Measurement of innovation in the informal sector in Africa: the importance to industrial policy

Innovation is key to industrialization in Africa and must be aligned with industrial policy. A challenge for African countries is to design and implement innovation and industrial policies that take into account the unique structural nature of African economies, in which the informal sector is prevalent. This paper argues that a measurement programme focused on innovation in the context of local economic development is imperative for setting industrial and innovation policy in Africa. Policies tend to speak and respond to those phenomena that have been subjected to measurement programmes. Is there space for designing new measures of innovation in Africa that include the informal sector? We propose a novel methodology and framework for measuring informal sector innovation, based on a local innovation and production systems approach. We end the paper with a proposal for using the evidence gathered from this methodology and a continental strategy that lends itself to direct policy intervention that has local economic development and upgrading of value chains as a goal.