How is the Digital Transformation Affecting Informal Businesses in the Global South? Early Findings from a Rapid Survey in 16 Countries

The informal sector is by far the world’s largest employer. The International Labour Organization estimates that 60% of jobs are informal. The Accelerator Lab Network of the United Nations Development Program (UNDP) has detected signals that informal businesses are embracing digital tools across the Global South. This is likely to have far-reaching implications in contexts where informal businesses account for a large part of economic activity. On top of the usual (and generally thought to be beneficial) implications in terms of efficiency and access to customers and suppliers, which are common to formal as well as informal businesses, the digitalization of informal businesses offers a new angle on informality itself. The use of digital tools increases their visibility and legibility to the rest of society. For example, you could think of estimating the number of informal businesses in a city or region by counting the number of vendors on Facebook Marketplace for that city or region. From the same data, you could infer the activities they are involved in, and even reach out to them. This could open new ways for development policies to support and include the owners of informal businesses, similarly with how, in the wake of the COVID-19 pandemic, hundreds of millions of people received income support, many of them, for the first time, through digital channels.

In this document, we report on the results of a survey on the use of digital tools by informal businesses in the Global South carried out by the UNDP Accelerator Lab Network. It was designed and deployed in 2022, when the COVID-19 pandemic was accelerating the take-up of digital tools by some businesses and their customers.

The dataset supporting the paper is available here: https://doi.org/10.5281/zenodo.7515227.