Browsing: Taxing the informal sector

As at 2015 the informal sector employed over 80% of the Kenyan working population as was reported in an article published by the Institute of Economic Affairs. The same is the case in most developing countries, where the informal sector accounts for up to half of most economic activity.

While the informal sector accounts for a significant proportion of the workforce in the East African region, its impact on GDP is largely outsized by the more formal sectors of the economy when the value of output is taken into consideration.The informal sector in Kenya only accounts for slightly above 30% of the GDP. Over 60% of those working in this sector are youth between 18–35 years, and half of them are women.

The resulting assumption, as is characteristic of the informal sector in an economy, is that a majority of the players do not register or comply with any regulations.They…