Around the globe, young people continue to face significant challenges in accessing formal employment. According to the International Labour Organisation (ILO), the global youth unemployment rate stood at 13.6%, more than three times higher than that of adult workers.
However, the 2023 youth unemployment rate has improved slightly to 13%, representing approximately 64.9 million young people and marking a 15-year low compared to the pre-pandemic rate of 13.8% in 2019. It is projected to decline further to 12.8% over the next two years. Despite this overall progress, regional disparities persist, with youth unemployment rates in the Arab States, East Asia, South-East Asia, and the Pacific remaining higher in 2023 than they were in 2019.
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Moreover, a growing number of young workers worldwide are caught in “working poor” conditions, jobs that provide some income but fall short of lifting them out of poverty. This precarious reality demands a rethinking of youth empowerment beyond the narrow measure of employment status.
Africa, home to more than 420 million young people under 25, faces the most acute challenge. Despite the continent’s remarkable economic growth, averaging 3.8% annually over the past decade, formal sector job creation remains insufficient. Official statistics show that only about 20% of youth in sub-Saharan Africa hold formal jobs, while an estimated 85% are active in the informal economy. Recent studies estimate that the informal sector contributes between 25% and 65% of the continent’s GDP, varying by country and region.
Such reliance on informal work is not merely a stopgap; it reflects systemic economic realities. Informal jobs are frequently low-paid, unstable, and devoid of protections, leaving young people vulnerable to income shocks and social exclusion. Studies indicate that average earnings in the informal sector are 40-60% lower than in formal employment, underscoring the persistent income gap. For millions, informal work means a daily struggle to secure basic needs, let alone invest in education, health, or entrepreneurial growth.
The Informal Economy
The informal economy is Africa’s largest employer and a complex ecosystem of enterprises and activities. Street vendors, small-scale farmers, craftsmen, gig workers, and informal service providers all contribute to this vibrant sector. Yet, despite its scale, informal work rarely confers benefits like healthcare, social security, or retirement savings.
Approximately 80% of African youth engaged in informal work lack access to any form of social protection. This leaves them exposed to risks that often push households deeper into poverty. Additionally, gender disparities are pronounced; young women in informal sectors earn up to 30% less than their male counterparts and face greater barriers to accessing finance and markets.
Transitioning from informal to formal status remains elusive for most. The World Bank’s Doing Business Report reveals that in many African countries, registering a small business can take upwards of 30 days and cost the equivalent of several months’ income for an informal entrepreneur. These bureaucratic hurdles discourage formalisation and limit growth prospects.
However, the informal economy also harbours immense potential. It serves as a training ground for entrepreneurship, financial management, and resilience. Many youth develop valuable skills and networks within informal work that can catalyse future success if nurtured properly.
Beyond Survival: Toward Economic Sovereignty
Youth empowerment must move beyond the simplistic goal of “job creation” toward fostering sustainable livelihoods and economic agency. This means ensuring that informal work becomes a stepping stone, not a dead end.
Recent initiatives offer promising examples. Kenya’s Ajira Digital Program has enabled over 1 million youth to access digital work platforms, increasing earnings and introducing many to formal payment systems and contracts. In Nigeria, the National Youth Employment Action Plan aims to improve access to finance, skills development, and technology for young informal workers, backed by a $200 million government fund.
Still, scaling these successes requires systemic reforms. Policies must prioritise social protection inclusion, reduce barriers to business registration, and expand financial services adapted to the realities of informal workers. Mobile money platforms are revolutionising financial inclusion across Africa, with over 750 million registered accounts continent-wide facilitating transactions, savings, and microloans that underpin small business growth.
Education and skills training also need recalibration. Beyond vocational training, young informal workers require digital literacy, financial management, and business development support. The potential for technology to transform informal work is vast, but it demands investment in infrastructure and capacity building.
The Stakes and the Opportunity
To grasp the urgency of youth empowerment in Africa, consider this: the average income of informal workers in sub-Saharan Africa ranges from approximately $2 to $5 per day—barely above the international poverty line. In stark contrast, formal sector jobs offer an average daily wage nearly three times higher, making it possible for workers to save, access healthcare, and invest in their children’s education. Yet, for most young people across the continent, such opportunities remain out of reach.
90% of Africa’s youth live in low- and lower-middle-income countries, where the greatest challenge is the scarcity of formal employment. In these economies, only about 10 to 15% of young labour force participants secure wage employment, while 30 to 50% are trapped in vulnerable forms of work. Meanwhile, in upper-middle-income countries like Algeria and South Africa, although wage employment is more accessible and vulnerable employment less widespread, the overall youth unemployment rate remains alarmingly high, with nearly one in every five young people out of work.
Furthermore, youth in the informal economy face a 50% higher risk of falling into chronic poverty compared to those in formal employment. Yet, informal enterprises generate up to 60% of urban employment and contribute nearly 40% of GDP in many African countries, highlighting their critical role in national economies.
The informal economy is also a crucible of innovation and adaptability. During the COVID-19 pandemic, informal workers demonstrated remarkable resilience, pivoting to new services and digital platforms even as formal sectors contracted. Harnessing this dynamism requires deliberate policy support, not neglect.
Policies for Inclusive Growth
True youth empowerment in Africa’s informal economy depends on creating inclusive economic ecosystems. This entails integrating informal workers into social protection schemes, simplifying business regulations, enhancing financial inclusion, and investing heavily in relevant skills development.
Governments, development agencies, and the private sector must collaborate to design policies that are responsive to the diversity within the informal economy and prioritise long-term livelihood security over short-term employment figures.
Investing in youth entrepreneurship, particularly among women and marginalised groups, is essential. Evidence shows that when young people are empowered with skills, finance, and networks, they generate jobs and stimulate broader economic growth.
Unlocking Africa’s Youth Dividend
Africa’s youth population represents an unparalleled opportunity for economic transformation if harnessed thoughtfully. The informal economy, where most young Africans find their livelihoods, cannot be dismissed as merely precarious or transitional. Instead, it must be recognised as a foundational economic space deserving of policy attention, protection, and investment.
Empowerment beyond jobs means enabling youth to build secure, dignified, and upwardly mobile livelihoods in the informal economy and beyond. This will require coordinated action across sectors to ensure that the next generation of Africans not only survives but thrives in a rapidly changing economic world.
