Policy Paper: Alternative Financing for Informal Businesses to Propel Youth Entrepreneurship in Sub-Saharan Africa

Policy Papers

In this paper, Youth Business International (YBI) and Somo, our member in Kenya, call for alternative financing schemes for informal youth-led businesses in sub-Saharan Africa.

Informal businesses form a substantial part of the economy and in Sub-Saharan Africa 85% of employment is informal, according to the International Labour Organization (ILO). These businesses, despite being unregistered and lacking formal structure, provide vital income-generating opportunities for marginalized groups, particularly women and youth. However, their growth potential is regularly hampered by a lack of access to finance due preventing them from scaling up, creating jobs and contributing to economies.

Our policy paper ‘Alternative Financing for Informal Businesses to Propel Youth Entrepreneurship in Sub-Saharan Africa’ shines a light on the important role of informal businesses in the region and the barriers they face that prevent them from scaling up, with a particular focus on women-led informal businesses in Kenya.

To increase access to finance for informal businesses in sub-Saharan Africa, YBI and Somo call for governments, financial institutions, and development agencies to:

  • Offer alternative financing models and partner with community-based organisations specifically targeted at informal businesses and provide microloans, alternative credit scores ​and​ guarantor arrangements, complemented by a holistic package of financial literacy support.  
  • Partner with local organisations to provide financial literacy initiatives tailored and accessible to marginalised groups who are more likely to operate in the informal sector.  
  • ​​Support marginalised groups, including young people, women, people with disabilities, refugees and migrants, and ethnic or religious minority groups, ​to​ navigate regulations and harmful stereotypes that ​prevent them from building an enterprise.​​  
  • Tailor all support services and financing models to the marginalised groups mentioned above, addressing their specific needs and challenges.   
  • Simplify policy frameworks for formal business registration and access​ to​ finance. 

Other Resources

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Reports

YBI’s Impact Report 2023

26.06.24
Learning papers

Financial Health for Young Entrepreneurs – Our Learnings

27.03.24

Those who make it possible

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Argidius Foundation

Argidius Foundation

Accenture

Accenture

European Bank for Reconstruction and Development (EBRD)

European Bank for Reconstruction and Development (EBRD)

Standard Chartered Foundation

Standard Chartered Foundation