The Informal Economy

Mozambique, for the first time in its history as an independent country, is to hold a statistical survey seeking to gather data on the informal sector. The data to be collected during this important statistical operation will contribute towards a better estimate of the National Accounts concerning this sector.


This survey is part of the Italian Programme to Support the Development of the National Statistical System. The operation, which is financed by this programme, will be carried out by the INE, with the technical support of international consultants who possess wide-ranging experience in this sector. The data will be gathered from households, and will be launched on 1 July, lasting for three months.

Data collection in the field will be undertaken nationally, covering a sample of 6,900 households distributed through all the provinces and covering both urban and rural areas. This sample will be representative at national level, disaggregated into urban and rural areas, and at provincial level.


The Importance of the Informal Economy


The Survey of the Informal Sector is a statistical operation with the purpose of bringing to the surface, for the first time in the country, relevant data on this important economic sector. It is hoped that, through the data to be collected, it will be possible to determine or capture the impact of the informal economy, in terms of the labour force involved, the activities covered by the sector, and its production and consumption, as well as its distribution across the national territory.


The importance of this operation also lies in the country’s need to possess National Accounts of high quality, which presupposes that they be produced in such a way as to better understand the contribution of each economic activity to the country’s product. Inclusive high quality National Accounts are vital for the definition of economic policies.

It should be noted that the gap in covering the activities of the informal sector causes imbalances in the internal consistency of the country’s National Accounts. This is mainly because some economic transactions escape from the existing statistical measurements, particularly as regards the breakdown of the product by each economic activity. For example, not all the expenditure and income of households, in goods and services, is covered adequately, particularly as regards distinguishing between what is produced for the market, and what is intended for consumption by the households themselves.


Reality shows us that today the informal sector in Mozambique is directly or indirectly associated to the main development objectives (increased production, job creation, and the fight against poverty). This fact justifies the efforts by the authorities to seek from informal sector operators all relevant data that can help understand reality, and thus allow evaluation of the impact of this reality on the national economy.
It is from this perspective that, given the growing size of this Sector and its undoubted contribution to the national economy, the INE is preparing to undertake a better statistical assessment of the sector, through the survey mentioned above.


Through holding this survey, it will be possible to measure (quantify), clearly and specifically, the production that comes from the non-formal sector. As we mentioned above, this will help improve the estimates of the National Accounts concerning this sector, since to date measurements have been made with the assistance of the results from the Household Survey.


Among other objectives, the results from the survey will make it possible to create a basis for analysing the situation on the ground, allowing identification of areas of economic activity, and the regions where this activity is most significant, to assess the growth trends of the phenomenon in various areas of activity and/or different regions with different characteristics, among other aspects. For example, this survey will make it possible to understand, much better than previously, what importance the informal sector has in employing the active population, what income individuals and households obtain from work in this sector, and also how each of the economic activities in the sector contributes to the national product.


Beyond Mozambican borders
At international level, there is consensus around the perception that the informal economy is increasingly taking on a significant role in the economy of states, particularly in developing countries. Bearing witness to this fact is a gradual increase in the number of surveys in recent years, in several parts of the world. There has also been considerable progress in seeking to harmonise concepts and methods in producing sector statistics, on the part of the major international institutions, among other aspects.


By way of example, we can cite the 15th International Conference on Labour Statistics, which produced recommendations concerning employment statistics and on the informal sector (1993); the 3rd revision of the System of National Accounts of the United Nations (SNA) which produced instructions on the way to deal with the Informal Sector; the production, by the OECD, of the Manual that guides measurement of the “Non Observed Economy - NOE” which remits to the SNA – 93 the definition of the terms to be used.


The informal sector may be characterised as consisting of units involved in the production of goods or services, with the primary purpose of generating employment and income for the individuals linked to those activities. These units typically operate with a low level of organisation, with little or no division between labour and capital, as factors of production, and on a lesser scale. Labour relations – where they exist – are mostly based on casual labour, kinship, personal or social relationships, and not on formally guaranteed social arrangements.


The first African experience was in 1993 (Yaoundé, Cameroon). Mexico was the pioneer (1986). Then followed several countries in Latin America and sub-Saharan Africa (including Madagascar and seven West African countries), China, Morocco, Algeria and Bangladesh. Currently, projects are under way in Burundi, Congo, RDC, Guinea-Conakry and Rwanda.