Aitken, Robert, 2013, Developing Energy Enterprises Project in East Africa, Final evaluation

2.1 ENABLING ENVIRONMENT

2.1.10. Improving linkages between formal and informal economy

Recommendation: 5. When designing projects or individual actions on the IE, consider supporting combining informal and formalisation aspects of economic activities. Doing this would depend on the needs and context of the community members. Combining would entail maintaining the informal and accessible character in terms of cottage industry, family labour, low technology, and local manufacturing. At the same time provide support for including important formal sector characteristics such as technical/national standards, business registration, and access to finance. Formalisation does not have to be an “either or” option but can include support for maintaining informal aspects if these are appropriate to the needs of the community members.

Reference: Aitken, Robert, 2013, Developing Energy Enterprises Project in East Africa, Final evaluation, The Global Village Energy Partnership DEEP EA, Nairobi, evaluation on the topic “Developing Energy Enterprises in Kenya, Tanzania and Uganda.

Sample evidence: the evaluation noted that the informal sector predominates in terms of employment and opportunities within East African economies – as it does across most of Sub-Saharan Africa. It holds this prominent position because it is accessible in terms of capital and education and provides the only real off-farm livelihood opportunity for most of the regions rural and peri-urban residents. The downside of the informal economy is that product quality is unreliable (there are no standards), it cannot access finance, it is overlooked by governments in terms of procurement of goods/services and it cannot really be regulated and supported. Which ensure that growth prospects and minimal. What the programme has done is develop a hybrid incorporating the useful elements of both the formal and informal sector into their approach to supporting businesses. The approach retains the informal and accessible character of the informal sector in terms of cottage industry, family labour, low technology, local manufacturing, etc. but at the same time includes important formal sector characteristics such as technical/national standards, business registration, access to finance, etc. While the businesses remain accessible and true to their socio-economic context, they do offer considerably more scope for growth and stability.