EDITORIAL: Informal sector is bleeding, needs urgent support and recovery measures

Friday February 11 2022
Editorial cartoon

It started with the closing of the Rwanda-Burundi border as relations between the two countries soured, the escalation of relations between Uganda and Rwanda three years ago made things even worse for people whose livelihoods depend on  informal cross border trade conducted near border crossings.

The economic cost of the border closures was largely looked at through macroeconomic lenses, with news outlets spending more time analysing negative growth in trade between the two countries, ignoring the microeconomic ramifications these political feuds left behind.

Informal trade contributes up to 12 percent of Rwanda’s trade, but the biggest contribution is perhaps the millions of livelihoods the informal sector supports in a largely traditional and agrarian economy like Rwanda’s.

The Covid-19 pandemic and its subsequent lockdowns and curfews has undoubtedly dealt the biggest blow to Rwanda’s informal sector, after it decimated jobs, limited movement and choked supply chains.

Truth be told, the pandemic found the country’s informal sector already on its deathbed, and just finished it off.

For years the sector had suffered unfriendly policies, a stagnant agriculture sector with fragile value chains that were not leaving any tangible revenues in the pockets of peasant farmers to support the local economy.


But it is the conspicuous absence of the minimum wage that has affected the country’s informal sector perhaps more than anything in the last 25 years after the 1994 genocide against the Tutsi.

Its absence has turned millions of informal sector workers into beasts of burden, exposing them to exploitation at the hands of errant employers, leaving them with meagre wages therefore no savings and no ability to engage in any meaningful  economic activity that can graduate someone from poverty.

The pandemic found the informal sector already weakened by such factors, which further inhibited its ability to be resilient. 

The Rwandan government ought to listen to the cries of its poor and revisit efforts to institute the minimum wage, which look to have been forgotten or overrun by events. 

The agricultural sector, which employs up to 78 percent of the population, will also need to be revisited and have its policies overhauled because they are clearly not working. Some components of the existing agricultural policies are designed well, but  it has all ended in design documents with no actual grass root implementation.

In two years, pandemic has driven many people into poverty, undoing some of the work done by the RPF government in the past few decades, and it is time government treated addressing problems facing the informal sector with urgency to avoid the situation getting worse, as it seeks to recover from the economic setbacks left by the pandemic. 

Research is very critical at this stage, the only available data about the informal sector dates a decade ago, which required the government through its line institutions and development partners to undertake research about the informal sector.