This news item features an interview with Professor Erika Kraemer-Mbula, Research Chair in Transformative Innovation, University of Johannesburg, co-author of “The Informal Economy in Developing Nations: Hidden Engine of Innovation?”; and Sacha Wunsch-Vincent, Co-Editor of the Global Innovation Index (GII) and Head, Section, Department for Economics and Data Analytics at WIPO. The discussion reflects on the project’s legacy and its relevance today.
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Fourteen years ago, WIPO launched a pioneering project under its Development Agenda (DA) to explore how innovation takes place in the informal economy. Focusing initially on Kenya, South Africa and Ghana, the project challenged prevailing assumptions that innovation is driven mainly by formal firms, research laboratories and patent-based systems. Instead, it highlighted that informal enterprises develop new products, adapt technologies, and improve processes without relying on formal research and development, or traditional IP systems.
A project rooted in development realities
In 2012, the Committee on Development and Intellectual Property (CDIP) adopted the project on Intellectual Property and the Informal Economy in response to a clear policy gap. In many developing countries, the majority of economic activity takes place informally, yet innovation policy and intellectual property frameworks largely overlooked this space.
In sub-Saharan Africa, for example, the informal economy accounts for around 80% of total employment and more than 90% of micro and small enterprises, according to ILO estimates. Despite its scale, informal economic activity was often framed as static, low-productivity and survival-oriented. The WIPO project set out to test these assumptions through sectoral case studies in metal manufacturing (Kenya), chemical sector (South Africa), and traditional medicines (Ghana), the project documented forms of innovation rooted in learning-by-doing, experimentation, collaboration and local diffusion. These innovations were frequently incremental, but highly relevant to local needs, markets and resource constraints.
Key findings and policy relevance
One of the project’s central findings was that innovation in the informal economy is widespread, continuous and systematic. Informal practices regularly introduce new or improved products and processes to respond to customer demand, overcome infrastructure failures, or adapt imported technologies to local conditions. In many cases, informal enterprises innovate in close interaction with formal practices, suppliers and customers.
Rather than relying on patents or formal IP rights, informal innovators typically use alternative mechanisms to capture value. These include speed to market, product quality, branding, reputation, customer loyalty and social networks. While such mechanisms can be effective at small scale, the research also showed that weak appropriation mechanisms often constrain growth. The ease with which innovations could be copied facilitated quick dissemination, but also discouraged investment and limited the ability of informal firms to scale beyond local markets.
Crucially, the project also broke new ground by proposing measurement approaches for informal innovation. By adapting innovation surveys and moving beyond research and development-based indicators, the research demonstrated that countries could generate evidence on innovation outcomes in informal enterprises, an essential step for informed policymaking.
Impact and outlook
Since its completion, the project has had a lasting influence on research, policy dialogue and development practice. The concept of “informal innovation” has gained traction in academic literature and policy reports, helping to broaden the understanding of what counts as innovation. In South Africa, for example, public bodies like the Human Sciences Research Council, have piloted national data collection efforts on innovation in informal enterprises, while international organizations have increasingly incorporated informal actors into programs on entrepreneurship, productivity and inclusive growth.
The project also contributed to the emergence of a network of researchers and policymakers across Africa, many of whom now play leading roles in national and regional innovation initiatives. Citing one example of this continued momentum, the United Nations Development Program (UNDP), via its Accelerator Labs Network and in collaboration with universities, released a report called “Making the Invisible Visible: Informal Innovation in South Africa” in 2023, which sheds light on the many informal innovators invisible to most organizations but whose knowledge could unlock progress toward the Sustainable Development Goals. This shift in mindset which recognized informal actors as innovators rather than policy afterthoughts, remains one of the project’s most important legacies.
Looking ahead, new dynamics are reshaping the innovation landscape. Digitalization is lowering barriers to entry, enabling informal enterprises to access mobile payments, online marketplaces and digital tools for production and marketing. At the same time, regional integration, particularly through the African Continental Free Trade Area (AfCFTA), offers opportunities for small and informal businesses to participate in regional value chains. Notably, several African economies continue to outperform on innovation relative to their level of development, as reflected in WIPO’s Global Innovation Index 2025.
However, persistent challenges remain. Chronic underinvestment in research and development, limited access to finance, infrastructure gaps, and weak links between formal and informal innovation systems continue to constrain inclusive innovation outcomes. Inequality in participation by firm size, gender and location, also risks leaving many informal innovators behind.
Against this backdrop, the findings of the WIPO Development Agenda project remain highly relevant. They continue to inform efforts to design inclusive, flexible and evidence-based innovation policies that reflect local realities and support everyday problem-solving. As the global focus shifts toward sustainable, resilient and just transitions, innovation in the informal economy is no longer peripheral, it is central to the development conversation.
Find out more
- Development Agenda for WIPO
- Committee on Development and Intellectual Property (CDIP)
- Global Innovation Index (GII)
- Outputs of the DA Project on Intellectual Property and the Informal Economy