The Voice Journal

1. Introduction and Background

The informal economy in Rwanda is more than a shadow beneath the formal—it is the main stage upon which the economic lives of millions are performed. According to the National Institute of Statistics of Rwanda (2022), over 80% of the workforce participates in informal economic activity, ranging from street vending and artisanal trades to small-scale transportation services. While often described as precarious or chaotic, this domain reveals a different reality under scrutiny: one of structured relationships, adaptive norms, and innovation born of necessity.

This article investigates the dynamics of Rwanda’s informal sector through a livelihoods lens. It focuses on three sites—Nyabugogo transport hub, Kimironko market, and rural trading posts in Northern Province—using ethnographic observations and interviews to map how actors such as boda boda drivers, tailors, fruit vendors, and mobile money agents weather external shocks. Crises like the COVID-19 lockdowns, inflationary spikes, and digital regulatory shifts have tested the agility of these systems. Yet, what emerges is not just survival, but a form of resilience that policy narratives often miss. By rethinking the informal economy not as a barrier to progress but as a site of embedded intelligence, we uncover vital insights into people-powered economics.

2. Conceptual Framework and Methodology

This study is grounded in the Sustainable Livelihoods Framework (SLF), which emphasizes the interplay of assets, contexts, strategies, and outcomes in understanding how people make a living. The framework accounts for five key assets—human, social, natural, physical, and financial capital—and how these are mobilized amid vulnerability and institutional conditions. In this analysis, the SLF is augmented with principles from participatory economics, which highlight self-managed economic structures, horizontal decision-making, and solidarity-based networks often observable in informal market systems.

Methodologically, the study adopts a qualitative, multi-sited ethnographic approach. Data were gathered through field observations, informal interviews, and participatory mapping exercises conducted in Kigali’s Nyabugogo and Kimironko areas, and in Gakenke and Musanze districts. Participants included market vendors, boda boda drivers, informal money agents, street food sellers, and community cooperative leaders. This grounded, people-centered methodology allowed us to trace real-time adaptations to crises such as pandemic lockdowns, inflation, and mobile money policy shifts. Ethical considerations included anonymity, informed consent, and reciprocity through feedback sessions with local associations.

3. Mapping the Informal Economy in Practice

In Nyabugogo, one of Kigali’s busiest transport nodes, the informal sector pulses with energy. Boda boda drivers form cooperatives not only to regulate pricing but also to offer mutual support during police crackdowns or fuel price hikes. Informal vendors in the bus park—selling snacks, airtime, and phone accessories—organize in clusters and rotate shifts based on demand surges around commuting hours. These are not random actors but part of a sophisticated network of embedded practices that respond to real-time needs.

At Kimironko Market, spatial arrangements are anything but accidental. Tailors, food vendors, and second-hand clothing sellers often pay informal ‘rental’ to early-arriving stallholders or local gatekeepers. Despite lacking official recognition, these transactions are governed by internal ethics of fairness and trust. Mobile money agents are central players in this micro-ecosystem, acting not only as financial intermediaries but also as informal credit providers to neighboring traders.

In rural trading posts such as those in Gakenke and Musanze, informality takes a different but equally structured form. Women-led cooperatives dominate fruit and vegetable stalls, while itinerant vendors operate on market-day cycles that are synchronized across hillsides. Information flows through word-of-mouth and mobile phones, allowing vendors to adjust stock based on weather, road accessibility, and crop cycles. In these zones, social capital is often the most valuable asset—facilitating entry, negotiations, and survival strategies during lean seasons.

4. Coping with Crisis – Informal Strategies During Shocks

When formal systems falter, the informal sector often acts as the first line of defense. During the COVID-19 lockdowns, street vendors in Kigali adopted mobile-based ordering systems and door-to-door delivery services to maintain a revenue stream despite movement restrictions. Boda boda drivers formed rapid-response collectives to share fuel costs and coordinate essential deliveries, while tailors began producing cloth face masks to meet both health needs and household income shortfalls.

In rural areas, traders adapted to movement restrictions by leveraging kinship networks to distribute goods across district lines through informal ‘relay’ systems. Farmers partnered with mobile money agents to pre-sell crops via digital payments, circumventing physical transport hurdles. Women in informal cooperatives repurposed savings groups into crisis funds, enabling rotating emergency access to small capital injections during periods of illness or food scarcity.

Inflation has prompted a recalibration of pricing systems, with informal traders introducing flexible pricing tiers based on customer familiarity and volume. Mobile money transaction limits and new tax policies in 2021 initially disrupted operations, but vendors quickly innovated workarounds—including rotating SIM cards and collective pooling of transactions—to maintain their liquidity and credit relationships.

5. Innovation, Agency, and Everyday Economics

Beyond coping, Rwanda’s informal economy thrives on a form of everyday innovation that transforms constraints into opportunities. From mobile phone-based savings clubs to rotating stall-sharing arrangements, informal actors consistently experiment with low-cost, high-ingenuity solutions to systemic barriers. Boda boda associations have started GPS-based informal apps to coordinate pickups and improve rider safety in high-traffic zones—without formal sector support or subsidies.

Women traders in Kimironko and Musanze have pioneered multi-use stalls, rotating between food, garments, and seasonal products based on demand trends tracked through informal WhatsApp groups. Meanwhile, street hawkers have redesigned their mobile displays to maximize mobility, minimize enforcement encounters, and appeal to customer convenience, often mimicking modern retail layouts in miniature.

These are not accidental adaptations but deliberate expressions of economic agency. They represent a knowledge system built on proximity to customers, iterative learning, and localized resourcefulness. Such micro-innovations may not appear in GDP figures, yet they are instrumental in maintaining economic circulation, fostering employment, and building household-level resilience—particularly for urban youth and women-headed families often excluded from formal job markets.

6. Policy Blind Spots and Institutional Responses

Despite its centrality to Rwanda’s economic life, the informal sector remains marginalized in formal policy discourse. Government frameworks such as Vision 2050 and the National Strategy for Transformation (NST1) acknowledge the informal economy, but often with the aim of formalizing or regulating it, rather than supporting its organic strengths. This has led to blind spots in planning—where informal workers are seen primarily as a problem to be solved rather than contributors to national resilience.

For example, tax policy reforms in 2021 placed unexpected transaction levies on mobile money services, disproportionately affecting informal traders who rely on digital transfers for daily operations. Similarly, COVID-19 emergency responses prioritized formal businesses with access to bank credit, leaving informal vendors dependent on mutual aid networks. While the Rwanda Social Security Board has initiated pilot programs to integrate informal workers into pension schemes, uptake remains low due to lack of trust, financial constraints, and bureaucratic hurdles.

That said, there are signs of institutional learning. Local governments have begun to engage with informal sector representatives more regularly, especially in market associations and transport unions. NGOs and civil society actors have played a key bridging role—facilitating digital literacy workshops, health campaigns, and community savings schemes. These initiatives suggest a nascent ecosystem of support that could be scaled up if policies embraced informality not as a barrier but as a foundation for inclusive development.

7. Rethinking Informality – Toward a New Economic Narrative

The informal economy in Rwanda is not a temporary aberration—it is a long-term, evolving institution with deep roots in social life, kinship structures, and entrepreneurial adaptation. To continue describing it merely as a policy deficit or regulatory challenge misses the more fundamental truth: informality reflects the actual architecture of livelihoods for the majority. It is shaped by necessity, but sustained by agency, networks, and lived economic wisdom.

Rethinking informality requires a shift from a deficit framework to one of productive pluralism. This means recognizing the informal economy not just as a site of hardship, but also of dignity, skill, and social organization. It demands that we foreground the contributions of boda riders, women traders, and market innovators not as fringe actors, but as central economic agents. Their adaptability during crisis periods—be it a pandemic, inflation, or digital regulation—is not incidental; it is instructive. It reveals the contours of an economy built from below, guided by relevance, responsiveness, and relational trust.

A new narrative of informality also necessitates policy reform rooted in co-creation. Instead of formalizing from the top down, governments and institutions can explore hybrid models of support—where regulation respects context, and growth strategies draw upon grassroots knowledge. By valuing informality as a legitimate form of economic organization, Rwanda has an opportunity to set a precedent for inclusive development pathways across Africa and beyond.

8. Conclusion – Informality as Infrastructure of Survival

Rwanda’s informal sector is more than a buffer in times of hardship—it is an infrastructure of survival, adaptation, and opportunity. From roadside stalls to mobile-based cooperatives, informal economic actors craft resilient livelihoods out of limited resources and shifting conditions. They are the weavers of safety nets where formal systems often fail to reach, and the architects of solutions attuned to ground-level realities.

This article has shown that the informal economy in Rwanda is not merely reactive—it is actively generative. It produces economic value, social cohesion, and adaptive systems that merit deeper recognition in both scholarship and policy. As the country strives toward Vision 2050 and a knowledge-based economy, its development strategy must not marginalize the informal sector but integrate it meaningfully. Doing so is not only a matter of inclusion—it is a strategy for national resilience.

Embracing informality as part of Rwanda’s future, rather than a relic of its past, opens a pathway toward a more pluralistic and robust economic vision—one that honors the ingenuity of its people and builds development not just from the top down, but from the street corner up.

9. References

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