Informal Sector Innovation

The majority of business enterprises in Africa are informal and there is growing interest in understanding the creative processes and innovations occurring in these informal sectors. Evidence remains scarce, however, and research on informal enterprises still represents a relatively new and unexplored frontier.

While the formal and informal sectors may seem worlds apart – with the former characterised by regulations and defined best practices, and the latter by an absence of such controls – our previous research highlights the fluidity of the formal-informal economic spectrum in Africa. Our investigations also suggest that such fluidity holds implications for intellectual property (IP) and innovation patterns, inspiring the development and application of unique, relatively open knowledge management strategies across the continent.

We are eager to deepen our exploration of the informal sector in Africa, expand our research into the maker movements springing up across the continent, and link our insights with studies that focus on different corners of the globe, including Canada.  Gaining a fuller appreciation of how the informal and formal sectors interact in different contexts, and how to alter the use of IP rights, will allow for the better facilitation of public policy frameworks that effectively encourage economic growth not only in Africa but in Canada as well.

Why Look at the Informal Sector?

The majority of businesses in developing regions around the world are informal, and their work spreads across a broad spectrum of economic activities. Informal entrepreneurship is receiving increasing scholarly and political attention in Africa, and the continent’s booming youth population presents an unprecedented need to create jobs and economic opportunities. Equally, in Africa there are myriad informal micro-enterprises that offer diverse and vibrant settings for analysing entrepreneurial development and innovation. Confronted with severe scarcity conditions, African firms regularly improvise solutions to everyday challenges, sometimes resulting in innovations that better address local needs and even drastically change the way things are done.

For example, our study of the Kiira EV electric vehicle in Uganda, published in the book based on our previous research, Innovation and Intellectual Property: Collaborative Dynamics in Africa, is an illustration of our observations and conclusions about “open development” in Africa. Working together, professors and students from Makerere University alongside informal artisans, applied a unique approach to knowledge management. Incorporating the openness of the informal sector and the protective elements of the formal sector, the artisans shared their work freely, with little concern for IP protection, while the university professionals utilised a memorandum of understanding, “whereby […] the artisans [were] expected not to share this information or designs with other people” (Open AIR Briefing Note, 2014). This allowed the two groups to effectively blend their respective skills and facilitated their groundbreaking technological innovation.

This blend of openness and formal protections was a theme in many of the Open AIR case studies, which led to our conclusion that

“open development cannot be conceived as a binary proposition, either open or closed. [Instead,] socio-economic development, especially when conceived as open development, is a far more complex process than that.” (UCT Press, p. 389)

Our publication, Knowledge and Innovation in Africa: Scenarios for the Future, also incorporated the theme of informal-formal sector linkages in a plausible futurist scenario: “Informal  – the New Normal”. This scenario envisions a future in which economies across Africa are driven by cooperation between formal companies and improvisational, small-scale enterprises. The latter operate according to informal mechanisms of knowledge management, while the former support them, providing skills, capital, and a conduit for state support in exchange for informal goods and labour.

New Questions to Answer

Open AIR’s past research highlighted the importance of informal sector innovation, and began to explore the relationships among innovation, appropriation, and openness. In our newest research, Open AIR aims to better understand:

  • What are the creative processes in informal enterprises, the nature of knowledge sharing, and possibilities of upscaling?
  • How can linkages across informal enterprises be stimulated in various contexts?
  • Are there IP-related solutions or unique challenges for scaling up informal businesses?
  • What connections exist between Africa’s informal enterprises and global open innovation phenomena such as the “maker movement”, co-creation and co-design, crowd-sourcing and crowd-funding, etc.?
  • What are the similarities and differences among the informal maker movements in developed versus developing countries?

The “Maker Movement”

One particular area of interest in this cluster is the “maker movement.” Urban informal enterprises tend to be small, specialised units that usually operate in clusters, forming linkages with reliable suppliers and clients. Much of their business relies on building social capital and relationships with their clients. The skills and knowledge for these businesses are often acquired through apprenticeships, through imitation, and even through the expanding use of online sources. These are also some of the principles behind the global maker movement and this sharing of knowledge in creative settings can be conducive to innovation.

The maker movement is focused on problem-solving, a “do it yourself” (DIY) ethos, sharing knowledge, and facilitating access to technologies through the democratisation of manufacturing tools. To some extent the maker movement espouses the values of Africa’s informal sector innovators; both are meant to operate at small scale but with the potential to scale up. In developed countries, the rise of this maker culture is closely associated with the rise of hackerspaces and Fab Labs, allowing like-minded individuals to share ideas, tools, and skill sets. In Africa the movement is at its initial stages but there are several maker spaces across the continent that Open AIR will look at. We are also especially interested in the advent of 3D printing and – while its connection to the informal sector is currently low – 3D printing’s possible impacts in the future.

The Open African Innovation Research Partnership