Why Kenya remains a giant economics lab globally

You rarely find hawkers in developed countries. There are designated places to trade. That creates order and cleanliness. We could quickly interpret that as a sign of development. Everything is formal. 

In Kenya, every available space, including underpasses, overpasses, sidewalks and even the road itself are markets. We can blame poverty, poor regulation, and slow economic growth.

Many hawkers and small-scale traders would leave the streets if they made enough money or got better jobs.  Competition makes it hard to scale up, with new competitors joining the market every year. Some traders have specialised in selling one type of product.

Others sell general merchandise. It would be interesting to compare the performance of specialists vs non-specialists. But Indian entrepreneurs have made it big by specialisation.

A few entrepreneurs make it and scale up. Remember Africa’s missing middle: many small-scale enterprises, few medium-sized firms and many large multinationals. The majority of entrepreneurs persist because it’s their primary source of income.

In the past, we thought this sector was for school dropouts, but today, well-educated men and women are in it. We hope their presence will transform the sector, with creativity and innovation. 

Unless we industrialise and create more jobs in the formal sector, the informal sector is there to stay. Our best shot is in the digital economy, avoiding the smoke stacks. The other option is migrating to countries with a shortage of labour. 

In looking down upon the informal sector, we forget it’s a source of livelihood for the vast majority of citizens. And a giant economic lab where citizens test their entrepreneurial acumen.

Even the formally employed people try their luck. Give credit where it’s due, the informal sector has made it to the digital space.

How much buying and selling takes place in cyberspace, catalysed by M-Pesa payment?  Such “labs” are rare in developed countries. They are formalised, which denies lots of ordinary citizens a chance to test their entrepreneurial acumen, if they have any. 

Without such informality, we could never have “discovered” lots of entrepreneurs.

The big dilemma is striking a balance between the “chaos” of the informal sector and entrepreneurial experiments.

If the formal sector (and government) can’t provide enough jobs, it should nurture the informal sector where jobs are created.

The jobs may not be of quality, but they feed families and ensure socioeconomic stability. Did you become a successful entrepreneur by trial and error, by experimentation, by trying? Talk to us.