“Informality and Dynamism of African Microbusinesses: Are Conventional Policies Still Relevant?” A Joint Webinar With the JASID Study Group on Quality of Working Life in Developing Countries

On Nov. 11, 2025, the JICA Ogata Sadako Research Institute for Peace and Development (JICA Ogata Research Institute) and the Study Group on Quality of Working Life in Developing Countries of the Japan Society for International Development (JASID) co-hosted a webinar titled “Informality and Dynamism of Microbusinesses in Africa: Are Conventional Policies Still Relevant?” The event explored a theme closely linked to the JICA Ogata Research Institute’s research project “Youths in Nairobi Slums: Socio-economic Isolation, Discrimination and the Impact of Intergroup Income-Generating Activities .”

The webinar opened with remarks from Takahashi Motoki, Professor Emeritus, Kyoto University and Kobe University, who leads the JASID study group. Takahashi shared the origins of the group, noting that issues around labor and working life have long been underrepresented in international development studies. He stressed that in order to understand workers’ lived experiences as much as possible and to design effective policies, we must go beyond conventional economic frameworks.

In the keynote lecture, Hino Hiroyuki, Visiting Scholar, Duke University (and former JICA Expert and former Economic Advisor to the Prime Minister of the Republic of Kenya), gave a presentation titled “Informality and Microenterprise Dynamics in Africa: Rethinking Development Policy.” Showing a photograph of children collecting metal scraps in landfills, Hino illustrated how informal work—often not registered with governments—forms an integral part of supply chains. He then talked about a study based on surveys of microbusinesses in Ghana, Kenya and Nigeria by microfinance institutions.

The study quantified four factors—freedom, trust, social recognition and risk management—and analyzed the correlation between business outcomes (e.g., productivity and sales) and the preference of informality among businesses and their informal structures. Hino noted that informal businesses are inherently adaptive and dynamic, and productive synergy exists. Therefore, while governments may seek to formalize informal sectors, the desired outcomes cannot be achieved through actions such as forcibly relocating informal businesses or imposing abrupt formalization. He emphasized the importance of closely observing and understanding the behaviors of informal businesses in order to identify appropriate policy targets, allowing for the formulation of evidence-based policies.

Hamaguchi Nobuaki, Professor, Research Institute for Economics and Business Administration (RIEB), Kobe University, who was a research collaborator for this study, provided additional insights. He explained that unlike previous analyses comparing informal and formal sectors, almost all subjects of the study were informal-sector workers, highlighting the diversity and continuum that exist within informality itself. Hamaguchi added that the study captured informality from two perspectives—the mindset of businesses and their practices—and identified direct and indirect effects on business performance. He noted that formalization policies often fail when they are based on oversimplified assumptions that businesses with an informal mindset conduct informal practices. He stressed that correlations among factors such as labor productivity need to be carefully examined.

The discussion that followed was moderated by Arai Makiko , Research Fellow, JICA Ogata Research Institute.

Takahashi started by sharing observations from a survey he conducted in a sofa-manufacturing cluster in Nairobi, Kenya. He noted that when local businesses develop new design ideas, they often share them with neighboring competitors instead of keeping them to themselves. This behavior reflected a strong sense of brotherhood and friendship, as well as a preference for social recognition within their community. Takahashi suggested that incorporating such social dimensions into future research work could lead to new and valuable forms of data.

Akutsu Kentaro , Executive Senior Research Fellow, JICA Ogata Research Institute, who previously worked at the JICA Tanzania Office, commented on the significance of the study. He noted that the research empirically questioned the widespread belief that formalization is inherently necessary, which is rooted in the assumption that informality constrains business performance. Akutsu added that the study’s findings could bring new perspectives into industrial development assistance that JICA provides in African countries. He then asked about practical ways to more easily quantify the informal mindsets of businesses, from the perspective of applying insights gained from the study to development programs. Furthermore, he raised questions about the policy implications of the research, particularly regarding how governments might address ongoing Gen Z protests across African countries, which are partially caused by job insecurity and economic instability.

Mine Yoichi , Executive Director, JICA Ogata Research Institute, asked how the mechanism of profit-generating informality can be concisely explained, adding that he felt the keyword is freedom.

Hino responded by saying that “the wish to be free,” inherent in informal settings, needs to be acknowledged. He noted that due to existing biases, informal work is often viewed negatively, while formal work is assumed to be superior. As a result, past approaches have focused on fitting informal work into existing systems. Hino stressed that such approaches should be reconsidered.

During the Q&A session, the audience posed a variety of questions. These included inquiries about why the three countries featured in the study were selected, how trust can be measured, the level of trust that business owners who reject formalization have toward their countries and governments, and suggestions for aid organizations like JICA.

The webinar was closed with remarks from Mine, who expressed his enthusiasm for the continued development of these discussions.