Sub-Saharan Africa has millions of nonfarm workers engaged in small and household enterprises outside formal wage employment, constituting the informal sector. Previously seen as a pool of surplus labor expected to be absorbed by future industrialization, this sector has instead become a persistent feature of the region’s economic landscape, and accounts for a majority of new jobs created off the farm.

Expanding the sector’s potential as a source of employment for the region’s growing workforce and improving its productivity and earnings are priorities for poverty reduction. This publication examines the role played by education and skills development in serving these priorities.

The study looks at how formal education, technical and vocational education and training, apprenticeships, and on-the-job learning shape employment and earnings in the informal sector in five countries: Ghana, Kenya, Nigeria, Rwanda, and Tanzania, that together account for one-third of the nearly 900 million people living in Sub-Saharan Africa. In particular, the paper examines: (a) the employment characteristics of the informal sector, (b) its size and impact on poverty, (c) the profile of education and training in the informal and formal sectors and the links with employment and earnings, and (d) the skills development strategies of those working in the informal sector.

The importance of this study is its quantitative assessment, using household surveys, of the relationship of different sources of skills development to the sector in which one works and to one’s earnings. The paper also examines a set of economic constraints to skills development and offers an insightful approach to improving employment outcomes, including examples of successful interventions taken from the five countries and elsewhere.