Unlocking the Potential of Cameroon’s Informal Sector in the Implementation of the AfCFTA

Introduction

The Cameroonian economy relies heavily on its informal sector, which contributes 50% of GDP and employs nearly 90% of the active workforce (INS, 2023). Present in agriculture, local trade, services, and crafts, this sector remains characterized by low productivity, a lack of social protection, and limited integration into regional and international value chains.

The implementation of the African Continental Free Trade Area (AfCFTA) will transform the agricultural and agri-food sector, enabling it to access new markets, improve its competitiveness, and strengthen its gradual formalization. According to our research at CEPI and the World Bank, the AfCFTA should help reduce agricultural prices and, more broadly, inflation. However, without appropriate policies, informal actors’ risk being left on the sidelines of this continental dynamic. It should be noted that only agricultural products integrated into the chemical industry could become truly competitive (corn used for the production of methanol or other industrial inputs, etc.).

This Brief analyzes the role of the informal sector in the Cameroonian economy and how the AfCFTA can become a lever for transformation, before making concrete policy recommendations to unlock the full potential of this sector.

Section 1. Overview of the Informal Sector in Cameroon

The informal sector employs nearly 9 out of 10 workers, the majority of whom are young people and women (ILO, 2021).

This informal economy plays a vital role in reducing unemployment and acting as a buffer against poverty. It is also dynamic: the creation of informal activities is growing faster than that of formal businesses (Djamo & Kouam, 2024). However, the sector is limited by several constraints: low productivity, precarious incomes, poor access to bank credit, lack of training, and absence of quality standards (Botea et al., 2022).

In the context of the AfCFTA, these weaknesses risk hindering regional integration if they are not addressed. On the other hand, with targeted policies, the informal sector could become a key player in the export of goods and services, particularly in agri-food, crafts, and cross-border trade, areas where it is already dominant.

Section 2. Challenges for Cameroonian Informal Sector Enterprises in the Context of the AfCFTA

• Formalization of informal sector enterprises

Current policies mainly target already formal enterprises, without addressing the specific constraints of the informal sector. The cost of registration remains high and the digitization of tax procedures remains insufficient, which discourages registration. However, these businesses account for more than 50% of GDP (ILO, 2017). Reducing costs, simplifying and digitizing procedures are essential to encourage their transition to formality.   

• Increased competition in regional markets

The removal of certain tariff and non-tariff barriers under the AfCFTA will lead to competition from foreign products, which are sometimes of a higher standard than ours in areas such as manufacturing.

• Improvement of production and distribution capacities

Improving production capacities for businesses in the informal sector remains a challenge and an ongoing objective. Performance requires the use of skilled labor, the availability of financing, the modernization of production tools, and the construction of infrastructure (transportation, energy, telecommunications, sanitation).

According to the World Bank’s Logistics Performance Index (LPI 2023), Cameroon is ranked 138th out of 168 countries. This indicator, which assesses the performance of logistics infrastructure, clearly shows the efforts that Cameroon needs to make to improve it. The lack of better-quality infrastructure significantly increases logistics costs and directly affects competitiveness.

Section 3. Opportunities Offered by the AfCFTA for the Informal Sector

The AfCFTA opens up major opportunities for Cameroon’s informal sector, which accounts for nearly 90% of employment and 60% of GDP (Kouam H. and Dang A., 2024).

Access to new markets is a key opportunity: while direct export remains difficult for most small players, their integration into national and regional value chains will be strengthened by the expected 53% increase in intra-African trade (IMF). This will boost craft, commercial, and service activities.

In addition, protocols on investment and dispute settlement provide a framework of transparency and legal certainty that can indirectly protect informal operators and promote partnerships with formal businesses.

Section 4. How is the informal sector adapting to the implementation of the AfCFTA in Cameroon?

Adaptation appears to be difficult for informal sector actors due to their difficulties in formalizing their structures, accessing financing, obtaining certifications for their products, and understanding the various regulations governing external markets.

Nevertheless, initiatives are being implemented by public actors such as the National Shippers’ Council of Cameroon, the Cameroon Economic Policy Institute (CEPI), and AFREXIMBANK, which has been offering training and awareness seminars on the opportunities of the AfCFTA since 2023.

Section 5. How the State Supports the Informal Sector in the Implementation of the AfCFTA

One-stop shops for business creation have been set up to simplify registration procedures, while programs such as PIAASI (Integrated Support Program for Informal Sector Actors) aim to improve access to financing and training.

On the fiscal front, incentives have been introduced, such as the flat tax regime, allowing small traders to contribute without administrative burdens.

In addition, the government, with support from the African Development Bank and other partners, is implementing microcredit and digital payment projects to reduce dependence on cash and improve traceability (AfDB, 2025). This includes a high-level AFAWA mission to strengthen existing initiatives. Another example is the CAP2E initiative, a skills development, self-employment, and entrepreneurship project in the Far North, financed by a €136 million loan approved in September 2025. However, efforts remain fragmented and sometimes ill-suited to the realities on the ground. The lack of social protection mechanisms for informal workers and the lack of awareness of the opportunities offered by the AfCFTA are hampering the impact of these initiatives.

Section 6. Policy Recommendations

Access to inclusive finance: Develop appropriate microfinance mechanisms, with preferential rates and public guarantees, to enable small producers and traders to invest in quality and exports.

Strengthen skills and digitalization: Develop technical training, particularly for women and young people, while facilitating access to quality certifications. At the same time, promote the use of digital payment, trade, and logistics tools to reduce costs, secure transactions, and improve access to regional markets.

Gradual integration: Create regulated cross-border trade zones where informal actors can legally sell their products under a simplified tax regime with a card that allows them to cross borders.

Institutional dialogue: Establish mechanisms for regular consultation between the state, associations of informal actors, and technical partners in order to jointly develop appropriate policies.

Conclusion

No one can deny that the informal sector in Cameroon is very dynamic and remains a major source of employment. However, it faces a multitude of endogenous constraints that prevent it from fully exploiting its potential. Its strong presence in several areas, particularly trade, services, agriculture, livestock, and agro-industry, offers interesting prospects.

The AfCFTA thus presents an opportunity to formalize businesses operating in the informal sector and enable them to contribute significantly to the economy.

Free trade agreements are not only intended to facilitate imports of goods and services, but also to accelerate structural transformation by improving competitiveness in order to face competition in regional markets.

References

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AUTHORS

Akono Ronald

Research Fellow

&

Haiwang Djamo

National Coordinator & Research Analyst

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