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The informal markets of Africa
are stereotypically seen

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as chaotic and lackadaisical.

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The downside of hearing
the word "informal"

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is this automatic grand
association we have,

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which is very negative,

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and it's had significant consequences
and economic losses,

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easily adding -- or subtracting --
40 to 60 percent of the profit margin

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for the informal markets alone.

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As part of a task of mapping
the informal trade ecosystem,

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we've done an extensive literature review

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of all the reports and research
on cross-border trade in East Africa,

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going back 20 years.

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This was to prepare us for fieldwork
to understand what was the problem,

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what was holding back informal trade
in the informal sector.

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What we discovered
over the last 20 years was,

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nobody had distinguished
between illicit --

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which is like smuggling or contraband
in the informal sector --

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from the legal but unrecorded,

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such as tomatoes, oranges, fruit.

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This criminalization --

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what in Swahili refers to as "biashara,"
which is the trade or the commerce,

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versus "magendo," which is
the smuggling or contraband --

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this criminalization
of the informal sector,

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in English, by not distinguishing
between these aspects,

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easily can cost each African economy
between 60 to 80 percent addition

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on the annual GDP growth rate,

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because we are not recognizing the engine

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of what keeps the economies running.

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The informal sector is growing jobs
at four times the rate

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of the traditional formal economy,

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or "modern" economy, as many call it.

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It offers employment and income
generation opportunities

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to the most "unskilled"
in conventional disciplines.

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But can you make a french fry
machine out of an old car?

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So, this, ladies and gentlemen,

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is what so desperately needs
to be recognized.

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As long as the current assumptions
hold that this is criminal,

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this is shadow,

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this is illegal,

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there will be no attempt at integrating
the informal economic ecosystem

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with the formal or even the global one.

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I'm going to tell you a story of Teresia,

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a trader who overturned
all our assumptions,

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made us question all the stereotypes
that we'd gone in on,

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based on 20 years of literature review.

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Teresia sells clothes under a tree
in a town called Malaba,

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on the border of Uganda and Kenya.

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You think it's very simple, don't you?

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We'll go hang up new clothes
from the branches,

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put out the tarp, settle down,
wait for customers,

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and there we have it.

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She was everything we were expecting
according to the literature,

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to the research,

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right down to she was a single
mom driven to trade,

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supporting her kids.

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So what overturned our assumptions?

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What surprised us?

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First, Teresia paid the county
government market fees

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every single working day

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for the privilege of setting
up shop under her tree.

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She's been doing it for seven years,

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and she's been getting receipts.

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She keeps records.

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We're seeing not a marginal,

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underprivileged,

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vulnerable African woman trader
by the side of the road -- no.

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We were seeing somebody
who's keeping sales records for years;

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somebody who had an entire ecosystem
of retail that comes in from Uganda

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to pick up inventory;

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someone who's got handcarts
bringing the goods in,

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or the mobile money agent
who comes to collect cash

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at the end of the evening.

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Can you guess how much
Teresia spends, on average,

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each month on inventory --

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stocks of new clothes
that she gets from Nairobi?

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One thousand five hundred US dollars.

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That's around 20,000 US dollars
invested in trade goods and services

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every year.

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This is Teresia,

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the invisible one,

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the hidden middle.

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And she's only the first rung
of the small entrepreneurs,

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the micro-businesses that can be found
in these market towns.

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At least in the larger Malaba border,
she's at the first rung.

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The people further up the value chain

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are easily running
three lines of business,

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investing 2,500 to 3,000
US dollars every month.

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So the problem turned out
that it wasn't the criminalization;

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you can't really criminalize someone
you're charging receipts from.

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It's the lack of recognition
of their skilled occupations.

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The bank systems and structures
have no means to recognize them

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as micro-businesses,

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much less the fact that, you know,

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her tree doesn't have
a forwarding address.

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So she's trapped in the middle.

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She's falling through the cracks
of our assumptions.

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You know all those microloans
to help African women traders?

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They're going to loan her
50 dollars or 100 dollars.

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What's she going to do with it?

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She spends 10 times
that amount every month

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just on inventory --

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we're not talking about
the additional services

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or the support ecosystem.

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These are the ones who fit
neither the policy stereotype

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of the low-skilled and the marginalized,

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nor the white-collar,
salaried office worker

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or civil servant with a pension

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that the middle classes
are allegedly composed of.

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Instead, what we have here
are the proto-SMEs

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these are the fertile seeds
of businesses and enterprises

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that keep the engines running.

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They put food on your table.

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Even here in this hotel,
the invisible ones --

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the butchers, the bakers
the candlestick makers --

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they make the machines
that make your french fries

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and they make your beds.

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These are the invisible businesswomen
trading across borders,

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all on the side of the road,

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and so they're invisible
to data gatherers.

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And they're mashed together
with the vast informal sector

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that doesn't bother to distinguish
between smugglers and tax evaders

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and those running illegal whatnot,

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and the ladies who trade,

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and who put food on the table
and send their kids to university.

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So that's really what I'm asking here.

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That's all that we need to start by doing.

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Can we start by recognizing
the skills, the occupations?

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We could transform the informal economy
by beginning with this recognition

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and then designing the customized
doorways for them to enter

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or integrate with the formal,

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with the global,

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with the entire system.

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Thank you, ladies and gentlemen.

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(Applause)