Policy Paper: Alternative Financing for Informal Businesses to Propel Youth Entrepreneurship in Sub-Saharan Africa

Youth Business International (YBI)
What is it?

Youth Business International's policy paper ‘Alternative Financing for Informal Businesses to Propel Youth Entrepreneurship in Sub-Saharan Africa’ shines a light on the important role of informal businesses in the region and the barriers they face that prevent them from scaling up, with a particular focus on women-led informal businesses in Kenya.

Informal businesses form a substantial part of the economy and in Sub-Saharan Africa 85% of employment is informal, according to the International Labour Organization (ILO). These businesses, despite being unregistered and lacking formal structure, provide vital income-generating opportunities for marginalized groups, particularly women and youth. However, their growth potential is regularly hampered by a lack of access to finance due preventing them from scaling up, creating jobs and contributing to economies.

In this paper, YBI provides recommendations on how to increase access to finance for informal businesses, including offering alternative financing models, financial literacy initiatives, specialized support for marginalized groups, tailored support services, and simplifying policy frameworks.


To increase access to finance for informal businesses in sub-Saharan Africa, YBI calls for governments, financial institutions, and development agencies to:

  • Offer alternative financing models and partner with community-based organisations specifically targeted at informal businesses and provide microloans, alternative credit scores ?and? guarantor arrangements, complemented by a holistic package of financial literacy support.  
  • Partner with local organisations to provide financial literacy initiatives tailored and accessible to marginalised groups who are more likely to operate in the informal sector.  
  • ??Support marginalised groups, including young people, women, people with disabilities, refugees and migrants, and ethnic or religious minority groups, ?to? navigate regulations and harmful stereotypes that ?prevent them from building an enterprise.??  
  • Tailor all support services and financing models to the marginalised groups mentioned above, addressing their specific needs and challenges.   
  • Simplify policy frameworks for formal business registration and access? to? finance.