Can Africa’s informal economy become the continent’s next investment frontier? {Business Africa}

Most of Africa’s economy operates in the shadows—at least on paper. An estimated 85% of workers are active in the informal sector, conducting business beyond official systems, often through cash-based, trust-driven transactions.

For global investors, this lack of formal data has long signaled risk. But beneath that perception lies a different reality: a vast, resilient, and dynamic economic engine. The question is no longer whether Africa’s informal economy matters—but whether it can be transformed into a viable investment frontier.

To understand how this shift is already underway, we spoke to Richard Okello, Co-Founder and Partner at Sango Capital, a firm deploying up to $1 billion to bridge the gap between informal markets and institutional capital.

Sango Capital’s strategy focuses on converting what many describe as Africa’s “handshake economy” into structured, investable opportunities. By identifying high-performing informal businesses and integrating them into formal value chains, the firm aims to reduce perceived risk while unlocking scalable returns.

A key challenge remains: how to replicate this model across the continent. Is it a question of building stronger digital infrastructure to capture data and transactions? Or should governments prioritize regulatory reforms that recognize informal traders as legitimate economic actors, capable of accessing credit and investment?

At a time of global uncertainty—heightened by geopolitical tensions such as those between Iran and Israel—Africa’s informal consumer base may offer a surprising advantage. Less exposed to volatile financial markets, these cash-driven economies often demonstrate resilience, making them an increasingly attractive hedge for investors, particularly from the Gulf.

Kenya’s Property Push Faces Supply Gap

Elsewhere on the continent, Kenya’s real estate sector is expanding steadily, with growth estimated at 5.7%. Yet, despite this progress, the market continues to fall significantly short of demand.

The government has set ambitious targets to deliver more affordable housing by 2026, aiming to address a growing urban population and housing deficit. However, private developers are facing mounting competition as new entrants and state-backed initiatives reshape the landscape.

Rising construction costs, access to financing, and land availability remain key challenges, even as demand for affordable housing continues to surge. For many Kenyans, home ownership still feels out of reach, highlighting the urgent need for innovative financing models and public-private partnerships.

Burundi’s Youth Marketplace Model Gains Momentum

In Burundi, a different kind of economic transformation is taking place—one driven by youth entrepreneurship.

At the Kigega marketplace in Bujumbura, nearly 90 youth-led businesses have found a platform to scale their activities. The concept is simple but effective: the marketplace manages sales and distribution, allowing young creators to focus entirely on production.

Backed by government support, the initiative is already showing tangible results. In just one month, over $20,000 has been paid out to participating entrepreneurs—a significant boost in a country where access to markets is often a major barrier.

Beyond the numbers, Kigega represents a broader shift toward structured support for informal and small-scale businesses. By reducing the friction between production and market access, it offers a blueprint for empowering Africa’s next generation of entrepreneurs.