How Business Associations Shape West Africa’s Informal Sector And Who Gets Left Out

A World Bank study finds that fewer than 10% of West African microenterprises belong to business associations, which primarily serve older, male-run, and better-established firms. While membership is linked to improved performance, these associations risk reinforcing inequality unless made more inclusive.

A new World Bank Policy Research Working Paper authored by Clément Joubert and Kathleen Beegle, in collaboration with research teams from the World Bank’s Development Research Group, the Enterprise Survey Program, the Living Standards Measurement Study (LSMS), and Ghana’s Institute of Statistical Social and Economic Research (ISSER), explores the surprising role and limitations of business associations among microenterprises in West Africa. Drawing on large-scale surveys from six West African countries Benin, Burkina Faso, Guinea-Bissau, Niger, Senegal, and Togo and in-depth field studies in Ghana, the paper offers one of the most comprehensive examinations to date of how informal businesses organize, who gets to join these associations, and whether participation brings measurable benefits.

Business Associations: Few, Big in Potential

Despite the dominance of informal microenterprises in Africa’s labor market, only about 7 to 10 percent of business owners in West Africa are part of any organized business association. These associations are far more common in certain sectors, particularly among tailors, mechanics, personal care providers, and transport operators, where membership rates can exceed 30 percent in specific country-sector combinations. Notably, association membership becomes much more common when businesses grow beyond one employee. While associations are sparse overall, they may still function as important aggregators or intermediaries for delivering targeted government programs or development initiatives in industries where they are strong.

Yet, these networks are far from universal. In fact, the largest microenterprise segments, such as food vendors and small-scale traders, have notably lower membership rates, despite comprising the majority of informal businesses. This fragmentation means that policymakers cannot rely on business associations as a one-size-fits-all delivery mechanism but should instead treat them as entry points into specific, more organized sub-sectors of the informal economy.

Who Gets In? Barriers of Age, Gender, and Size

A central finding of the study is that business association members are not representative of the broader informal sector. Membership tends to be skewed toward older, better-educated, male business owners running larger and more established enterprises. These members are also more likely to operate from fixed premises, hold business licenses, and have obtained formal credit or loans, signaling a higher level of financial inclusion and maturity.

In contrast, women and younger entrepreneurs, who make up a large share of the informal workforce, are significantly underrepresented in associations. This demographic skew raises concerns about inequality and exclusion, suggesting that associations may inadvertently serve as gatekeepers that reinforce existing hierarchies rather than platforms for empowering marginalized business owners. These patterns mirror findings from higher-income countries, where associations have often been shown to favor incumbents and stifle competition.

Less Advocacy, More Services

Contrary to the image of business associations as political or advocacy vehicles, most in the West African informal sector function more like service providers. Members pay dues modest but meaningful in proportion to their income and in return receive services that are tightly tailored to their industry. For instance, tailors and healers gain access to training and equipment, while traders benefit from procurement help and access to credit. Transporters, meanwhile, rely on associations to resolve disputes and negotiate with authorities.

Very few members cited lobbying or collective action as core purposes of their associations. In fact, over 70 percent said that leaving their association would have no consequence, underscoring the voluntary and service-oriented nature of these groups. This also means associations rarely function as representatives of the informal sector at large, and their ability to mobilize politically or bargain for sector-wide improvements appears limited.

A Boost for Business? The Evidence Is Mixed

The study finds that business association membership is associated with better business outcomes, including 14 percent higher productivity, 15 percent higher profits per worker, and an 11 percentage point increase in access to formal credit. But the benefits are not uniform. Traders, in particular, show the strongest performance gains, likely due to better market access, improved procurement, and financial assistance gained through association networks. These findings align with existing research suggesting that networking enhances firm growth by reducing informational barriers and improving access to markets and finance.

However, not all sectors benefit equally. For example, tailors, despite being highly organized, sometimes show lower profits and productivity, a phenomenon the authors attribute to the apprenticeship systems managed by associations, which may dilute per-worker output. Overall, the study cautions against interpreting the correlation between membership and performance as causal. It is possible that more successful businesses self-select into associations or that members collaborate to limit competition from non-members.

A Tool for Inclusion or an Engine of Inequality?

This paper presents a nuanced view of how informal businesses are organized in West Africa. While business associations are far from widespread, they hold substantial potential as targeted channels for delivering services and support. However, their current form seems to favor larger, older, male-run enterprises, raising important questions about equity and access. If left unchecked, these associations may reinforce structural disadvantages, rather than alleviate them.

The findings urge policymakers to think carefully about the role of associations in supporting informal businesses. Programs that aim to increase productivity or extend social protection through these networks will only be effective if they acknowledge the sector’s diversity and the selective nature of association membership. Future research should explore how associations form, what institutional conditions make them more inclusive, and whether policy interventions can transform them into more equitable platforms for collective advancement. As the informal sector continues to absorb the bulk of urban labor in Africa, understanding and perhaps reshaping its networks will be crucial for fostering inclusive economic development.