Shifting Gears: From Informal Economies to Digital Enterprises in Zambia

Abstract

Transitioning from a predominantly informal economy to a burgeoning digital one has become a central concern for African governments, including Zambia. Digital enterprises, ICT-enabled commercial ventures leveraging broadband, mobile, cloud, and other internet-based technologies are emerging across the continent’s economic, social, and political spheres. This study examines Zambia’s informal sector, outlining its longstanding role and the obstacles it faces in formalizing, then explores how the adoption of digital technologies is fostering digital entrepreneurship and a new wave of digital enterprises. Internal and international migration contributed to the rapid growth of informal economies in the 20th century. Informal foreign currency trading evolved into parallel (black) foreign exchange markets in Zimbabwe and Zambia. Informal economies enabled a growing number of migrant workers to meet their basic needs and financing costs. Migration also increased demand for small-scale agricultural and construction activities, which remain important features of informal economies across sub-Saharan Africa. Moreover, agriculture, construction, accommodation, and food sectors already dominate informal enterprises alongside those provided by non-African migrants.