The Economic Community of West African States (ECOWAS) Parliament has raised concerns over the dominance of the informal sector in West Africa, warning that nearly 90 per cent of the region’s economic activities and at least 60 per cent of its workforce remain outside the formal economy.
Lawmakers said the trend continues to undermine economic growth, job creation and the region’s global competitiveness.
The parliament on Monday called for far-reaching policy reforms to formalise and strengthen Micro, Small and Medium Enterprises (MSMEs), describing the sector as critical to driving economic transformation, reducing poverty and tackling insecurity across the sub-region.
The warning was issued at the opening of a Joint Committee meeting of the ECOWAS Parliament in Cotonou, Republic of Benin, where lawmakers, policymakers, private sector operators and development partners began deliberations on strategies to integrate millions of informal businesses into the formal economy.
Delivering the opening remarks on behalf of the Joint Committee on Industry and Private Sector, Macroeconomic Policy and Economic Research, Administration, Finance and Budget, and Public Accounts, Co-Chairperson Hon. Alhagie Darbo said the figures reflected both the entrepreneurial resilience of West Africans and the failure of existing policies to adequately support business growth.
According to him, although MSMEs remain the backbone of local economies by creating jobs, promoting innovation, encouraging entrepreneurship, empowering women and youths, and facilitating cross-border trade, the vast majority continue to operate informally, limiting their access to finance, technology, markets, business support services and legal protection.
“It is estimated that the informal sector accounts for nearly 90 per cent of economic activities and employs not less than 60 per cent of our labour force across member states,” Darbo said.
“While this demonstrates the entrepreneurial spirit of our people, it also highlights the urgent need to create enabling policies that encourage formalisation, improve productivity and integrate MSMEs into regional and continental value chains.”
He stressed that formalising small businesses is no longer just an economic objective but a strategic necessity for poverty reduction, sustainable development and regional integration.
Darbo urged ECOWAS member states to remove barriers hindering the growth of MSMEs through harmonised policies, improved access to finance, digital transformation, stronger productive capacity and greater participation in regional value chains under the ECOWAS Trade Liberalisation Scheme (ETLS) and the African Continental Free Trade Area (AfCFTA).
He noted that the objectives align with ECOWAS Vision 2050, the regional bloc’s long-term development agenda aimed at building a peaceful, prosperous and fully integrated West Africa driven by inclusive economic growth.
Declaring the meeting open, Speaker of the ECOWAS Parliament, Hon. Hadja Memounatou Ibrahima, represented by Second Deputy Speaker Hon. Adjaratou Coulibaly, linked economic empowerment to the region’s growing security challenges.
She said expanding opportunities for women and young people through thriving MSMEs would help reduce unemployment and address some of the underlying causes of insecurity confronting several ECOWAS member states.
According to her, empowering citizens to participate meaningfully in economic activities remains one of the most effective long-term strategies for promoting peace, stability and sustainable development across the region.
The committee is expected to submit recommendations to ECOWAS institutions and member states aimed at creating a more business-friendly environment, accelerating industrialization, boosting intra-African trade and making West African economies more globally competitive.
MSMEs account for more than 90 per cent of businesses in many African countries and remain the largest source of employment outside the public sector. However, many continue to operate in the informal economy due to burdensome regulations, multiple taxation, inadequate infrastructure, limited access to affordable finance and weak institutional support.
The challenge has become increasingly urgent as ECOWAS intensifies efforts to deepen regional integration through the ECOWAS Trade Liberalisation Scheme and the African Continental Free Trade Area, both of which require competitive, productive and formalised businesses capable of participating effectively in cross-border trade.
Economic experts have consistently argued that bringing more businesses into the formal sector would expand government revenue, improve access to credit, boost productivity and strengthen West Africa’s competitiveness in the global economy.
