is projected to shrink slightly by 2050. In 2024, it comprised approximately 27% of GDP and 58% of the total labour force, with forecasts predicting a decrease to 24% of GDP and 50% of the labour force by 2050.
• Digital ID systems are identified as the essential starting point for formalisation. Africa is home to approximately half of the one billion people globally who lack official identification, although countries like Nigeria and South Africa have advanced biometric ID programs.
• Widespread adoption of digital ID coverage has the potential to generate significant economic value. A McKinsey study involving seven countries, including Ethiopia and Nigeria, estimated that such coverage could unlock value equal to 3–13% of GDP by 2030.
• Technological tools allow governments to expand the tax base and increase domestic revenue mobilisation with low burdens on small operators. Specifically, mobile payment platforms, biometric IDs, and digital transaction records enable the monitoring of economic activity without onerous compliance requirements.

APA

Yeboua, K. (2026). Technological Leapfrogging and the Formalisation of Africa’s Informal Sector. Institute for Security Studies. https://futures.issafrica.org/thematic/guide.pdf?thematic=09-leapfrog&topic=05-technological-leapfrogging

Chicago

Yeboua, Kouassi. Technological Leapfrogging and the Formalisation of Africa’s Informal Sector. Institute for Security Studies, 2026. https://futures.issafrica.org/thematic/guide.pdf?thematic=09-leapfrog&topic=05-technological-leapfrogging.

Wikipedia

{{cite report |last1=Yeboua |first1=Kouassi |title=Technological Leapfrogging and the Formalisation of Africa’s Informal Sector |publisher=Institute for Security Studies |date=25 May 2026 |url=https://futures.issafrica.org/thematic/guide.pdf?thematic=09-leapfrog&topic=05-technological-leapfrogging |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{yeboua2026technological, author = {Yeboua, Kouassi}, title = {{Technological Leapfrogging and the Formalisation of Africa’s Informal Sector}}, institution = {Institute for Security Studies}, year = {2026}, month = may, url = {https://futures.issafrica.org/thematic/guide.pdf?thematic=09-leapfrog&topic=05-technological-leapfrogging}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }