Businesses Must Understand Informal Markets to Succeed

The Africa Retail Academy of Lagos Business School cautions that businesses aiming at Africa's informal economy risk failure if they impose strategies meant for formal institutions without grasping local market dynamics. Prof. Uchenna Uzo, the Academic Director, stated that many businesses falter in informal markets due to a lack of understanding of their operations.

Speaking at the executive programme "Winning in Africa’s Informal Economy" held in Lagos on July 28 and 29, Uzo highlighted three myths that obstruct comprehension of informal markets: the belief that they are illegal, that market players lack business acumen, and that they are a homogeneous entity. Uzo's ten years of research reveal that informal markets are fragmented, comprising legitimate businesses, hybrid operators, and grey market players.

The programme gathered senior executives and policymakers to explore strategies for competing in this sector, which accounts for over 90% of retail transactions in Africa and contributes about 48% of Nigeria's economic output.