Beyond informal: Africa’s industrial future will be built from below

Small business traders operating from Gikomba Market busy at work on July 12, 2023.

Photo credit: File | Nation Media Group

When discussions about industrialisation arise, attention quickly turns to industrial parks, multinational corporations and billion-shilling investments.

Yet this conventional picture overlooks a quieter reality unfolding across Kenya and much of Africa. Industrialisation is already taking place. It simply does not look the way many policymakers imagine.

Across Eastleigh, Gikomba, Kariobangi, Kamukunji and countless market centres, thousands of small enterprises are producing clothing, furniture, metal products, beauty products and food items. Most operate outside formal industrial policy frameworks, but together they constitute an important part of the continent's productive economy.

These enterprises are not merely businesses. They are socially embedded production systems. Their success depends less on sophisticated machinery and more on trust, relationships and informal institutions.

Churches, women's groups, apprenticeship arrangements, family networks and community associations provide the social infrastructure that allows these enterprises to function in environments where formal institutions are often weak or inaccessible. These networks reduce uncertainty and create economic opportunities for thousands of households.

This suggests that Africa's industrialisation may not necessarily follow the classical path experienced in Europe or East Asia. Rather than emerging solely from large corporations and formal manufacturing zones, industrial transformation on the continent is frequently occurring through what may be described as socially embedded micro-industrial systems.

Unfortunately, public policy has often viewed informality as a problem to be eliminated rather than as an economic reality to be understood and strengthened.

Attempts to force rapid formalisation sometimes undermine the very networks that sustain these enterprises. What many small producers require is not displacement but support.

Incremental improvements in quality management, access to finance, digital marketing, business development services and modernised apprenticeship systems could significantly enhance productivity without destroying existing social foundations.

This requires a shift in thinking. Policymakers must move beyond the narrow assumption that industrialisation is synonymous with large factories.

Small enterprises are not merely survivalist activities. They are productive institutions capable of generating employment, fostering innovation and building local capabilities. The challenge is therefore not whether informal enterprise should exist, but how to help it evolve into more competitive and resilient production systems.

Africa's industrial future will not be built exclusively in special economic zones or by multinational corporations.

It will also be built in workshops, market centres and neighbourhood enterprises where trust, skill and social networks combine to create value. Perhaps it is time we recognized that industrialization in Africa is not waiting to happen. It is already happening—from below.

The writer is a Business School Professor | Researcher in Entrepreneurship and Innovation | Founder, Katito Atelier

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.