The Economic Community of West African States (ECOWAS) Parliament has raised concern over the dominance of the informal sector in West Africa, warning that nearly 90 per cent of economic activities and at least 60 per cent of the region’s workforce remain outside the formal economy, a situation lawmakers said is undermining economic growth, job creation and regional 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 central to achieving economic transformation, reducing poverty and addressing insecurity across the sub-region.
The warning came at the opening of a Joint Committee meeting of the ECOWAS Parliament in Cotonou, Republic of Benin, where lawmakers, policy experts, 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 statistics reflected both the entrepreneurial resilience of West Africans and the failure of existing policies to support business growth.
According to him, while MSMEs remain the backbone of local economies by creating jobs, driving innovation, promoting entrepreneurship, empowering women and youths and facilitating cross-border trade, the overwhelming majority continue to operate informally, preventing them from accessing 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 was no longer just an economic objective but a strategic necessity for poverty reduction, sustainable development and regional integration.
Darbo urged ECOWAS member states to dismantle barriers limiting the growth of MSMEs through harmonised policies, improved access to finance, digital transformation, stronger productive capacity and greater participation in regional value chains under both 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 argued that expanding opportunities for women and young people through thriving MSMEs would help reduce unemployment and address some of the underlying drivers of insecurity confronting several ECOWAS member states.
According to her, empowering citizens to participate meaningfully in economic activities is one of the most effective long-term strategies for promoting peace and stability in the region.
The committee is expected to produce recommendations for consideration by ECOWAS institutions and member states, with the aim of creating a more business-friendly environment capable of accelerating industrialisation, 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 are recognised as the largest source of employment outside government. Despite their importance, many operate in the informal economy because of burdensome regulations, multiple taxation, inadequate infrastructure, limited access to affordable finance and weak institutional support.
The challenge has become more pressing 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 and formalised businesses capable of participating in cross-border commerce.
Economic experts have repeatedly argued that bringing more businesses into the formal sector would expand government revenues, improve access to credit, strengthen productivity and position West Africa to compete more effectively in the global economy.
