Informal economic activity in Kenya: benefits and drawbacks

Abstract

The informal economy now constitutes an important component in the economic activities and process of development in Kenya. Although its relative importance was minimized in the past, the informal economy continues to thrive in Kenya and the rest of Africa. In this work, the informal economy (Jua Kali sector) is defined as consisting of those economic activities, units, enterprises and workers (both professionals and non-professionals) who engage in commercial activities outside of the realm of the formally established mechanisms for the conduct of such activities and are therefore not regulated or protected by the State. It includes all forms of unregistered or unincorporated small-scale productive, vending, financial and service activities, and is also comprised of all forms of employment without secure contracts, worker benefits or social protection both inside and outside informal enterprises. The article discusses and analyses the nature, impact, benefits and drawbacks of informal economic activity in Kenya.