The Informal Sector and Economic Growth of South Africa and Nigeria: A Comparative Systematic Review

Ernest Etim,Olawande Daramola

doi:10.3390/joitmc6040134

Abstract

The informal sector is an integral part of several sub-Saharan African (SSA) countries and plays a key role in the economic growth of these countries. This article used a comparative systematic review to explore the factors that act as drivers to informality in South Africa (SA) and Nigeria, the challenges that impede the growth dynamics of the informal sector, the dominant subsectors, and policy initiatives targeting informal sector providers. A systematic search of Google Scholar, Scopus, ResearchGate was performed together with secondary data collated from grey literature. Using Boolean string search protocols facilitated the elucidation of research questions (RQs) raised in this study. An inclusion and exclusion criteria became necessary for rigour, comprehensiveness and limitation of publication bias. The data collated from thirty-one (31) primary studies (17 for SA and 14 for Nigeria) revealed that unemployment, income disparity among citizens, excessive tax burdens, excessive bureaucratic hurdles from government, inflationary tendencies, poor corruption control, GDP per capita, and lack of social protection survival tendencies all act as drivers to the informal sector in SA and Nigeria. Several challenges are given for both economies and policy incentives that might help sustain and improve the informal sector in these two countries.

Highlights

Two billion people take part in informal employment, with the accompanying risks and vulnerabilities [1]
This paper assesses the contributions of the informal economy to the economic growth of South Africa and Nigeria through a systematic review of papers that have been published in the literature
High unemployment, income disparity among the citizens, and the resulting fall in national Gross Domestic Products (GDPs) act as contributory factors to the propagation of the informal sector in South Africa (SA) [61]

Summary

Introduction

Two billion people take part in informal employment, with the accompanying risks and vulnerabilities [1] This translates into 60% of the global labour force and 90% of all small- and medium-scale enterprises [2]. According to [5], a new trend in employment revolves around part-time/part-year employment, flexible/fixed-term employment contracts, employment arrangement achieved through temporary agencies or contract firms, casual employment, contract labour, and services outsourced to home workers with flexible working schedules. All these forms of employment directly or indirectly feed into the growth dynamics of informality in the economy.

Methods

Results

Discussion

Conclusion