Locations
Informal Economy Project
Summary
Informal economy which constitutes a diversified set of economic activities, enterprises, jobs, and workers contributes significantly to Mozambique economy. It accounts for more than 80 percent of employment and with a share of up to 40 percent of the Gross Domestic Product (GDP) of the country. Despite its significant contribution, however, the sector faces several structural, institutional, and operational challenges.
Informal workers tend to be predominantly female and less educated than workers in the public sector or the formal private sector. With regard to education, these differences are particularly large for informal workers in agriculture.
Informal workers are more likely to be multi-dimensionally poor than formal workers, and when so, they also experience higher severity of poverty.
Multidimensional poverty, both in terms of levels and intensity, is particularly severe among informal workers in agriculture. Outside agriculture informal workers tend to be poorer than non-informal workers, although MPI poverty incidence for this group, estimated at 21%, is considerably lower than the national average.
Background
The project is an initiative of an Organisation of African, Caribbean and Pacific States (OACPS) financed by the European Union (EU) and United Nations Development Programme (UNDP), and implemented by United Nations Development Programme (UNDP) in collaboration with International Labour Organization (ILO). The project, among aims to support the transitioning of informal enterprises into sustainable growth and formalization in Mozambique by resolving key structural and institutional bottlenecks.
Project pillars/outcomes
1) Supporting the creation of enabling policy and regulatory environment
2) Facilitating access to finance
3) Building capacity among the intermediaries and informal enterprises
4) Fostering collective actions and innovations to address gaps in selected sector
5) Disseminating knowledge and experience at the regional and global level
Major achievements
- Call for Proposals for financial intermediaries: a call for proposal was launched and 8 financial intermediaries were selected. These financial intermediaries consist of banks, microfinance institutions, insurance companies and mobile network operators. In partnership with FSDMoc, these organizations were trained to identify and adopt innovative financial services models for informal enterprises and implement Human Centered Development solutions.
- Innovation Challenge Awards for fintechs and financial intermediaries: another call for proposal was also launched in February 2024, targeting financial intermediaries and fintechs seeking to develop new financial and digital services and products for informal sector businesses. A total of 18 proposals were received The project is currently selecting the 4 best proposals to receive a grant to implement the solutions over a period of one year.
- Collective Action Platform: Agricultural commercialization platform was co-designed and created in Quelimane, Zambezia, with the main ecosystem actors engaged in the agricultural marketing sector, including private sector – financial intermediaries, start-ups –, agricultural associations, smallholder farmers, and the national, provincial and district governments. The members of the platform have already identified different challenges, opportunities and actions that can be developed and implemented around the 4 Is – Information, incentives, investments and implementation. The members of the platform have developed the first draft of the Action Plan, which will operationalize the activities and interventions of the platform. The platform has also been identifying essential elements that will be integrated into the Formalization of Informal Business Agenda that is being developed under the Output 1.
Key Project Partners:
- Ministério da Indústria e Comércio
- Instituto de Cereais de Moçambique (ICM,IP)
- Ministério da Agricultura e Desenvolvimento Rural (MADER)
- Financial Sector Deepening Moçambique (FSDMoç)
- International Labour Organization (ILO)
