Impact of Policy Measures on the Sustainability of the Informal Sector in Southern Africa: A Case Study of South Africa

Lucy Chamba, Mphathesithe Mkhize and Helper Zhou ()
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Helper Zhou: Durban University of Technology

Africagrowth Agenda, 2025, vol. 22, issue 2, 16-21

Abstract: The persistent expansion of the informal sector in developing countries reflects the structural inability of formal economies to generate sufficient employment opportunities. As a result, informal employment has become a foundational component of labour markets in low- and middle-income countries, contributing significantly to economic activity despite its unregulated nature. However, the informal sector is often characterized by severe decent work deficits, which hinder inclusive and sustainable development. In response, the International Labour Organization’s Recommendation No. 204 advocates for a gradual transition to formality as a strategic imperative for economic growth and social equity. Within the African context particularly in South Africa this transition is central to policy debates, given the informal sector's critical role in poverty alleviation and GDP contribution. This study evaluates the extent to which South Africa’s current policy framework supports the sustainability of the informal sector and identifies key enablers for a sustainable transition to formality, aligning with the principles of Recommendation 204 and the 2030 Agenda for Sustainable Development. Ensuring the long-term viability of the informal economy is thus essential to any comprehensive strategy aimed at reducing poverty, inequality, and unemployment.

Date: 2025
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