OIT - Engaging informal economy actors in trade and labour policy in Africa

 ILO Brief 1 Engaging informal economy actors in trade and labour policy in Africa  Research Brief September 2026 Engaging informal economy actors in trade and labour policy in Africa1 Part of the ‘What Works and Why Series’

 Trade-linked employment is associated with lower informality than non -trade employment, by 12.4 percentage points globally and 8.1 percentage points in Africa. However, t his pattern does not imply a straightforward transition toward s formality. I n Africa, trade liberalisation has often coincided with rising informality as domestic firms face greater international competition.  Africa has the world's highest informal employment rate at 85 per cent. While informality is lower among trade-oriented jobs, around 75 per cent of these jobs are still informal. Informal cross-border trade alone provides employment for at least one fifth of the continent's economically active population.  Despite being directly affected by trade and labour policy, informal economy actors face systemic barriers to participating in policy dialogue. This includes difficulties in reaching and organising informal workers, ambiguous employment relationships that complicate their recognition, and weak dialogue mechanisms, particularly on trade policy. As a result, their interests are seldom reflected in trade policy decisions.  Some approaches used in the region can help address these barriers, although they remain limited in scope. Cooperatives and other alternative forms of collective organisation often engage and support informal economy actors. When they are affiliated with formal social partners, these organizations can give these workers a route into organised representation. Trade agreements with labour provisions, particularly the AfCFTA, also offer significant yet largely unrealized frameworks to this end.

Introduction The informal economy, which includes any economic activity that is “ in law or in practice – not covered or insufficiently covered by formal [provisions or] arrangements” (ILO 2025c) , is prevalent in Africa.

frameworks to this end.

Introduction The informal economy, which includes any economic activity that is “ in law or in practice – not covered or insufficiently covered by formal [provisions or] arrangements” (ILO 2025c) , is prevalent in Africa.

1This brief was prepared by Iuliia Privalikhina, ILO Research and Statistics Department. The author is grateful to Stefan Kühn for providing estimates on employment linked to trade, and to the following colleagues for their comments and suggestions : Marva Corley-Coulibaly, Franz Christian Ebert, Christoph Ernst, Hyung Sik The region has the highest informal employment rate in the world, exceeding 85 per cent, compared with a global average of around 58 per cent (ILOSTAT). In Sub-Saharan Africa, approximately nine out of ten workers are currently in informal employment (ILO 2026a) 2, including those employed in trade-related sectors. Eum, Caroline Fredrickson, Grayson Koyi, Sameeksha Matta, Pelin Sekerler Richiardi, Arianna Rossi, Guy Tchami. 2 At the sub-regional level, informality rates are the highest in Central, Western and Eastern Africa, where it is around 90%, and lowest in Key points ILO Brief 2 Engaging informal economy actors in trade and labour policy in Africa Globally, the share of informal employment in trade and global supply chains (GSCs) is around 43 per cent (or 202 million) (ILO estimates) 3. In Africa, however, this share is considerably higher – in the 11 countries with available data, more than three quarters of trade -linked jobs are informal (see figure 1 )4. In export -oriented agricultural sectors , such as cocoa or coffee production , informality is even more pronounced, with almost all jobs being informal (ILO 2020).  Figure 1. Share of informal employment in trade and

jobs are informal (see figure 1 )4. In export -oriented agricultural sectors , such as cocoa or coffee production , informality is even more pronounced, with almost all jobs being informal (ILO 2020).  Figure 1. Share of informal employment in trade and GSCs in 2024, by region

Source: ILO estimates Yet the relationship between greater participation in international trade and informality is not straightforward .

On the one hand, increased trade is associated with higher productivity and economic growth, facilitating structural transformation towards more competitive sectors (ILO 2007; Ernst and Leung 2023) . Jobs associated with trade and GSCs also tend to be more productive, better paid and more formal than employment in the domestic economy (ILO 2026; OECD 2018; World Bank 2025). On the other hand, as trade expands, informality may increase in sectors where domestic firms face greater competitive pressures and respond by cutting costs,

Southern Africa (around 39%). In Northern Africa, informality increased during the COVID-19 pandemic – by about 3 percentage points – and has remained elevated at around 63% since then (ILOEST). 3 ILO estimates (November 2025) based on input–output modelling for 80 countries and territories, representing 85 per cent of global employment. Aggregate estimates are derived using sectoral shares of employment linked to trade and sectoral informality rates. Within sectors, informality rates of trade versus non-trade related jobs are not observed. For the methodology, see box 3.2 of the ILO Employment and Social Trends 2026 report (ILO 2026a). 4 11 countries represent 45 per cent of employment in Africa and include Angola, Côte d'Ivoire, Cameroon, Democratic Republic of Congo, Egypt, Morocco, Nigeria, Saõ Tomé and Principe, Senegal, Tunisia, South Africa including through reductions in formal employment (Ernst

4 11 countries represent 45 per cent of employment in Africa and include Angola, Côte d'Ivoire, Cameroon, Democratic Republic of Congo, Egypt, Morocco, Nigeria, Saõ Tomé and Principe, Senegal, Tunisia, South Africa including through reductions in formal employment (Ernst and Leung 2023; ADB 2021; OECD 2023) . Empirical studies focusing on Africa suggest that greater trade openness has, in some cases, been associated with an expansion of the informal economy (Bodjongo and Kamdem 2024 ; McMillan and Rodrik 2011 ; Davies and Thurlow 2009 ; McCaig and McMillan 2020). Consistent with these findings, informality was highlighted as one of the main traderelated challenges by over half of respondents in an ILO survey conducted across five African countries: Ghana (55 per cent), Kenya (60 per cent), Mozambique (73 per cen t), South Africa (71 per cent), and Uganda (79 per cent)5. Moreover, recent trade shocks (such as t he COVID -19 pandemic and geopolitical conflicts) have highlighted that in times of crises those in the informal economy are more exposed to income losses and have limited access to finance and support measures, than those in the formal economy (ILO 2022; UNECA 2025). Bringing the voices of informal economy actors into trade policy discussions is an important step in ensuring that increased trade participation leads to more inclusive labour-market outcomes. At the same time , informal workers and enterprises remain weakly represented within national employers’ and workers’ organisations (ILO 2024b). In some instances , dialogue mechanisms have been established to facilitate informal economy engagement in tripartite fora on trade and labour issues. This includes cooperative affiliation s and space s created under trade agreements . This brief examines such mechanisms, analysing institutional barriers and reviewing dialogue frameworks under regional trade agreements. Informal employment in Africa’s export-oriented sectors: overview

engagement in tripartite fora on trade and labour issues. This includes cooperative affiliation s and space s created under trade agreements . This brief examines such mechanisms, analysing institutional barriers and reviewing dialogue frameworks under regional trade agreements. Informal employment in Africa’s export-oriented sectors: overview In many developing economies that depend heavily on commodity exports, informal workers are concentrated in 5 An online targeted survey and follow-up consultations (online and in person) were undertaken with over 70 respondents from workers' and employers' organizations, labour and trade ministries, export and/or investment promotion agencies, and NGOs in Ghana, K enya, Mozambique, South Africa and Uganda between April and November

2025. These activities constituted part of the ILO IMPLEMENT project, funded by the Government of Flanders, with the objectives of (1) gathering countries' perspectives on the link betwee n trade, investment and labour, and (2) collecting evidence from different groups of stakeholders on their involvement in the design and implementation of trade arrangements. Detailed information on the survey methodology can be found in the ILO report Trade, Investment and Decent Work in Africa: Evidence and Stakeholder Perspectives (ILO 2026).

76% 55% 39% 33% 7% 0% 20% 40% 60% 80% Africa Asia and the Pacific Arab States Americas Europe and Central Asia ILO Brief 3 Engaging informal economy actors in trade and labour policy in Africa the lower tiers of global supply chains , often in primary production activities (Ernst and Leung 2023). Agriculture is an illustrative example: t he sector employs the largest share of the workforce in Africa , and almost all workers (97.9 per cent) are in informal employment (ILO 2020). Most agricultural workers either produce food mainly for their own subsistence or operate only in the lowe st tiers of supply chains . These workers rarely have direct relationships with lead suppliers and buyers , are the hardest to reach through labour law enforcement , and

agricultural workers either produce food mainly for their own subsistence or operate only in the lowe st tiers of supply chains . These workers rarely have direct relationships with lead suppliers and buyers , are the hardest to reach through labour law enforcement , and often operate with weak or no compliance with labour and production standards. (ILO 2025a). Informal workers in agricultural GSCs in Africa therefore face high underemployment and vulnerability, low productivity and incomes and limited access to essential services (UNECA 2025 ; UNCTAD 2018) . I nformal crossborder traders face similar constraints. They encounter significant operational and informational barriers , and experience harassment and insecurity at border crossings (particularly for women) , limited access to finance, and difficulties navigating regional trade regimes 6 (UNCTAD 2022; Afreximbank 2020). Yet informal cross -border trade is a major source of employment and livelihoods in Africa, providing employment for at least one fifth of the population, with women accounting for the majority of traders7. Engagement in trade and labour policy dialogue: barriers and pathways forward Integrating informal workers and micro, small and medium-sized enterprises (MSMEs) into trade and labour policy processes is important, as their participation in global supply chains means they are directly affected by changes in domestic trade policy . Their position within these supply chains can also leave them particularly vulnerable. For example, t hey are often assigned the role of dependent contractors to larger domestic or multinational firms, which, under unfavourable market conditions, may terminate such arrangements without legal consequences (Narula 2020; OECD 2023).

6 Trade regimes under the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community (EAC) 7 Estimates vary widely, as there is no unified methodology for assessing informal cross-border trade. For instance, some sources suggest it

6 Trade regimes under the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the East African Community (EAC) 7 Estimates vary widely, as there is no unified methodology for assessing informal cross-border trade. For instance, some sources suggest it provides income to around 43 per cent of Africa's population (Afrika Policies shaped primarily by formal firms’ perspectives may overlook or disadvantage informal economy actors. Despite this exposure to the effects of trade policy, informal economy actors rarely have opportunit ies to voice their interests in policy formulation . Formal exporting firms, by contrast, tend to have greater access to policymakers and influence over trade policy design (Benítez 2018; Osgood et al. 2017) . As their interests do not necessarily align with those of informal actors, policies shaped mainly by formal firms’ perspectives may overlook or disadvantage informal workers and MSMEs. Beyond being unable to raise their concerns at the design stage, informal workers and MSMEs are often unaware of how trade policy is implemented, and therefore do not take up measures from which they stand to benefit, such as simplified trade regimes and de minimis thresholds (Mangeni and Gor 2024; Kahunde and Okillong 2023) . This can limit their use of official border posts, prompting them to use insecure crossing s and further increasing the precariousness of their activities (UNCTAD 2022). Complex trade policy may itself benefit from the input of "non-traditional" actors (Van Den Putte 2015) . In the context of the negotiation and implementation of trade agreements with labour provisions, for example, the engagement of different groups of stakeholders can help improve domestic labour standards by raising awareness and fostering more systematic and productive dialogue between policymakers and civil society (ILO 2016; CorleyCoulibaly 2026). Despite a clear rationale for their inclusion, reaching and involving these actors remains a major challenge in Africa.

improve domestic labour standards by raising awareness and fostering more systematic and productive dialogue between policymakers and civil society (ILO 2016; CorleyCoulibaly 2026). Despite a clear rationale for their inclusion, reaching and involving these actors remains a major challenge in Africa. Although many informal cross-border traders organise into associations or groups to improve access to finance or operational support, their involvement in policy dialogue remains minimal, as these organizations rarely articulate policy positions or engage systematically with governments (Afreximbank 2020). ILO Stakeholder Survey5 participants highlighted further obstacles , including difficulties in reaching informal sector actors through formal consultation processes, the dual employeeemployer status of many of them , and persistent bottlenecks between formal social partner organisations and Ajumbo 2012; Afreximbank 2020) and provides employment to between 20 and 75 per cent of the population in most African countries (FAO 2017; Afreximbank 2020). Women account for the majority of informal cross-border traders across most regions of Africa – up to 70 per cent in Southern Africa and around 60 per cent in Central and Western Africa (UNCTAD 2019; Afreximbank 2020). ILO Brief 4 Engaging informal economy actors in trade and labour policy in Africa and governments. While these challenges are not easy to address, there are examples of good practices within the continent. The following sections examine these mechanisms, including how cooperatives and other social and solidarity economy entities affiliate with formal social partners, and consider how they might be strengthened and adapted more widely. Challenges and opportunities in reaching informal economy actors A key finding from the ILO Stakeholder S urvey is the difficulty in reaching informal stakeholders through formal consultation processes on trade and labour issues (ILO 2026c). Some informal economy actors operate “under the radar”, either deliberately to avoid taxes and administrative

informal economy actors A key finding from the ILO Stakeholder S urvey is the difficulty in reaching informal stakeholders through formal consultation processes on trade and labour issues (ILO 2026c). Some informal economy actors operate “under the radar”, either deliberately to avoid taxes and administrative procedures (UNDP 2023) , or because their activities are perceived as illegal, as is often the case for informal crossborder traders discussed earlier (Afreximbank 2020) . Others may avoid associating with formal workers’ and employers’ organisations due to unaffordable membership fees (ILO 2024b) , or because they feel that these organizations do not adequately represent their needs (Lamptey and Debrah 2020). Some survey participants noted that gaps in reaching informal economy actors could be narrowed by strengthening cooperatives and other social and solidarity economy entities . Many informal actors already rely on such alternative forms of collective organisation (see Box 1). These structures are viewed as capable of delivering tangible benefits, supporting transitions towards formality, providing access to essential goods and services , and facilitating better integration into supply chains, thereby expanding opportunities for meaningful policy engagement (ILO 2025b). Challenges and opportunities of organizing amid ambiguous employment relationships While cooperatives and other collective organisations can strengthen the voice and bargaining power of informal economy actors, they do not automatically ensure systematic participation in social dialogue on trade and labour issues. Direct engagement betwe en these groups and government authorities remains the exception rather than the norm. One example is Uganda, where coffee cooperatives and their apex bodies regularly engage highlevel officials on pricing and farmer support measures (Wedig 2019; Wedig and Wiegratz 2018). More commonly, informal workers participate in dialogue through affiliation – either individually or through cooperatives and associations – with formal workers’ or employers’ organisations. However, this pathway is

level officials on pricing and farmer support measures (Wedig 2019; Wedig and Wiegratz 2018). More commonly, informal workers participate in dialogue through affiliation – either individually or through cooperatives and associations – with formal workers’ or employers’ organisations. However, this pathway is complicated by the blurred boundaries between employment statuses in the informal economy . Workers often operate simultaneously as labour providers and ‘own account’ operators, making the distinction between ‘employer’ and ‘employee’ difficult to apply (Spooner and Bonner 2011; Riisgaard 2022; FKE and ILO 2021) . These ambiguities create challenges for engaging informal actors in trade policy dialogue through standardised institutional channels. Trade unions globally, including i n Africa, often prioritise labour rights and employment standards for formal workers, and some maintain restrictive membership rules that limit representation to those in formal employment relationships (Spooner and Bonner 2011; Asafu -Adjaye 2025). Moreover, efforts by formal workers' organisations to unionise informal economy workers can also generate tensions, particularly where the priorities of informal actors diverge from those of established members seeking to preserve existing protections or bargaining outcomes (Nanfosso 2016; Gallin 2001) . Partnerships with cooperatives and associations representing informal workers offer one way forward: the survey 5 collected evidence from Ghana and Uganda on how informal workers' associations are formally affiliated with national trade union centres ( table 1 ). However, such alliances between trade unions and informal workers’ entities are often approached cautiously due to concerns that cooperatives may be influenced by government or large corporations in ways that could compromise workers' rights (Pérez et al. 2022) . Even without formal affiliation, some unions actively represent informal workers' interests: in Kenya, for example, trade unions responding to the ILO Stakeholder Survey described their efforts to advance those interests in trade policy discussions with government and employers' organisations (table 1).

some unions actively represent informal workers' interests: in Kenya, for example, trade unions responding to the ILO Stakeholder Survey described their efforts to advance those interests in trade policy discussions with government and employers' organisations (table 1). Employers' organisations also face challenges when engaging informal economy actors, as micro -businesses without employees often fall outside their traditional scope (Jansen 2020; Riisgaard 2022) . Additionally, some employers' organisations view informal MSMEs as unfair competitors to formal enterprises and consequently exclude them from membership (ILO 2022a). ILO Brief 5 Engaging informal economy actors in trade and labour policy in Africa Nonetheless, the survey findings indicate that informal MSMEs in some cases maintain links with employers' organisations. In Ghana, South Africa and Uganda employers' organisations support informal MSMEs by representing their interests in policy forums and providing assistance with skills development and pathways to formalisation. In Kenya, the Federation of Kenya Employers (FKE) – the national umbrella employers' organisation – engages informal MSMEs primarily through partnerships with chambers of commerce that have significant informal membership, rather than through direct affiliation (table 1).  Box 1. Cooperatives in Africa’s cocoa supply chains

 Table 1. Informal economy actors’ engagement with social partner organizations Country Linkages with workers’ organizations Linkages with employers’ organizations Ghana The Union of Informal Workers Associations (UNIWA) is affiliated with and supported by TUC Ghana. In addition, the Ghana Federation of Labour (GFL) has ratified its affiliation with the Ghana National Cocoa Farmers Association (GNCFA), the largest farmers’ association in the country, which includes informal farmers.

The Ghana Employers Association (GEA) includes informal-sector business associations and carries their agenda into government forums. The cocoa sector is predominantly export -oriented, yet most farmers operate informally and sell their cocoa through

country, which includes informal farmers.

The Ghana Employers Association (GEA) includes informal-sector business associations and carries their agenda into government forums. The cocoa sector is predominantly export -oriented, yet most farmers operate informally and sell their cocoa through multi-layered chains of intermediaries (Van et al. 2025 ; Bermudez et al. 2022) . This indirect integration into global markets limits their participation in trade policy processes and social dialogue with government authorities. Cooperatives have been shown to mitigate this gap by contributing to the visibility of small-scale producers and linking them to more sustainable markets (Ciliberti et al. 2020; Dragusanu et al. 2018). Across Africa, cooperatives help address decent work deficits by providing training, financial services and other support (ILO 2026b, 2024a; Langenberg 2018) . This is particularly important in countries such as Côte d'Ivoire and Ghana, where over 20 per cent of all agricultural workers are employed in the cocoa sector (USDA 2025b, USDA 2025a). In Ghana, the Ghana Cocoa Board (COCOBOD) oversees all cocoa exports, sets a single producer price and purchases cocoa from Licensed Buying Companies, which source from farmers and cooperatives, or ‘Purchasing Clerks’ (ILO 2026). Around 680,000 of the country’s estimated 800,000 cocoa farmers are members of the Ghana National Cocoa Farmers Association (GNACOFA), which provides financial services through its cooperative credit union as well as training and other assistance to farmers. To strengthen its bargaining power in dialogues with government, GNACOFA is affiliated with the Ghana Federation of Labour (GFL) , which has used this affiliation to advocate on farmers' behalf, particularly regarding farm-gate price adjustments for cocoa beans (ILO 2026c). In Côte d’Ivoire, the Coffee -Cocoa Council regulates the sector and sets minimum farm -gate prices linked to international market prices (USDA 2025a). Farmers typically sell to cooperatives or to intermediary traders (pisteurs).

In Côte d’Ivoire, the Coffee -Cocoa Council regulates the sector and sets minimum farm -gate prices linked to international market prices (USDA 2025a). Farmers typically sell to cooperatives or to intermediary traders (pisteurs). Cooperatives may also sell to pisteurs, who then supply international and national cocoa trading companies (ILO 2022b). Some multinational firms (MNCs) have recently developed their own cooperative networks, providing price premiums that fund annual bonuses to farmers (IDEF 2025; ILO 2022b). While these arrangements with MNCs can raise incomes, concerns have emerged about cooperatives’ increasing dependence on multinational firms and the weakening role of national cooperative movements in the cocoa market (ILO 2022b; ILO 2019). Despite their potential, cooperatives reach in the cocoa sector remains limited. In Cote d’Ivoire, cooperatives handle only about 10 per cent of cocoa production, while roughly 80 per cent is channelled through intermediary traders (Langenberg 2018). ILO Brief 6 Engaging informal economy actors in trade and labour policy in Africa Country Linkages with workers’ organizations Linkages with employers’ organizations Kenya Trade unions such as COTU(K) and TTWU -K represent the interests of informal workers and engage in negotiations with the government and employers on their behalf. Informal actors are not direct members of the Federation of Kenya Employers (FKE), as membership requires formal registration. However, FKE partners with the Kenya National Chamber of Commerce and Industry (KNCCI), which has strong representation of inform al MSMEs.

South Africa Trade unions (COSATU, FEDUSA) do not routinely consult informal workers’ associations on trade matters, but many unions have members who are informally employed. Trade unions have expressed a commitment to advancing the interests of informal workers and pu rsuing broader policy reforms.

Business organisations (BUSA, BBC) represent the

consult informal workers’ associations on trade matters, but many unions have members who are informally employed. Trade unions have expressed a commitment to advancing the interests of informal workers and pu rsuing broader policy reforms.

Business organisations (BUSA, BBC) represent the interests of informal MSMEs in the NEDLAC forum and support their transition to formality. Uganda Trade unions (NOTU, COFTU) partner with informal-sector associations and cooperatives and have formalised engagement with some of them, including at the local level. The Federation of Uganda Employers (FUE) supports informal MSMEs through formalisation and business skills development initiatives, including support for cross -border informal traders and cooperatives in export -oriented sectors such as coffee.

based on the consultations findings conducted by the ILO in October -November 2025.

Abbreviations list: Ghana: Trades Union Congress Ghana (TUC Ghana); Ghana Federation of Labour (GFL); Ghana National Cocoa Farmers Association (G NCFA); Ghana

Employers Association (GEA).

Kenya: Central Organization of Trade Unions (COTU(K)); Tailors and Textiles Workers Union – Kenya (TTWU-K); Federation of Kenya Employers (FKE); Kenya National Chamber of Commerce and Industry (KNCCI).

South Africa: Congress of South African Trade Unions (COSATU); Federation of Unions of South Africa (FEDUSA); Business Unity South Africa (BUSA); Black Business Council (BBC); National Economic Development and Labour Council (NEDLAC).

Uganda: National Organisation of Trade Unions (NOTU); Central Organisation Of Free Trade Unions (COFTU); Federation of Uganda Employers (FUE).

Trade agreements as platforms for inclusive dialogue Trade agreements can serve as important entry points for sustained dialogue between government authorities, social partners and, in some cases, broader civil society . Africa currently has 15 trade agreements in force, both within the region and with external partners (see figure 2).

Trade agreements as platforms for inclusive dialogue Trade agreements can serve as important entry points for sustained dialogue between government authorities, social partners and, in some cases, broader civil society . Africa currently has 15 trade agreements in force, both within the region and with external partners (see figure 2). This includes the continent's major regional trade framework, the African Continental Free Trade Area (AfCFTA), which has dedicated institutional mechanisms to facilitate engagement. National Implementation Committees (NICs), chaired by relevant national ministries, provide a platform for social partners and civil society organizations to participate in discussions on trade decisions with labour -market implications (Sebahizi et al. 2023). Trade union representatives are already part of NICs in countries such as Namibia, Kenya, Ghana, Rwanda and Nigeria, and the African Regional Organisation of the International Trade Union Confederation (ITUC-Africa) has called for their inclusion across all AfCFTA Member States (Nyagah 2025) . In Uganda, the NGO SEATINI – which supports women-owned MSMEs, including informal crossborder traders – joined the NIC in 2024 (SEATINI 2025).  Figure 2. African countries trade agreements with labour provisions by partner

Source: ILO LP Hub

Intraregional 33% European Union 33% United Kingdom 27% United States 7% ILO Brief 7 Engaging informal economy actors in trade and labour policy in Africa Stakeholder engagement mechanisms are also embedded in several trade agreem