African Women in the EntrepreneurialLandscape: Reconsidering the Formal and

Informal Sectors

ANITA SPRINGDepartment of Anthropology, University of Florida, Gainesville, Florida, USA

Informal and formal sectors can be seen as ‘‘dual economies’’of African countries. This article discusses the entrepreneuriallandscape in Africa considering both sectors, as well as the con-tinuum from small to large within each. It queries whether therecan be mobility within and between sectors and whether upwardmovement, as seen elsewhere, is possible for most African entre-preneurs. The landscape displays the range of women entrepre-neurs from traditional microenterprises to large informal-sectortraders, from small- to large-scale formal-sector companies, aswell as emerging globalists (the ‘‘new generation of African entre-preneurs’’). Paradigms compare and contrast these entrepreneursin terms of demographic variables, types of typical enterprises andcompanies, product sources and markets, start-up capital,networks and associations, and mobility within and betweenthe sectors. Findings show the informal�formal distinction isuseful to disentangle the landscape, but that movement betweeninformal sector categories is not substantial because of the entryrequirements of education, capital, business networks, etc. Simi-larly, within the formal sector of small to large businesses, limitedaccess to capital, networks, market niches, and product innova-tion hinders upward mobility for most. The new generation ofAfrican entrepreneurs form an endpoint of the continuumbecause their global business methods, networks, financial trans-parency, and business ethics propel them to success. Hence, whilemost African women entrepreneurs are lower on the scale, there

Address correspondence to Dr. Anita Spring, Professor of Anthropology and AfricaStudies, Department of Anthropology, University of Florida, Gainesville, FL 32611-7305,USA. E-mail: springanita@yahoo.com

Journal of African Business, 10:11–30, 2009Copyright # Taylor & Francis Group, LLCISSN: 1522-8916 print=1522-9076 onlineDOI: 10.1080/15228910802701296

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is a growing cadre of women at the top who provide role modelsof achievement within their countries.

KEYWORDS Africa, entrepreneurship, formal and informalsectors, women

INFORMAL AND FORMAL SECTORS: DICHOTOMIESAND DUAL ECONOMIES

There is no conclusive definition of the informal sector, although the termhas been in existence since the 1970s when Hart (2001) called it the self-organized energies of people escaping government strictures. ‘‘Informal’’usually refers to unregistered, unregulated, and untaxed businesses,including service enterprises, production activities, and street vendor sales.By contrast, the formal sector includes taxed, registered, and regulatedbusinesses. Spring and McDade (1998) used this distinction in their book,African Entrepreneurship: Theory and Reality. But the distinctions are notso clear-cut. Some governments changed their perspectives and began tocapacitate the informal sector by providing ‘‘sites and services’’ so they couldtax and register small business activities (e.g., Kamete, 2002), and microfi-nance schemes also registered participants. Using these concepts, all levelsof entrepreneurs, except micro- and illegal ones, are in the formal sector.

As well, there has been movement from the formal to the informalsectors in many countries because structural adjustment programs retrenchedsalaried workers who then became informal-sector entrepreneurs, oftenincreasing the competition for women and men already there. In addition,formal-sector firms may turn toward suppliers in the informal sector to findprices and credit that are more flexible. Adam’s (1999) study of enterprisesin Nigeria concluded that although the informal and formal sectors arequalitatively different, the two are interdependent in many African econo-mies (e.g., a boom in the formal sector may result in a recession in theinformal sector that must compete for resources and markets, while aneconomic upturn can benefit informal-sector businesses by infusingresources and creating demand in niche markets).

Informal and formal sectors can be seen as ‘‘dual economies’’ of Afri-can countries. Governments have more usually been concerned with theformal, and ironically, donor development agencies have supported theinformal. The entrepreneurial landscape considering both sectors and therange from small to large within each is discussed here. The aim is to con-ceptualize the range of traditional and emerging entrepreneurs. Women arethe particular focus, but the paradigms are applicable with modifications tomen as well.

12 A. Spring

Sometimes women entrepreneurs who are in different sectors and levelsare ‘‘lumped together.’’ In a recent example from the author’s fieldworkin 2001, some large-scale, global businesswomen, described later, notedthat donors and some scholars lumped them indiscriminately withmicroentrepreneurs in the informal sector. In Uganda, one owner of aformal-sector, medium-sized business declined the invitation of a donoragency to join weekly forums with traditional female microentrepreneurs.She said the advice and assistance required to take her business to the ‘‘nextlevel could not be found in this group.’’ Other medium-sized and largecompany owners said they sympathized with informal micro- and small-scaleentrepreneurs but suggested there were many organizations that focused onthem. The company owners noted that their entrepreneurial enterprises fellinto a gap in lending practices. Whereas donor agencies provided small loans(e.g., US$100–500) to microenterprises and banks loaned large amounts tolarge corporations, the medium-sized loans (US$50,000 to $1 million) toexpand their businesses were hard to find.

Also included in this article are data about an emerging sector, thenew generation of African entrepreneurs (NGAEs), formal-sector businessglobalists of both sexes (23% of the total membership are women), whobetween 1993 and 2004 were organized into networks: 31 at the nationallevel, 3 at the regional level, and 1 for the continent (Table 1). They pro-vide an ‘‘end-point’’ of the continuum of the formal sector (McDade andSpring, 2005; Spring, 2002, 2008, 2009). Figures 1 through 6 present modelsor paradigms of a continuum from microentrepreneurs in the informal

TABLE 1 Selected NGAE Country Networks, Members, and Women Interviewed by BusinessPosition and Acquisition, 2000–2005

Countrynetwork

Membersinterviewed

N ¼ 57(Women)

Nationalnetwork

membership(Women)

Business position ofthose interviewed

Business acquisitionof those interviewed

Owner(Women)

Manager(Women) Self Family SOE

Botswana 6 (1) 14 (2) 6 (1) — 6 (1) — —Ethiopia 3 7 2 1 1 — 1Ghana 13 (6) 44 (18) 13 (6) — 9 (4) 3 (2) 1Kenya 11 (2) 11 (2) 11 (2) — 10 (2) —Mali 2 17 (2) 1 1 1 — —Senegal 5 (3) 18 (4) 5 (3) — 5 (3) — —South Africa 6 (2) 9 (2) 5 (2) 1 5 (2) — —Uganda 8 (2) 10 (2) 8 (2) — 6 (2) 2 —Zambia 1 10 (2) 1 — 1 — —Zimbabwe 2 8 (2) 2 — 2 — —Total 57 148 54 3 46 6 2Percent 95% 5% 85% 11% 4%

Source: McDade and Spring (2005) and ‘‘genderized’’ by the author.

Formal and Informal African Economy Sectors 13

sector to NGAEs in the formal sector, using variables that include demo-graphics, types of enterprises and firms, product sources and markets,sources of start-up capital, associations and networks, and potential mobi-lity within and between the sectors.

The article focuses on distinguishing the categories and queryingthe ease of movement within sectors and between sectors. Conceptualnotions of entrepreneurial prowess include the idea that through their ownachievements, entrepreneurs can significantly increase their incomes andlifestyles—that is, upward mobility or ‘‘rags to riches.’’ This links to questionsabout Africa’s so-called ‘‘missing middle,’’ since the majority of entrepreneursare micro and small, while only a small number of large firms are owned byAfricans, and only some have women owners. What facilitates and constrainsmovement within and between sectors and from smaller to larger in businessactivities? A number of paradigms heuristically conceptualize the formal�formal contrast. The data consider the continuum of microentrepreneurs tolarge traders, from jua kali (‘‘in the sun’’) small industries (Esbin, 1994;House-Midamba and Ekechi, 1995), to small retail shops, and frommedium-sized companies to large manufacturing firms and global companies(Kinunda-Rutashobya and Olomi, 1999; McDade and Spring, 2005;Snyder, 2000).

THE ENTREPRENEURIAL LANDSCAPE IN AFRICA

Entrepreneurship is a major catalyst for economic growth in both industria-lized and developing countries. Entrepreneurs establish new businesses thatcreate employment and provide services and products to increase thewealth of their local and national economies. Gender influences the entre-preneurial landscape. In Africa, most women-owned enterprises are micro-and small-scale informal sector ones. Women have played a more limitedrole as owners and managers in the formal sector, although they areincreasing in numbers and business levels (see Kibanja and Munene;Kuada; Madichie; Ndhlovu and Spring, in this issue). Even in the formalsector, African women entrepreneurs feel obstructed by the ‘‘gender divide’’that prevails in most African countries (Hagos, 2000). Patriarchial attitudesoften inhibit women in the formal business sector, since women are outsideof ‘‘old boys’ networks,’’ such as social clubs where businessmen congre-gate. Snyder (2000) studied women entrepreneurs in Uganda who estab-lished and operated successful businesses covering the entire spectrum ofthe entrepreneurial landscape. These entrepreneurial women included mar-ket women (who sell everything from water to curtains), manufacturers ofcustom leather shoes, owners of private clinics and supermarkets, as wellas major hoteliers and tourism industry operatives. Snyder concludes thatdespite women’s activism and positive impacts, there is a tendency for

14 A. Spring

gender disparities (also see Boohene; Rutashobya, Allan, and Nilsson, inthis issue).

Micro- and Small-Scale Enterprises

The majority of women-owned enterprises are micro- and small-scale ones inthe informal sector (Aspaas, 1998; Daniels, 1994, 1998; Daniels, Mead, andMusinga, 1995). Prominent among microentrepreneurs are the multitude offemale agriculturalists and traders whose provisions supply towns and citiesall over Africa (Clark, 1994, 2000; Horn, 1994, 1998; Robertson, 1997, 1998;Spring, 2000). A study of 50,000 such businesses in southern and easternAfrica between 1990 and 1998 showed that women owned 48% of them(Mead, 1999). Microentrepreneurs consist of one to three employees, mostlyin the informal sector. Only 2% of African businesses have 10 or moreemployees. However, despite donor agency and NGO support for over 30years, the expected growth and transition of most informal-sector micro- tosmall-scale enterprises into medium- or large-scale enterprises have notoccurred (e.g., Rugimbana and Spring, 2008).

A growing segment of women in the small-scale formal sector havebeen described by Kinunda-Rutashobya and Olomi (1999) for Tanzania;Boohene (in this issue) for Ghana, Snyder (2000) and Kibanja and Munene(in this issue) for Uganda, and Woldie and Adersua (2004) for Nigeria. Recur-rent themes include gender differences in access to resources for businessstart-ups and expansion, difficulties in getting credit and loans, as well aswomen’s businesses having fewer employees and shorter business longevitythan male-owned counterparts.

Medium-Scale African Firms

A relatively small large-scale sector and relatively large small-scale sectorcharacterize most African economies; in between is a small=medium-scalesector. This structure has been described as the ‘‘missing middle’’ in Africaneconomies (Esbin, 1994; Ferrand, 1996). However, studies of some countriespoint to a viable and emerging medium-scale sector. Snyder (2000) identifieda growing segment of Ugandan women owners of middle-level businesses.Some had formed business associations and asserted that they were seizingthe challenge.

Business Partners Ltd., South Africa’s ‘‘Leading Investment Company forSmall and Medium Enterprises,’’ invests in formal enterprises with investmentfinancing of between R150,000 and R15 million (R7.4 ¼ US$1.00) (http://www.businesspartners.co.za/). One fund focuses on female entrepreneurs,and during 2004 – 2005, R154 million were invested in 159 businesses ownedand operated by women. Data from other funds show 370 women-ledmedium and large businesses were capitalized with funding of R150 to

Formal and Informal African Economy Sectors 15

R300 million (see Ndhlovu and Spring, in this issue, for additional data). Busi-ness Partners sponsors annual Business Women of the Year competitions forfemale entrepreneurs whose ventures include retail appliance stores,tourism, and petrol service stations.

Large-Scale Enterprises in Africa

A small percentage of African-owned businesses are medium-size to large,formal-sector enterprises that conform to regulations and exhibit high levelsof human and financial capital (Bowditch, 1999). Most owners of large-scalebusinesses are men, but women are owners as well. In Ghana, women ownlarge-scale textile, water=beverage, and furniture manufacturing companies,while in Kenya and Zambia, women own export horticultural (roses)operations (Fick, 2002, 2006; McDade and Spring, 2005). In Ethiopia, awoman owns the largest supermarket chain; in Eritrea, a woman owns thelargest manufacturing company; in Uganda, a husband and wife own thelargest cell phone company; in South Africa, women own jewelry factoriesand appliance stores (author’s interviews) and are heavily involved on majorcorporate structures (Ndhlovu and Spring, in this issue). In fact, women areinvolved in the nontraditional exports, trade, banking, and transportation inmany countries.

The New Generation of African Entrepreneurs

Another segment of the entrepreneurial landscape was a readily identifiablegroup who called themselves the ‘‘new generation of African entrepreneurs’’(NGAEs) and were formally constituted into networks between 1993 and2004; they are still a presence in business in their countries. (Other entrepre-neurs may also be similar in their perspectives, but were not members.)Twenty-three percent of all members are women, although Spring (2002,2008, 2009) and McDade and Spring (2005) reported 33% women in theirsample based on fieldwork in eight countries (Botswana, 2000, 2006;Ethiopia, 2000, 2004; Ghana, 2000, 2006; Kenya, 2001; Senegal, 2003; SouthAfrica, 2000, 2001, 2006; Tanzania, 2005; and Uganda, 2001). NGAEs orga-nized themselves into 31 countries, 3 regional networks, and a pan-Africannetwork to influence business conditions. They implemented cross-nationaljoint business ventures, created a professional subnetwork of accountants,gained official observer status at the regional economic organizations(ECOWAS, COMESA, and SADC), signed memoranda of understanding withmultilateral agencies (World Bank and Ecobank), formed venture capitalfunds, and changed government regulations (Orsini, 2001; Orsini, Courcelle,and Brinkerhoff, 1996; Wohlmuth and Wauschkunh, 2001). The countries,members interviewed (in relation to country networks), business position,and business acquisition methods (self-, family-, or state-owned enterprises

16 A. Spring

[SOEs]) are shown in Table 1. NGAEs emphasized financial transparency,being apolitical, using merit rather than kinship=ethnic-based hires, adheringto ethical practices, advocating for the private sector, and having globalperspectives. They form the end-point of the formal sector.

PARADIGMS TO CONSIDER THE ENTREPRENEURIALLANDSCAPE

Figures 1 through 6 show the range of women’s involvement inentrepreneurial and business activities throughout the continent.

Demographic Profiles

Figure 1 diagrams some demographic characteristics of women entrepre-neurs in the formal and informal sectors: educational levels, formal-sectorwork experience, marital status, and husband’s financial contribution. Micro-entrepreneurs usually have none to some primary education, while large-scale owners may have secondary to some college education (some arenow assisted by educated children to do E-commerce). By contrast,small=medium-size business owners (e.g., members of the Uganda WomenEntrepreneurs Ltd. [UWEAL] and Ghanaian Association of Women Entrepre-neurs [GAWE]) have mostly completed secondary school, some college andfull degrees (author’s data). Conventional large-scale businesses owned byAfricans are mostly in the manufacturing and agricultural sectors. SomeNigerian company-owners with little education hired MBAs to manage theircompanies using contemporary methods, but there was often friction as aresult (Ukaegbu, 1998). By contrast, the NGAEs mostly all have bachelordegrees; some have MAs and MBAs, and a few have PhDs (author’s data),as do many top businesswomen in Nigeria (Madichie, in this issue).

Microentrepreneurs rarely have previous formal-sector employment andlarge-scale traders usually were not salaried workers. House-Midamba andEkechi (1995) described some West African village and peri-urban women(Yoruba and Igbo women in Nigeria and Ghanaian women from many ethnicgroups) who expected to receive money from their husbands to start agricul-tural and trading microenterprises. Coquery-Vidrovitch (1997) noted thatsome West African women passed down textile businesses for hundreds ofyears to their daughters, but currently, daughters are well educated and pre-fer formal-sector professional careers. In East Africa, by contrast, assistanceby husbands was not automatic but sometimes occurred; both marriedwomen and female heads of households were market traders (Horn, 1994,1998; Robertson, 1997, 1998). In some cases, women were supposed to giveprofits to their husbands, while in other situations they hid their money todevelop enterprises (Khasini, 1995). By contrast, salaried women workers

Formal and Informal African Economy Sectors 17

might have separate financial responsibilities from their husbands for house-holds and children or they might have joint bank accounts. Data from Africaand elsewhere show husbands reduced household allowances when womenearned their own income (Spring, 2000).

Owners of small to large businesses have several pathways. Salaried work-ers may start their own companies or take over family businesses. By contrast,85% of NGAEs interviewed started their businesses, and 11% took over SOEs(Table 1). Most worked in formal-sector companies (many in the United States,United Kingdom, and Europe) before starting their own companies. Some wereCEOs and senior managers of companies in their own countries. Husbands andwives in the same business might own or manage businesses together orseparately, and sometimes both spouses were network members.

Types of Enterprises and Firms

Figure 2 summarizes the types of enterprises by sector and level. Small-scaletraders and marketers sell agricultural produce, cooked food, beer, crafts, andcloth. In West Africa, some specialize in palm and kola nuts, salt, fish, and sheabutter, while in Central=East Africa the products are grains, tubers, vegetables,and fruits. In certain locales, such as Lagos, women specialized in herbals andhousehold utensils in the past, but currently this has become ‘‘male’’ territory.Traders of any size who buy from the rural areas and sell in towns and urbanareas often provide linkages in terms of moving agricultural and craft products

FIGURE 1 Demographic characteristics of informal- and formal-sector entrepreneurs. Source:Author.

18 A. Spring

toward the city and manufactured items (agricultural tools and inputs, cloth,and household utensils) toward the countryside (Clark, 1994, 2000).

In most places, women sell their own and others’ produce, food, cloth,crafts, and pottery. Men control the making of metal and wood products. Com-modities that require capital and direct connections to international markets areusually male controlled; items that concern daily subsistence and local marketsare usually female controlled because of women’s limited cash resources. Ingeneral, the large-scale female vendors are involved in the cloth trade andhousehold goods. However, there are exceptions, such as women in the Demo-cratic Republic of Congo who sell gold, diamonds, and electrical appliances(MacGaffey, 1997, 1998). Some large-scale women traders have extensivenetworks; some operate internationally dealing wholesale and cash-and-carryin salt, fish, palm and kola nuts, shea butter, cloth, and gold in West Africa.Large-scale female traders in Ethiopia and Eritrea resell electronics and appli-ances purchased in Dubai, and in Kenya and Uganda, women do cross-bordertrade in crafts made in Kenya, Uganda, and Tanzania (author’s data).

Although bakeries, groceries, and clothing stores are examples of smallfirms that women own, once food production becomes industrialized, theowners of large manufacturing and food processing companies generally aremen, although a few women own supermarkets (Ethiopia) and bottled water=juices firms (Ghana). For some women, there is business expansion fromone successful apparel, food, or appliance store to multiple stores or in

FIGURE 2 Types of enterprises=firms by sector and size. Source: Author.

Formal and Informal African Economy Sectors 19

transportation companies from one to several truck, bus, or taxi fleets as wasthe case for some Ghanaian and South African women (author’s interviews).The NGAE women and men, by contrast, are mostly involved in the servicesector (tourism, computers and information technology, public relations,and consultancy companies), and high-value agricultural exports such asvanilla bean (Uganda) and roses (Ethiopia, Kenya, and Zambia). Most of theseare high-profile businesses with specific locations and recognizable logos.

Start-up Capital

Figure 3 models the sources of capital, probably the single largest factor affect-ing level and success (education=training may be second). Rotating Savingsand Credit Associations (ROSCAs) find their incentives among small-scalebusinesswomen, as a means of helping them accumulate sums they couldnot achieve with ordinary daily or monthly revenues. But formal-sectorand medium-size to large businesses require significant capital. Small tomedium-size firms resort to bank overdrafts—supplier credit that they finessebetween receipts and payments to get them through (Fafchamps, 1998).Donor loans and projects are usually directed to microentrepreneurs,although projects like the Gemini project capacitated formal-sector smalland medium-size firms (Daniels, 1994; Daniels, Mead, and Musinga, 1995).While all levels can use their own and family money, and can inherit familybusinesses, the model shows that NGAEs usually start their own firms. NGAEs

FIGURE 3 Sources of start-up capital by sector and size. Source: Author. (parentheses indicatethat this is less commonly the case).

20 A. Spring

have overcome the problems of limited capital markets in most African coun-tries because they use previous salaries and obtain bank credit successfully.

Sourcing and Markets

Figure 4 models sectors and level differences concerning sources of rawmaterials and the markets to sell products. Microentrepreneurs use localresources and sell in local markets, while globalists can use any level ofresources and markets; they can have regional and international productsources and markets and usually combine the local and nonlocal, using Inter-net, regional and international travel, and personal communication with sup-pliers and buyers. Usually, successful international formal-sector companiesalso have a successful national base. Large-scale, informal-sector traders areglobal in their purchases of manufactured goods for local, informal-sectordistribution. They perform a valuable service of bringing products to localpeople but do not contribute to GDP in terms of in-country manufacturing,using local raw materials, having business locations, paying taxes, etc.

Networks and Associations

Figure 5 models the kinds of business and social networks and associationsthat entrepreneurs join to aid their endeavors. Women’s entrepreneurial asso-ciations are not new, and market women, as well as business and professionalwomen, have had associations for several decades. Small-scale entrepreneursoften are members of local organizations of market women. Both informallarge-scale wholesalers and formal-sector small and medium-size enterprises

FIGURE 4 Product sourcing and markets by sector. Source: Author. (parentheses indicate thatthis is less commonly the case).

Formal and Informal African Economy Sectors 21

may be members of national women’s organizations (e.g., GAWE and theAfrican Federation of Women Entrepreneurs [AFWE]) (author’s interviews).GAWE and AFWE were founded by Lucia Quachey in 1990, and membersinitially were concerned with women’s issues such as divorce and female gen-ital cutting (Spring, 2002). Quachey noted: ‘‘Women were not being invited toanything important or considered an economic force . . . . Women just come inhandy to be present or to speak on women’s issues.’’ The group then went onto consider women’s economic issues. ‘‘We stopped talking about equalityand rights, and just focused on making money’’ (Quachey, personal commu-nication, 2004). Subsequently, GAWE and AFWE (based in Accra, Ghana)organized proposals and received funding from donors. AFWE sponsoredthree international trade fairs and investment forums (in Ghana, Ethiopia,and the United States) and received funding from bilateral (Norway=NORAD)and multilateral United Nations (UNIFEM) organizations.

Women owners of small and medium-size businesses in many Africancountries are organized into national organizations, usually in the capital city,such as UWEAL. These provide forums and venues for education, socialactivities, business networking, and advocacy. South Africa has the Business

FIGURE 5 Membership in networks and associations by sector and level. Source: Author.(parentheses indicate that this is less commonly the case).

22 A. Spring

Women Association (BWA), which has offices in all cities and conductsannual censuses of women’s achievements in government and private-sectorbusiness structures (see Ndhlovu and Spring, in this issue). Research on smalland medium-size businesspeople now shows the effects of personal andbusiness networks on business performance. Women’s networks are moreextensive than men’s and involve social capital (Kuada, in this issue).Rutashobya, Allan, and Nilsson (in this issue) showed that women may havediverse networks, but they have more family and relatives in their strong ties(first top group of friends) than men. However, as the ties become weaker,women’s non-family ties increase and are more focused on business net-works. Male entrepreneurs have higher proportions of outsiders (businesspartners, colleagues, and ethnic group members) even at the first top friends.Hence, men’s and women’s networking behaviors contribute to differencesin enterprises performance, with women being excluded from participatingin more rewarding and strategic financial networks.

The NGAE women belonged to their national and regional networks, aswell as to professional organizations related to their businesses and profes-sions (e.g., manufacturers association for factory owners and architecturalassociations for architects). Like their male counterparts, they did not joinchambers of commerce noting that these were too inclusive with many mem-bers not adhering to global business ethics and practices. Rather, their focuswas on regional and global contacts in trade and investment, as well as inimproving the business climate in their own countries. One NGAE endeavorwas the creation of a professional West African subnetwork on accountancythat was lead by a female owner of one of the largest accounting firms(Orsini, 2001; Spring, 2008). In most country chapters, women commentedthat their networks included both men and women members for businessactivities, but women members provided greater social support.

Mobility Within and Between Sectors

Not all women entrepreneurs are similar in their business skills and practices,and not all can expand, move within, or rise to other sectors. Data from theauthor’s interviews and business histories show some fluidity within andbetween sectors, and standard distinctions and definitions of formal�informaloften are heuristic only. However, many factors limit women entrepreneurs’upward movement within and between the sectors. These include (1) limitedexpansion due to lack of capital, management skills, formal education, andformal-sector business experience; (2) inability to purchase necessary materi-als and find profitable markets due to lack of contacts, capital, technical andmanagerial skills, and size of operation; (3) government regulations that hin-der business transactions or are ‘‘rent-seeking;’’ (4) inability to broaden theirbusiness and=or compete outside local areas due to the lack of networks,fiscal transparency, global experience, etc.; and (5) limits on private enterprise

Formal and Informal African Economy Sectors 23

(e.g., regulations, competition) due to the political landscape in manycounties.

Figure 6 models the potential for mobility within and between sectors.Considering mobility from small to medium to large-scale informal tradingbusinesses, there are well-known women who have made such moves, butthey are few. Esther Occlu, whose grandmother gave her some ‘‘smallchange,’’ with which she bought oranges and made marmalade and thenwent on to own food product and textile factories (first informally and thenin the formal sector), and who ran for political office and chaired the nationalAssociation of Ghanaian Business and Professional Women, is a well-knownexample (Fear Woman, UN Television film, 1974; and Esther Occlu, personalcommunication, July 2000). By contrast, large-scale wholesalers in textiles,such as the woman portrayed in the film Mama Benz, inherited their busi-ness positions (Coquery-Vidrovitch, 1997). Usually family connections andcapital were necessary for enterprise mobility, but increasingly tertiary edu-cation and formal managerial business experience are required for entry intoformal-sector businesses and for job promotions.

Similar to most African countries, Daniels (1998) argued that therewere both high- and low-profit industries. Small- to medium-scale

FIGURE 6 Potential for mobility within and between sectors. Source: Author.

24 A. Spring

industries for men and women had different strategies and capitalrequirements, and few people rose from low- to high-profit industries.High-profit small industries included retailing garments, auto works, car-pentry, and electrical repair, while low-profit industries included tailor-ing, vending foods and farm products, knitting, and woodcarving. Theyrepresented 19% and 81%, respectively, of micro and small enterprises,and most women were in the latter. Women’s microenterprises werelimited to trade in foodstuffs, food processing, and household goodsand to certain occupational categories (i.e., domestic service, beer-brewing, hairdressing, sewing, knitting, and pottery and craft-making).They faced increased competition from men, as well as from women,who lost formal-sector jobs (because of structural adjustment programsand political unrest) and who subsequently entered the informal sector.

Considering the boundaries between the sectors, informal tradersand importers=exporters who sell large quantities of imported goodsand generate high revenues, conduct business differently from thosein formal-sector manufacturing and retail corporations (with similarrevenues and incomes). These traders do not desire to be registeredand regulated. Within the traditional formal sector of small to mediumto large businesses, there is some upward mobility based on women’saccess to capital, market intelligence, product innovation, and marketniches. Some women are risk-adverse in terms of expansion, while otherslack access to resources (see Boohene; Kuada, in this issue). Those inmanagement often face the glass ceiling in terms of promotions (seeMadichie; Ndhlovu and Spring, in this issue). Women who own ormanage formal-sector enterprises often do so based on formal educationand formal-sector employment backgrounds; they are usually consideredas mainstream businesspeople and not as a separate category of womenentrepreneurs. They ensure their continuance through a focus onadvocacy for business development.

NGAEs women differ from the traditional formal sector women ownersbased on new types of businesses for women, networks, business ethics, duediligence, and access to capital. They also use global business methods (i.e.,financial transparency and advocacy for the private sector) (Orsini, 2001;Wohlmuth and Wauschkunh, 2001). These NGAE women do not want togo back to the standard formal sector, and entry into the informal sector isbeyond the realm of possibility.

CONCLUSION

Dual economies are a reality of the African landscape, but the boundaries are‘‘fuzzy.’’ Movement upward is possible but depends on where women startand a variety of other factors: their educational and employment experience,

Formal and Informal African Economy Sectors 25

business skills, capital sources, business skills, and luck. The informal-formaldistinction is useful to disentangle the entrepreneurial landscape; in reality,there is fluidity but with limitations. Movement backward from the formalto the informal for failed businesses and retrenched workers occurs, andcompanies may find suppliers in the informal sector. But there is not a sub-stantial movement from the informal to the formal sector because of the entryrequirements of capital, education, networks, etc. Within the informal sector,the mobility from micro- to larger enterprises is rare and depends on capitaland networks rather than on innovation and new products.

For the informal sector, Horn (1998) delineated 10 tenants of womenmicroentrepreneurs (1) entrepreneurship is a gendered activity; (2) marketwomen take risks; (3) they diversify income-earning activities; (4) they createmicroenterprise niches; (5) they do not have access to formal capitalopportunities but rely on spouses, relatives, money-lenders, and savings;(6) entrepreneurship requires market intelligence and reliable wholesalers,as well as knowledge of clientele and their preferences; (7) womenapprentice themselves to experienced traders to learn entrepreneurial skills;(8) they adapt trading techniques to available locales and spaces; (9) womenstrategize in terms of ways to make a profit and devote much time to theirbusiness; and (10) some women find freedom from domestic chores by enga-ging in entrepreneurial activities. However, none of this helps them expandinto the large-scale informal sector or the small formal sector.

By contrast, many medium formal-sector business owners and theNGAEs at the end of the spectrum differ fundamentally. Hence, this author’s10 tenets for formal-sector women entrepreneurs are divided here into thoseapplicable to formal-sector business owners in general and NGAEs in parti-cular. The general ones are (1) women enter formal-sector companies,develop, and own enterprises based on their education and formal-sectorwork experience; (2) many women are considered as businesspeople inmainstream arenas, and not as a separate category of ‘‘women’’ entrepre-neurs; (3) many women use their own and family money, but someobtain bank loans (often more difficult for women than for men—see Kibanjaand Munene, in this issue); (4) membership in social and business associa-tions=networks facilitates women’s business endeavors; (5) women constructand use business networks differently than men; and (6) entrepreneurshipinvolves risk-taking; entrepreneurial women differ from salaried personnelbecause they have taken risks and created businesses while others only‘‘dream’’ about doing so.

Tenets that are specific for female NGAEs are (7) NGAE women use thesame business methods, ethics, and networks as NGAE men; (8) NGAEwomen practice global standards of accountability and financial transpar-ency, and they keep their businesses separate from family and domesticconcerns; (9) NGAE women obtain market intelligence using internationalmethods that include the Internet, network contacts, international travel,

26 A. Spring

due diligence, etc.; and (10) women traders and most formal-sector businesswomen and do not become NGAEs.

Businesspersons, researchers, and donors should realize the large rangeof women in business and not confuse small-scale microentrepreneurs andformal-sector small industries, medium-large level businesses, and NGAEsin terms of their needs for business training, credit and loans, and networks.Nor should those who want to conduct business deals confuse small- andlarge-scale entrepreneurs and informal- and formal-sector activities, enter-prises, businesses, industries, firms, and corporations. Enhanced understand-ing of the financial limitations of each sector, as well as an appreciation ofthe significant skills and accomplishments of the large range of female(and male) entrepreneurial activity, is required. The questions would thenbe about realistic planning to facilitate upward mobility and to capacitatethe ‘‘missing middle’’ based on the reality of where different players beginand end. The entrepreneurial landscape of participation and remunerationand the outcomes for women are complicated and changing. Increasingwomen’s decision-making and financial empowerment depends on knowingthe landscape in terms of its constraints and opportunities.

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