In developing countries, there are businesses and individuals who work in the informal sector of the economy. The informal sector is made up of firms whose operations are unregistered and operate outside the purview of tax authorities. Their modus operandi is based on informal skilled labour supply while most operate out of kiosks, and homes or obscure locations that make it difficult for the tax operators to capture them within the tax net. In Sub-Saharan Africa, the informal sector forms a significant portion of the economy in terms of employment, downstream production and innovation. However, their contributions to national development have not been properly captured in the economic development process.
Therefore, the current development paradigm is shifting attention to transforming the informal sector economies aimed at regularising their operations to enable them to access modern business tools and credit provided by the formal financial system. The transformation of the informal sector business will lead to increased incomes for their households. This is based its size in terms of employment and income.
One way to orchestrate this transformation is by closing the knowledge gap that exists between the formal and informal sector firms. The universities play a role in the research and teaching of new knowledge for graduates who get employed in the formal sector. There is, however, a disconnect between the universities and the informal sector. The research and teaching activities of universities don’t benefit the informal sector. The transformation process will require a change in curricular of the universities that will aggressively address the knowledge needs of informal sector firms. A way to transfer knowledge to these firms through co-design and co-production of innovation is key to the transformation process.
Universities can move their classrooms to the workshops of these firms and offer evening classes where new production knowledge and processes are transferred to the informal sector firms. This process should be less formal but acknowledge the needs of these firms production activities. The firms are looking for ways to produce innovations at a low-cost that are affordable to the low-income population. Universities can play a key role in this transformation process.