Informal yet organized: Can business associations be harnessed for development?

The views expressed in the Let’s Talk Development blog are solely those of the author(s).

Informal firms, typically microenterprises, are central to the economic life of many African countries. They employ large shares of the workforce, fill gaps in service delivery, and form a key part of local markets. Yet, despite their prevalence, they remain difficult to reach through traditional policy channels.

In our recent study across seven Sub-Saharan African countries, we looked at one potential—but understudied—mechanism to support informal firms: business associations (BAs). These organizations are visible actors of the informal economy, yet little is known about their membership patterns, functions, and potential as partners for development programming.
 

What We Found: Low Membership, High Variation

Across the sample, fewer than 10% of informal business owners are members of a business association. However, this average masks a significant variation. In some sectors—such as transport, artisanal trades, and certain services—membership is much more common. Some countries, like Benin or Togo, also exhibit higher membership rates than others.

Members of these business associations tend to be older, larger, and more established firms, often led by male owners. This profile raises important questions around which firms would be reached through such organizations. If associations mainly serve established businesses, they may not represent the broader informal sector—and could stifle competition and contribute to unequal firm development and opportunities to reach high-potential but smaller firms.

Associations act as service providers. Traders use associations to access credit or access large orders; Tailors receive technical training and access to modern machines; transporters rely on associations to solve disputes with competitors or to link with the administration etc. Members voluntarily join these associations and pay sometimes significant dues. And these services appear to matter; even when comparing observably similar businesses, association members are more productive, more profitable, and more financially included. Whether these gains improve overall welfare or are at the expense of non-members remains to be determined.
 

What This Means for Development Practitioners

These findings suggest that business associations, while not a universal solution, offer a promising entry point for supporting informal businesses in specific sectors and contexts.

Here are a few key implications:

• Associations might serve as valuable delivery partners for social protection programs or productivity-boosting interventions, especially for microenterprises with employees and extended networks. Reaching members could also indirectly benefit others in their ecosystem.
• Associations already offer some of the services that development practitioners recommend for microenterprise growth (financial inclusion, technical training, help with procurement, access to larger orders). Ignoring this role can lead to ineffective programs. Instead, drawing on associations’ experience to design the right intervention to the right targets could be key.
• Understanding membership patterns is critical to using BAs effectively in program targeting. Knowing who is inside—and who is outside—these networks matters for design and impact.
• Governments can play a role in expanding and engaging associations to promote fairer access and enhance the benefits they offer. Support to associations could help improve reaching a wide range of informal firms, encouraging outreach to women-owned and newer entrepreneurs, or incentivizing broader member services.

Finally, we emphasize the need to explore how business associations overlap with other types of networks—such as cooperatives, community groups, or savings circles—to identify complementarities and expand reach.
 

Looking Ahead

Business associations are just one piece of the informal sector puzzle in Africa, but they may hold untapped potential for extending support and improving performance among micro and small firms. By better understanding their role—and recognizing both their strengths and limitations—development actors can design smarter interventions that meet informal entrepreneurs where they are.