Informality in the Hybrid Economy of Uganda

The aim of this project has been to fill crucial theoretical and evidence gaps, by collecting and analysing data on the informal economy and cities growth in Uganda, testing the relevant theories/models/hypotheses and methods of analysis and feeding the results into current academic and policy debates at national and international levels. 

Based on evidence from reviews of relevant literature, analysis of the secondary data from various official sources and primary research in the fieldwork in Uganda, the theoretical argument presented in this research monograph rests on the need to move from the dualistic concepts of the urban economy, to notions that present urban economic activities on a continuum. The study builds on the concept of the ‘hybrid economy’ (Chen, 2012) and the recent efforts of other researchers in challenging the dualistic concept of formal and informal sectors. 

The research evidence indicates that the informal economy is not a single sector but comprises many sectors and sub sectors or segments that shares linkages with corresponding formal enterprises. The principal findings of the research are as follows:

1. Informal and hybrid economy – general findings and policy implications: the informal economy plays a significant role in the economies of sub-Saharan African and is likely to persist, and a radical change of policy direction is needed to support the hybrid economy.
2. Key data and knowledge gaps: in order to influence the institutional perspective of the informal economy, it is essential to demonstrate the viable role played by informality in the urban economy. Data on, and analysis and knowledge of, the hybrid economy is lacking; existing value chains and networks involving informal formal and informal enterprises have to be better understood and their economic contribution evaluated.
3. Spatial and sectoral findings: with continuing rapid urbanisation, the focus will be increasingly on cities as engines of inclusive growth. However, rapid urbanisation in Uganda and other African countries is having a major impact in terms of the urbanisation of poverty with implications for the growth of the informal economy and the heterogeneity of its workforce and the un- and underemployment of youth. Informal settlements play a key role in the urban physical and economic development in providing access to affordable housing and job opportunities for the low-income majority, and improving the general level of accessibility in cities is a key factor in realising their economic development potential, as well making cities work for people, in general and those particularly dependent on the informal economy.